The worldwide market for mobile phones increased by 29.3 per cent compared to the same quarter a year ago, with smartphone shipments leaping 86 per cent.
But the research by IDC found that market leader Nokia saw a 19 per cent decrease compared to the previous quarter.
Nokia's fall came as a result of a product mix weighted towards entry-level phones lacking in midrange colour and cameraphones, areas that proved to be growth catalysts for other companies, IDC claimed.
But the analyst said that Nokia plans to regain its market share through a combination of price discounts and the launch of around 40 new handsets this year.
Nokia still remains the clear market leader in both the mobile phone market and the converged mobile device market, where it saw growth of 17.2 per cent over the year.
The study found that worldwide mobile phone shipments decreased by 5.9 per cent in the first quarter of the year, compared to the last quarter of 2003, but increased by 29.3 per cent year-over-year to 152.7 million units.
"Despite the anticipated seasonal effects of the post-holiday first quarter, worldwide mobile phone manufacturers were able to produce significant year-on-year growth on the strength of mid-range handsets featuring colour screens and cameras," said David Linsalata, an analyst in IDC's mobile devices programme.
"Additionally, the market for converged mobile devices, or smartphones, demonstrated strong growth potential as enterprises and consumers continue to show interest in improved devices combining data and telephony capabilities."
With 1.5 billion wireless subscribers expected worldwide by the end of the year, IDC expects the worldwide mobile phone market to surpass 595 million units shipped in 2004.
Through 2008, the market is predicted to expand until it reaches an "all-replacement" sales situation towards the end of the decade with over 800 million mobile phones shipping annually.
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