After years of massive growth, the worldwide market for cellphones is finally starting to cool, according to analysts at IDC.

Year-over-year growth in sales of handsets during the holiday quarter has fluctuated between 18 and 30 per cent over the past three years, but this past quarter saw an increase of only 11.6 per cent, the global research firm said on Friday. That lower growth is an indication that cellphone sales have peaked.

Nokia's wide array of mobile devices, such as this internet tablet, has kept the company atop the cellphone industry.
(Damian Dovarganes/Associated Press)

"The expectation that the market would maintain the level of growth it saw over the last three years was unrealistic," said Ryan Reith, senior research analyst with IDC's worldwide mobile phone tracker, in a release. "We expect growth to be in the single digits throughout 2008, and most likely for years to follow."

More than 300 million devices were shipped in the fourth quarter, bringing the 2007 sales total to more than 1.1 billion handsets, or a 12.4 per cent increase over the previous year.

Many countries — particularly in Europe and Asia — have reached cellphone saturation points, where many people own more than one device and subscriptions actually outnumber the population. As a result, handset sales in these countries are largely driven by customers replacing their devices, rather than new subscribers coming on.

The slowdown isn't likely to happen in Canada, however. With about 19 million cellphone subscribers, or about 60 per cent of the population, Canada is far from achieving the penetration rates seen in Europe and Asia. Lawrence Surtees, principal analyst of communications research for IDC Canada, said in an interview that Canada will still need a few years to achieve a saturation rate of 80 to 90 per cent of the population.

"I don't think we're anywhere near a saturation point in Canada yet," he said. "We've got a ways to go mainly because we still have many people that are waking up to wireless."

He said the global slowdown could also reverse itself when the cellphone makers start paying attention to the largely undeveloped market of Africa.

"They're just beginning while the rest of the world has sort of hit a plateau," Surtees said.

Nokia maintains lead

Worldwide, Nokia maintained its lead over the handset market, with a share of about 38 per cent. The company shipped more than 437 million devices, representing a four per cent increase in market share over 2006.

IDC's prediction of single-digit growth countered a more bullish forecast by Nokia on Thursday, which predicted a 10 per cent increase in mobile phone shipments in 2008.

Samsung overtook Motorola as the No. 2 manufacturer, with 14 per cent market share. The company shipped 161 million handsets in 2007, giving it a three per cent increase in market share over 2006, IDC said.

Motorola faced a number of challenges over the past year, with the company's chief executive admitting the firm had missed out on significant growth areas, including 3G, China and emerging markets. Motorola's market share slipped to 13.9 per cent in 2007 from 21 per cent a year earlier. The company shipped 159 million handsets, down from 217 million.

"Give credit to Samsung for taking the No. 2 position worldwide from Motorola," said Ramon Llamas, research analyst with IDC's mobile devices technology and trends team, in a statement. "Samsung capitalized on replacement handset opportunities in the United States and Europe with a steady stream of mid-range and high-end devices, while Motorola spent much of the year addressing inventory challenges."

Sony Ericsson and LG Electronics rounded out the top five mobile phone vendors with nine and seven per cent market share respectively, IDC said.