Handset sales in Christmas slump

MOBILE PHONES: Christmas sales of mobile phones may have fallen by half this year as market saturation and lower handset subsidies from operators hit the market.

Estimates from Ireland's biggest independent retailer, Carphone Warehouse, show it expects total market sales of between 200,000 and 220,000 units by all retailers. Sales in the Republic last year were estimated at between 300,000 and 400,000 by analysts, who described Christmas 2000 as the high point for the industry.

Mr Mervyn O'Callaghan, managing director of Carphone Warehouse Ireland, said yesterday that, although total market sales would be down considerably, the company's own sales would be strong. He said Carphone expected handset sales would be within 3-5 per cent of last year's sales figures of about 50,000 units.

Carphone Warehouse will issue a full trading update for its European operations on January 23rd.

Mr O'Callaghan said the reduction in total market sales reflected lower handset subsidies and increasing mobile phone penetration in the Republic. "The price of a pre-pay mobile phone was £39 last year and was sold in supermarkets," he said. "This year, the cheapest we were selling was at £99 apiece."

Mr O'Callaghan said reducing handset subsidies had lowered sales but had saved network operators money because they were at least getting bone fide customers.

Last year, tens of thousands of mobile handsets sold in the Republic were exported abroad and sold at a profit by criminals.

Mr O'Callaghan said the focus this Christmas was on upgrading pre-pay phones to contract phones. This had benefited Carphone, which offered independent advice to customers, he said. Several supermarkets were exiting the mobile market as operators focused more on complicated contract handsets rather than the simpler pre-pay units, he added.

An Eircell spokeswoman would not release sales figures yesterday, but admitted sales would be down. "As the market landscape has changed this year, we would not expect the same sales figures this year," she said.

A spokesman for Meteor said it was a very successful Christmas, but could give no detailed figures.

Despite reduced sales figures, all the mobile networks released figures showing a big increase in the number of text messages sent during Christmas. Digifone, which has about one million subscribers, said it had processed about 22 million text messages between Christmas Day and New Year's Day.

Eircell said it had processed 50 per cent more text messages than normal. Meteor said its network handled five million text messages between Christmas Eve and New Year's Day.