IDC's report titled "Worldwide Mobile Phone Tracker" says that 470.7 million units of mobile handsets have so far been shipped in 2006. It suggests the industry may be close to shipping one billion handsets by the end of this year.

Nokia has retained its leadership with 33 per cent global market share through the shipment of 78.4 million handsets during Q2 of 2006. It posted 4.3 per cent sequential quarterly growth and a 28.9 per cent increase from last year's Q2. Nokia launched the 3250 music phone in March 2006 and sold one million units in less than four months. It has made Nokia the world's largest digital music player manufacturer.

The Finnish company has already become the world's biggest digital camera maker through its wide range of camera phones. Now it is swallowing the digital camcorder market through the highly innovative N-series devices. The enterprise market has also welcomed Nokia's E-series devices, which is a blow to Blackberry.

Motorola has aggressively stepped up its challenge by closing the gap with Nokia by shipping 51.9 million handsets and securing 22 per cent market share. It was Motorola's sequential increase of 12.5 per cent over 1Q06 and 53.1 per cent growth from last year.

Motorola's success is driven by its iconic RAZR models. Last week it announced a major milestone with the shipment of the 50 millionth RAZR V3 handset. Since its introduction in Q4 of 2004, Motorola posted an industry-leading performance in handset sales up 42 per cent versus the Q4 2003 shipments. And in its Q2 2005 sales, the Motorola RAZR V3 had sold more than five million units globally, a record that was topped in the Q3 of 2005 with sales of over 12 million units globally.

If Motorola continues this pace it would overtake Nokia in the first half of 2007, predicts Neil Mawston of Boston-based Strategy Analytics. He advises Nokia to more rapidly and simultaneously improve the entry and mid-tier product offerings in terms of both designs and numbers.

Motorola, however, lacks couple of strategic advantages that Nokia has acquired over the years. Nokia offers the widest choices of handsets for each segment of every market. That gives the Finnish vendor a phenomenal branding advantage worldwide. Nokia's strength is attributed to its capillaries of distribution, which has become the differentiating factor for a fast moving consumers product like mobile phone.

"What's the point of making cheaper phones if they are not available everywhere?" says Mauro Montanaro, Nokia's vice president of Customer and Market Operations in South East Asia and Oceania. Citing from Nobel laureate Amartya Sen's Poverty and Famines:

An Essay on Entitlement and Deprivation Montanaro emphasises a robust distribution chain to effectively serve the emerging markets.

Motorola is also struggling in the environment front. Greenpeace has recently accused Motorola of not keeping the commitment to phase out all toxic brominated flame retardants (BFRs) from its mobile phones by mid 2007 and to provide a phase out date for the hazardous plastic PVC by March 2006. "But after follow-up talks on their progress we received a letter on 15 May 2006 stating that Motorola cannot phase out BFRs and PVC from their products," said Greenpeace in an official statement.

Nokia has already removed PVC from all new models and all new components will be free of BFRs from 1st January 2007, according to Greenpeace. It also says that Sony Ericsson has already removed BFRs from all their models except one. "Both LG electronics and Samsung are currently behind on their promises but still working towards elimination of these toxic chemicals," Greenpeace says.

However, Samsung has suffered a 9.4 per cent quarter-over-quarter decrease in 2Q06, with the majority of the loss coming from Europe, Middle East and Africa. It, however, increased shipments into Asia-Pacific and the Americas, and worldwide shipments were up 8.2 per cent from a year ago. The market share gap between Motorola and Samsung opened to its widest point since 1999, as the Korean vendor keeps on missing the boom in emerging GSM markets, says Strategy Analytics.

Sony Ericsson has all the reasons to celebrate as it defeated LG Electronics and clawed back the fourth position for the first time in two years. It posted 33.1 per cent year-over-year growth in the second quarter of 2006. The company continued to build on the success of its Walkman-branded phones by launching a number of new devices, including the first UMTS Walkman phone (the W900), and announcing the W850, which will also be UMTS capable.

A 1.7 per cent decrease from last quarter was felt primarily in LG's CDMA handset shipments. In North America, which has historically been a strong market for LG, shipments dropped from 6.5 million units in Q1 to 4.3 million units in Q2. On a positive note, LG shipments of WCDMA handsets went up 170.0 per cent in Q2, and HSDPA handset shipments into Europe, coupled with its newly announced plans to ship into the U.S., accounted for the company's growth. Worldwide shipments were up 26.4 per cent year on year slightly ahead of total market growth.