Mobile phone market to shrink in 2009

Mobile phone sales will shrink next year at their fastest pace ever as consumers cut spending, a Reuters poll showed, with analysts increasingly concerned about unsold phones piling up in stores.

On average, the poll of 36 analysts shows global market volumes shrinking 6.6 per cent next year and 5.7 per cent in the fourth quarter -- traditionally the strongest period for the industry due to holiday sales.

In a similar poll in early November analysts on average forecast the market to rise 2.6 per cent in 2009.

But since then Nokia, the world's top mobile phone maker, has warned twice on market growth, saying on December 4 its best guess was for sales to fall 5 per cent or more next year.

"Fear and uncertainty are causing many suppliers and consumers to delay purchasing their next handsets," said Strategy Analytics' Neil Mawston.

Consumer electronics demand has slumped in the run-up to the key Christmas sales season, triggering the loss of 16,000 jobs at Sony Corp and profit warnings from Samsung Electronics Co and Texas Instruments Inc.

British electronics group Laird Plc, a component supplier for Nokia and others, on Tuesday announced the loss of 5,000 jobs, or nearly half its staff, and said it sees global handset volumes declining 10 per cent next year.

Analyst estimates varied significantly due to the uncertainties over economic growth, with 2009 forecasts ranging from a market contraction of 13 per cent to growth of 3 per cent. Only two analysts polled expect growth next year.

"A 5-10 per cent decline is the best guess at the moment," said Nordea analyst Martti Larjo. "This can move either way: if the economy continues to go downward the numbers could be worse. But while growth is not impossible, it's unlikely."