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Smartphones a Hot Seller, Up 39 Percent in Q4

If there is a market that's defying the economy, it's smartphones. The worldwide market for smartphones hit 54.5 million units in the fourth quarter of 2009, a 39.0 percent increase over the same quarter in 2008, according to figures released by IDC.

For the full year, total smartphone shipments hit 174.2 million units, up 15.1 percent from the 151.4 million units in 2008. Smartphones accounted for 15.4 percent of all mobile phones shipped in 2009, up from 12.7 percent in 2008.

Not too many industries can claim double digit growth in a recession. Ramon Llamas, senior research analyst with IDC's Mobile Devices Technology and Trends team, chalked it up to lower prices across the board.

"Look at Nokia. They don't have much in the U.S., but in Europe and Asia, they have lots of legacy devices that have been around for 12 months, but prices dropped like crazy, so they sold a lot. Take a premium device and drop the price it will ship a lot of units," he told InternetNews.com.

The top five vendors remained in the same order as last year: Nokia, Research in Motion (NASDAQ: RIMM), Apple (NASDAQ: AAPL), Motorola (NYSE: MOT) and HTC. Nokia shipped 20.8 million units worldwide in Q4 to be the number one supplier, with 38.2 percent of the market. Research in Motion was a distant second with 10.7 million sold, for 19.6 percent of the market.

Apple was third with 8.7 million units in Q4 but its year-over-year growth was the best: 97.7 percent. In the year since it shipped 4.4 million iPhones in Q4 2008, it introduced two 3GS models and dropped the price of the 3G model to $99, helping nearly double its growth.

Motorola was fourth, with 2.5 million units for 4.6 percent of the market but 56.3 percent year-over-year growth (thank you, Droid) and HTC rounded out the top five with 2.4 million units for 4.4 percent growth.

Llamas said smartphones are popular because they do so much beyond make phone calls. "If you ask people 'why do you want the iPhone?', they say for the apps and surfing and games. The last thing that comes up? No one wants to make phone calls. They look at it as a multimedia experience and Apple has that wrapped up nicely in a shiny glass and metal package," he said.

"The entire market is people who want to do more on their phones than make phone calls and text," he added.

2010 Outlook

IDC doesn't see the market cooling off at all. If anything, it will get more competitive with new releases of the Symbian and Windows Phone OS. Even though Windows Phone has been a laggard, Llamas thinks Microsoft is going to get its act together. "I'm eager to see what Microsoft does with Windows Phone," he said.

He expects Google, now that it's had its coming out party with Android and the Nexus One, will wade deeper into the market, but the big question is what will Apple do in terms of carriers. Will it remain with AT&T, despite loud user protest, or move elsewhere?

RIM, despite being knocked as looking dated, remains very strong. "As much as people knock them for being slightly antiquated, what's the alternative for messaging? Where do you go from there? I don't think RIM will get hit as hard as people think. That usage model is still popular with people," said Llamas.

Andy Patrizio is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.