Nov 26, 2008 (10:11 AM EST)
Samsung Sees Cell Phone Market Squeezed

Read the Original Article at InformationWeek

In the latest indicator that the mobile phone market will be hit by the economic recession, Samsung issued a warning this week that the global market may potentially shrink next year.

The company forecasted the global market unit growth would be 9% for 2008, but the economic situation may make that figure unattainable. The market may also be facing some tough times next year, Samsung warned.

"As for next year, it is possible that the market could post a single-digit or even negative growth," a Samsung spokesman said.

Samsung's warning comes a few weeks after market leader Nokia predicted the economic situation will lead to slowed growth worldwide. Nokia said a rapid drop in consumer spending could lead to companies fighting for existing customers rather than finding new ones.

Sony Ericsson also has been taking a beating in the sales department, primarily because it does not have a large line of basic entry-level phones that sell well in emerging markets like China and India. The company is in the midst of restructuring and said it expects tough business months ahead.

Research firm Gartner is in agreement with the cell phone manufacturers' warnings as it expects handset volumes to contract next year.

"It is too early to say how long the economic climate will impact the devices market, but we expect market condition to remain challenging through at least the first half of 2009," Gartner analyst Carolina Milanesi said in a statement. "We expect sales in 2009 to show a low-single-digit growth contraction."

The research firm said many customers will hold off on replacing their existing cell phoned to save money. Milanesi said Nokia is in the best position to handle the sluggish market because of its size and scale.