Too Many Cell Phone Companies Expect Huge Unit Growth

Samsung, one of the five largest cellphone manufacturers in the world, raised its forecast for 2010 unit sales to 25 million. The South Korean company added that it expects to sell 50 million handsets next year. No one believes that the cellphone market will double in 2011, so the Samsung statement begs the question of where its tremendous growth will come from.

Most large handset companies have predicted very good years in 2011. Part is due to an expected 15% growth in the global market which would move overall sales above 1.2 billion. But someone will lose market share although every company in the industry claims it will gain.

It is easy to say that Apple Inc (NASDAQ: AAPL) will double sales. The market penetration of the remarkably popular iPhone is still small and the device is not available in great numbers in large markets like China. Research In Motion (NASDAQ: RIMM) said its shipments rose 43% in the last quarter and reached 11.2 million units. The Canadian company said it expected strong growth in the current quarter although Wall St. thought the forecast was disappointing.

Motorola (NYSE: MOT) shipped 8.3 million handsets in it last quarter. It expects that number to rise due to the popularity of its Droid handsets built on the Google (NASDAQ: GOOG) Android operating system. Rival Sony Ericsson says that its new handsets will pull it out of the tailspin it has been in for the last two years.

All of those predictions leave out Nokia (NYSE: NOK) which has been badly clobbered in the smartphone business but still expects its global market share to remain about 37% .  That will keep it in first place among cellphone companies. If that number is correct, it is difficult to see how most of its smaller rivals will grow very rapidly compared to the overall industry. Nokia should not be counted out of the smartphone business because of its girth and the number of relationships it has with cellular providers worldwide.

Maybe every major handset maker will double sales next year, but probably not.

Douglas A. McIntyre