Handsets from Nokia Corp. and Code Division Multiple Access technology dominated the U.S. cellular and personal communications services industry in 1999, while international powerhouse L.M. Ericsson struggled to keep its share of the U.S. market, said reports from The Strategis Group and Dataquest.
Nokia claimed more than 34 percent of all cellular and PCS handset sales, followed by Motorola Inc. with 23 percent, and Qualcomm Inc. with 12 percent, according to “U.S. Wireless Handsets: Marketshare and Trends,” from The Strategis Group in Washington, D.C.
Nokia sold the most Time Division Multiple Access and Global System for Mobile communication handsets, and Motorola led the way in analog handset sales. Qualcomm Inc. garnered the highest volume of CDMA sales, according to the report.
Noticeably missing from the top three handset manufacturers was Ericsson. With only 9.6 percent of the U.S. market share, the company has surrendered much of its sales to other manufacturers like Audiovox Corp. and Qualcomm, which have kept pace with the increasing popularity of CDMA technology and products.
“Ericsson is definitely in a share-loss scenario and we won’t see a turnaround until mid-2000, once their new technologies are ramped up,” said Brian Prohm, senior industry analyst for Dataquest’s Mobile Communications Terminal Devices North America program. “They still don’t have a CDMA product, which is a big drag on them share-wise. They also walked away from the analog market a little earlier than they would have liked to.”
“After Japan, the U.S. market for Ericsson is one of the worst,” said Prohm.
For the nine months ended Sept. 30, 1999, Ericsson reported net income of $685.3 million, a significant decrease from the $979.1 million reported for the same time the previous year.
Adding to Ericsson’s demise in the U.S. market was the higher cost of its analog handsets, which differed only slightly, or not at all, from its less-expensive counterparts.
“Their analog handsets were not well positioned on the cost curve,” Prohm said.
Happauge, N.Y.-based Audiovox assumed some of Ericsson’s market share. Due in part to its successful transition from analog to CDMA technology throughout the year, Audiovox held the fourth-place position-or an 11.8-percent share-of the U.S. handset market, said The Strategis Group.
The company created an adverse CDMA handset portfolio, and its willingness to “bend over backwards” to accommodate vendors propelled it into a strong market position for the year, said Prohm.
For the nine months ended Aug. 31, 1999, Audiovox reported net income of $15.9 million, compared with a net loss of $474,000 reported for the first nine months of fiscal 1998. The company’s fiscal year-end net sales totaled approximately $1.16 billion, an 83.6-percent increase from the year prior.
Audiovox is expected to continue to hold its own in the U.S. handset market. In addition to offering CDMA and TDMA handsets, the company said it will offer GSM handsets early this year.
According to The Strategis Group, by 2004, CDMA handset sales will account for 50 percent of all U.S. handset sales, and TDMA handset sales also are forecast to remain strong. GSM handset sales growth is expected to increase as well.
However, analog handset sales are expected to decline significantly, which doesn’t bode well for Ericsson.
“We think over time Ericsson will start to become a bigger market share player, but now you have Samsung emerging through its strength in CDMA. It could be that Ericsson will fall into a sixth- or seventh-place position before they move back into the top three,” Prohm said.
