Better-than-expected holiday sales boosted cell phone shipments 15 percent in the fourth quarter, marking the highest quarterly growth in two years, according to a report Friday by research firm iSuppli.

Manufacturers shipped 241.5 million phones in the fourth quarter, and 812.5 million phones in the full year, beating iSuppli’s forecast of 239 million phones for the quarter and 810 million for 2005, the company said. The news comes as the world’s mobile companies prepare to gather at the 3GSM World Congress starting Monday in Barcelona.

For the full 2005 year, cell phone shipments rose 14 percent over 2004 shipments of 713 million phones.

The growth projection had been revised upward at least once. iSuppli had raised its forecast in October to represent about 13.6 percent growth over 2004, thanks in part to a growing demand for cell phones in emerging countries (see Cell Phone ’05 Growth: 13.6%). Its earlier forecast had predicted 2005 shipments of 750 million phones, or only about 3.7 percent growth from 2004 (see Mobile Phone Growth Slows).

Mobile Phone Growth Slows

Growth Tapering Off

Still, Scott Smyser, director and principal analyst for communications and consumer electronics for iSuppli, said he expects growth to begin tapering off next year.

iSuppli will probably raise its 2006 forecast to 860 million cell phones, he said, which would indicate growth slowing to 5.8 percent. The official forecast is still 850 million, or 4.6 percent growth.

“Subscriber growth is still tapering off,” Mr. Smyser said. “A lot of other research firms are seeing emerging regions in the world, like China and India, offering a lot of potential growth. We’re done a lot of analysis in the area looking at the population, and at poverty issues, and I think we have more concern about growth in these emerging regions.”

A number of other research companies are predicting slower growth for the industry, but iSuppli’s forecasts are more pessimistic than those of some other companies (see Cell Phone Sales Up 22% in Q3).

Cell Phone Sales Up 22% in Q3

iSuppli is expecting 2.6 billion subscribers, worldwide, and shipments of 910 million phones in 2009, the latest year forecasted.

“We still haven’t forecasted 1 billion handsets yet, and other research firms do have that within three to five years,” he said. “There is going to be more reliance on upgrade sales, as developed regions of the world have a saturation of subscribers.”

Upgrade sales, as opposed to sales to first-time cell phone owners, accounted for 65 percent of cell phone sales in 2005, said Mr. Smyser. iSuppli expects those sales will make up 85 percent of sales in 2009.

According to the report, the big cell-phone companies are getting bigger market shares, while smaller companies are losing theirs. Nokia had 32.6 percent of the industry’s shipment share—a growth of 3.5 percent from 2004—and Motorola shipped 18 percent of the cell phones, representing a 3.3 percent growth in shipment share over 2004.

                 Mobile Handset Market Shares for Q4 2005 Based on Production((Millions of Units)

(Millions of Units)

Q4 '05	Company Name	Q4 '05 Shipments	Q3 '05  Shipments	Q3 '05      Shipment      Share	Q4 '05     Shipment        Share
1	Nokia	84	67 67	31.7%	34.7%
2	Motorola	45	39 39	18.4%	18.5%
3	Samsung	27	27 27	12.8%	11.3%
4	LG Electronics	16	15 15	7.4% 7.4%	6.7% 6.7%
5	SonyEricsson	16	14 14	6.6% 6.6%	6.7% 6.7%
6	BenQ-Siemens	10	10 10	4.8% 4.8%	4.3% 4.3%
Other Companies	43	39 39	18.4%	17.9%
Total	242	210	100.0%	100.0%

Source: iSuppli, February 2006