Mobiles Christmas shocker

WITH JUST 70 shopping days until Christmas, the mobile phones industry is bracing itself for the first potential shortage of handsets since the boom days of 2000.

Carphone Warehouse chief executive Charles Dunstone warns: 'All the retailers have got or will get the stock they have ordered but if anyone wants to up their orders - say for an extra half million of the most popular handsets - I suspect they will be out of luck.‘

He cites the Sony Ericsson T610 (£249). the Motorola V600 (£299) and Samsung S300 (£269) as the top-of-the-range colourscreen models that will drive Christmas demand.

A spokesman for Virgin Mobile - dominant in the pre-paid market, which is always strong at Christmas - says: ?There are reports that some manufacturers are a bit short of chips and the precious metals needed for handsets but we don't expect it to work through to the consumer.

'This year it is a bit like the supermarkets trying to push wine customers up to the better £7 to £9 a bottle. In phones, that's the £100 to £149 bracket.‘

Samsung, which has made powerful inroads against the established handset makers, says its stocks of mobiles are at their lowest for ?four or five years‘.

The bottom end of the market is also being shaken up by low-price newcomers such as Primus, which this month launched a very small handset into the UK retailing at just £75.

The perceived lack of handsets may force the networks to draw back from the threatened pre-paid price war they could have started to preserve market share.

It is much more worth their while to hold back desirable models of mobiles for more lucrative contract customers.

Talk had been of pre-paid handsets coming down below £39.99, which is reckoned by the industry to be the point at which someone will start to lose money.

Manufacturers and networks stopped their massive handset subsidies almost two years ago and neither really wants to restart them now.

The waters are further muddied by new entrants to the market. Third-generation operator 3 has slashed its charges and created high demand but only recently took delivery of a consignment of Motorola A835 camera and speaker phones and may not get another delivery of NEC handsets until shortly before Christmas.

Tesco has gone for the other end of the market on a Virgin-style virtual network aimed at the family. Half the handsets on its website are as yet unpriced and described as ?coming in time for Christmas‘.

Industry analysts have been raising their forecasts for total world sales throughout the year from a starting point of below 435m units to about 460m. That would be a 10% increase on 2002 but revenues would only rise by a single-digit percentage because prices are falling.

Nokia's third-quarter results seem to confirm the record demand. It is said to be well stocked with the most desirable handsets, such as the 3510i (£99), and has plenty of its gaming phone the N-Gage. The Finnish company has a well-earned reputation for matching the demand it creates with an adequate supply of hardware.

Sony Ericsson yesterday reported the first quarterly profit since the joint venture was set up two years ago.

It highlighted demand for the expensive T610 specifically alongside similarly costly third-generation models for the Japanese market.

However, president Katsumi Ihara admitted that sales growth in the fourth-quarter run-up to Christmas would be slower as more cheap phones went into the shops.

Motorola, which produced forecast-busting figures this week with a 19% increase in shipments of handsets, warned that cheap phones from China and oversupply in some segments of the market were pushing prices down sharply.

The message is to shop early if you really want a specific top-of-the-range mobile phone this Christmas. But the odds are that you are buying it for yourself and you are probably upgrading from a fairly fancy phone anyway.

For the truth is, as Dunstone puts it: ?The vast bulk of sales at Christmas are people being bought their first mobiles. And that usually means the lowest point of entry. People don't tend to buy 12-month contracts for other people.‘

Nokia's high-stakes gamble on N-Gage

NOKIA is taking a massive gamble with the launch of its gaming console N-Gage. It has spent tens of millions of euros on its development and promises to splash out e100m (£70m) on promotion and marketing.

This may be a worldwide market worth £18bn a year but even Microsoft has yet to make a single cent profit from its Xbox console. As the N-Gage retails at £229 against £59 or less for the Gameboy Advance, parents will find it easy to turn their kids down for this Christmas. But deals such as the one where the price falls to £49.99 if you sign a 12-month contract with 02 mean it will become a serious option.

After all, it is more than a games console. It is also a mobile phone, an FM radio and a music download-and-play device. It looks pretty cool, too. On the downside, the screen is small and you have to remove the battery to insert a game.

To reinforce how serious it is, Nokia's handful of games at launch includes best-sellers such as Sonic, Tomb Raider and Tony Hawks Pro Skater. You can also compete with other players in the same room, or the same building, using soon-to-be-introduced advanced wireless technology, which will also allow you to joust with anyone, anywhere.

As the market leader by a wireless mile in mobile phones, Nokia did not have to risk the gaming market. But the rewards, not just from console sales but also from royalties, could be great and, as chief executive Jorma Ollila says: ?We're in this for the long haul.‘