Smartphone Sales Increasing, Just Not as Much as Usual

Global sales of smartphones increased year-on-year last quarter, but at a much slower rate than this market has become accustomed to.

Worldwide smartphone sales to end-users totaled 36.5 million units in the third quarter of 2008, an 11.5% increase from the same period in 2007, according to Gartner. That's the weakest year-on-year growth since this market-research firm began tracking the industry.

"The current economic climate is negatively impacting sales of higher end devices,” said Roberta Cozza, principal analyst at Gartner. "Going forward, we should expect the smartphone device market to continue to grow but at a slower pace."

Still, much of the slow-down is in Asia, where smartphone sales actually declined. N. America saw annual growth of nearly 70%.

Results by Company

Nokia maintained its long-held position at the top of the smartphone market, with a 42.4% market share last quarter, but for the first time it recorded a decline in sales of 3% year-on-year. In the same quarter of 2007, its share of the market was 48.7%

"Nokia is feeling the pressure from increased competition in the consumer smartphone market," said Ms Cozza. “The company introduced solid N-series products with top features, but its lack of a commercial touchscreen device in its smartphone portfolio prevented Nokia from capitalizing from consumer demand for this feature."

In a second place is RIM, whose BlackBerrys made up 15.9% of the smartphone market in Q3. It may be well behind Nokia, but it's share of the market is growing; it had just a 9.7% share in the same quarter of last year. Sales BlackBerry smartphones increased 81.7% year-over-year in the third quarter of 2008.

Next is Apple, whose share of this market is also growing. During the third quarter of 2007 it had a 3.4% share, but that jumped to 12.9% last quarter. Sales of the iPhone line had an annual increase of 327.5%.

In fourth place is HTC, with a 4.5% share of the market. However, this number could be higher. Gartner has only included devices sold with the HTC brand, not all the models that are designed and manufactured by HTC and sold under different names, like the AT&T Tilt, Verizon XV6800 and XV6900, etc.

Sharp rounds out the Top 5 with 3.4% of the market, down from 4.7% the year earlier. Sales declined 19.3%.

Results by Operating System

In the competition between the different smartphone operating systems, Symbian commanded 49.8% of the global sales to end users in the third quarter of 2008. While Symbian is still on top, this was the first time its share went below the 50% mark, and sales dropped 12%.

Gartner expects Symbian share to continue to erode next year, but maintain its leading position in the market.

In second place is the BlackBerry OS with 15.9% of the smartphone market, up from 9.7% in the same quarter a year ago. As all BlackBerrys are made by RIM,  sales increased at the same rate for devices and the OS.

The iPhone OS had a 12.9% share last quarter, up from 3.4% in the previous year. For the first time, iPhone sales exceeded sales of Microsoft Windows Mobile devices worldwide and in North America.

Windows Mobile's share dropped in Q3, from 12.8% last year to 11.1%. Sales declined by 3.0%. Gartner blames this on "the lack of a competitive user interface when facing competitive consumer smartphones."

In fifth place is Linux, with 7.2% of the market. It's share declined 1.6% year-on-year, and sales were down 9.1%.

And finally there's the Palm OS, whose share is small, but it saw significant annual growth. It had 2.1% of the world smartphone market last quarter, up from just 1.2% in Q3 of 2007, and sales were up 103.3%.

The "Other" category, which includes devices like the T-Mobile Sidekick, made up just 1% of the smartphone market.

Results by Region

On a regional level, North America was the fastest growing smartphone market with a 68% increase last quarter. RIM was on top, with Apple in the second position.

Smartphone sales in Europe, the Middle East, and Africa (EMEA) increased 14% year-on-year. The region saw Nokia’s share decline nearly 8%, but still maintain its leading position. Apple gained the No. 2 spot, moving in front of HTC and RIM. 

The markets in Asia/Pacific and Japan declined 11% and 23%, respectively in the third quarter of 2008.

In Latin America, despite a decline in sales for all handsets, the smartphone market grew 56%. Sales were bolstered by the official introduction of Apple’s iPhone 3G across a dozen countries.

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