RETAIL: Global sales of mobile phones fell below 400 million units in 2001, the first decline in the history of the industry, new data compiled by Gartner Dataquest shows.

Overall sales to consumers declined by 3.2 per cent to 399.6 million mobile phones in the full year, a marked difference from the 60 per cent average growth rate between 1996 and 2000.

Sales were hurt by saturated markets in Europe, the removal of subsidies by telecoms operators, a burgeoning second-hand market in developing countries and unlisted imports from overstocked distributors wanting to get rid of inventories, said Mr Bryan Prohm, a senior analyst with Gartner Dataquest.

In addition, handset makers and operators failed to introduce new features that could convince consumers to replace old handsets with new, more expensive ones.

Meanwhile, the slowing economy hurt consumer spending in general, said Gartner.

Consumers also shunned general packet radio service (GPRS) - seen as a stepping stone to third-generation services. Network operators failed to convince end-users of the benefits of this new network, which offers slightly faster access to mobile internet services, according to Gartner.

Market leader Nokia from Finland recovered all the ground it had lost earlier in the year. It grabbed 36.9 per cent of the market in the fourth quarter, up from 33.4 in the third quarter, as a new line-up of fancier models caught on with the Christmas shopping crowds.

Nokia company ended the year with a 35 per cent market share, up from 30.6 per cent in 2000. Challenger Motorola from the US, despite a fourth-quarter dip, halted its decline and defended its number-two slot with a full-year market share of 14.8 per cent, versus 14.6 per cent in 2000.

But the scramble for the third, fourth and fifth places continued. Germany's Siemens moved into third, dislodging Sweden's Ericsson, which was also overtaken by South Korea's Samsung Electronics.

The most impressive gains among the smaller players were chalked up by Samsung, which climbed to a fourth-quarter market share of 7.9 per cent, coming from 5.0 per cent for 2000. This was largely the result of its successful high-end clam-shell phone A300, which was marketed heavily.