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The state of the smartphone market

Johannesburg, 16 Nov 2011

Smartphone sales are up by 42%, compared to the same quarter last year, and Android now accounts for more than 50% of smartphone sales, according to Gartner.

A total of 440.5 million mobile devices were sold worldwide in the third quarter, with smartphones accounting for 26% of all sales.

Principal research analyst at Gartner Roberta Cozza says strong smartphone growth in China and Russia helped increase overall volumes in the quarter.

“But demand for smartphones stalled in advanced markets, such as Western Europe and the US, as many users waited for new flagship devices featuring new versions of the key operating systems. Slowdowns also occurred in Latin America and the Middle East and Africa."

Cozza says rumours of the new iPhone and associated price cuts on older devices affected sales in the US especially.

While still on the decline, Nokia remains the leader in worldwide mobile sales - taking 23.9% of sales.

“The second quarter of 2011 was the low point for Nokia, and the third quarter brought signs of improvement. Dual-SIM phones in particular, and feature phones generally, maintained Nokia's momentum in emerging markets,” says Gartner.

“Heavy marketing from both Nokia and Microsoft to push the new Lumia devices should bring more improvement in the fourth quarter of 2011. However, a true turnaround won't take place until the second half of 2012.”

Top spot

Samsung's sales to end-users have reportedly tripled year-on-year to reach 24 million. The company is also now the number one smartphone manufacturer in the world, in terms of sales, for the first time.

According to Gartner, Samsung's success can be attributed to the success of the Samsung Galaxy smartphones.

Worx MD Steven Ambrose says: “Based on sheer number of models available, and the ability to produce and distribute across the globe, Samsung will consolidate its position as the largest smartphone manufacturer.”

According to Ambrose, Samsung should maintain its position for the next few years.

Gartner expects more competition in the fourth quarter of 2011, not least because sales of the iPhone 4S, 4 and 3GS will capture share from Android manufacturers.

Apple's iPhone sales reached 17 million, but Gartner says this is down nearly three million from the previous quarter. This dip is attributed to October's iPhone 4S announcement, which consumers were holding out for.

Gartner says Apple will “bounce back” in the fourth quarter, because of its strongest ever pre-orders for the iPhone 4S in the first weekend after its announcement. Ambrose also predicts the iPhone 4S will, for the next quarter, be the best selling smartphone but will fall in overall numbers below the number Samsung can ship over the following quarters.

According to Gartner, the lower prices of the iPhone 3GS and iPhone 4 will give Apple a place in emerging markets.

Android domination

Android continues to reap the benefits of what Gartner calls “a lack of exciting new products” on competing operating systems such as Windows Phone 7 and BlackBerry.

The outlook continues to be bleak for Research In Motion (RIM), as Cozza notes: “Continued pressure is impacting RIM's performance, and its smartphone share reached its lowest point so far in the US market, where it dropped to 10%."

Ambrose remains optimistic for RIM, however, and says: “The BBM [BlackBerry Messenger] and mail services on offer are still far more cost-effective, and efficient, than anything the other smartphone manufacturers can offer currently.

“The cost of the handsets is also a major factor, with BlackBerry having some of the lowest cost devices with identical functionality to their most expensive devices, unlike other smartphone manufacturers which have far greater functionality and design compromises from high-end to low-end devices.”

Galaxy Nexus and Ice Cream Sandwich

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