Mobile market growth raises price fears

By Tarmo Virki, European technology correspondent

HELSINKI (Reuters) - The global mobile phone market is set to grow in the holiday sales-fuelled October-to-December quarter, after four quarters of falls, raising fears of pricing battles, analysts said on Friday.

The mobile phone industry is ending its worst year ever, with top handset vendor Nokia (NOK1V.HE) forecasting earlier this month that 2009 market volumes would fall 7 percent from 2008, indicating a small rise in the fourth quarter.

"The industry is edging towards recovery," said Neil Mawston, analyst with research firm Strategy Analytics, while forecasting handset sales to grow 3 percent annually in the fourth quarter.

He warned, however, that the global handset market was getting very crowded and oversupply and price cutting would be inevitable in 2010.

Strategy Analytics estimated 291 million phones were sold in the third quarter, down 4 percent from a year ago.

Separately, research firm IDC estimated the market dropped 6 percent year-on-year to 287 million phones in the third quarter.

"During the third quarter, we saw a number of channels promoting older devices at significantly lower prices. For many, this was enough to spur demand and push volumes higher," said IDC analyst Ramon Llamas.

Nokia cut phone prices across its portfolio in mid-October, with analysts saying the quarterly price cuts were spread quite evenly across the models at around 5 percent level.