SAN JOSE -- Sales of communications equipment sales reached $309 billion in 2005, topping the $300 billion mark for the first time, research firm Electronic Trend Publications reported, led  by sales of cellular handsets.

Through 2010, outsourced manufacturing will grow nearly twice as fast as in-house manufacturing, ETP said. "Outsourcing will prove to be most popular for commodity and high-volume products for which cost reduction and time to market are important. Demand for in-house production of communications products will remain solid but uninspired, and dominated by Asian OEMs that prefer not to subcontract."

Handsets sales recorded $118 billion in revenue, the firm said.

The cost of goods sold for all communications equipment was $192 billion in 2005, for an industry gross margin of 38%.

About 67% of the equipment manufacturing took place in the Asia Pacific, ETP said.

The market is fragmented, with no OEM holding more than a 14% share, and just two -- Nokia and Motorola -- with shares greater than 10%. The top 10 OEMs were Nokia, Motorola, Siemens, Cisco, NEC, Ericsson, Samsung, Alcatel, Nortel and Sony Ericsson.