Smartphone sales last quarter rose 12.8 percent from last year while the overall mobile phone sector remained flat, providing proof that the high-end handsets continue to be the crown jewel of the wireless space even as they face new challenges.
Worldwide mobile phone sales checked in at close to 309 million for Q3, a mere 0.1 gain from the same period last year, although smartphones topped 41 million, a gain of almost 13 percent from Q3 2008, according to research firm Gartner.
This year marked a seminal stage for the smartphone sector as key players rallied with major refreshes to their operating systems while simultaneously releasing new flagship handsets.
Still, the smartphone portion of the market is facing some obstacles, including lower average selling prices as the devices proliferate, and fragmentation in the marketplace due to new models and platforms like Google’s (NASDAQ: GOOG) Android and Palm’s (NASDAQ: PALM) webOS.
“The third quarter of 2009 saw the announcement of many new mobile devices, including several Android smartphones ready for the holiday season in the fourth quarter, but hardware commoditization and the growth in open platforms will make it harder for them to stand out,” Carolina Milanesi, research director at Gartner, said in a statement. “Meanwhile, the channel slowed its inventory-reduction efforts so while some sales volumes increased, average selling prices (ASPs) stagnated. We expect pressure on ASP to continue into 2010.”
She went on to say that the introduction of open, customizable platforms like Android are resulting in increasingly varied devices as manufacturers strive to stand out in the crowded crop of new smartphones.
“Android already demonstrates this trend: Individual manufacturers have deployed their own user interfaces such as HTC Sense, and some, like Motorola’s Motoblur, go deep into the part of the operating systems that manages contact information,” she said.
In terms of market share, Gartner’s findings show worldwide mobile phone leader Nokia (NYSE: NOK) dipping by 1.5 percent year-over-year, hitting an all-time low at 39 percent of the market — down from 45 percent in the second quarter.
Research In Motion (NASDAQ: RIMM), however, fared better – the BlackBerry maker reached 20 percent market share, its highest ever.
“RIM’s sales volumes rested on the Curve 8900 in Europe and the Tour and Storm 2 with Verizon Wireless in the U.S.,” according to Gartner. “RIM also focused on pre-paid sales and more flexible BlackBerry Internet Service offerings, which helped to drive volumes in emerging markets like Latin America.”
Apple (NASDAQ: AAPL), while still only a smaller player with a market share of 17 percent, continues to do well. RIM sold 8.5 million handsets for Q3, while Apple trailed only by 1.5 million after a record-breaking 7 million in sales.
There’s more good news for Apple, as it appears immune to the slide in average selling price, said Gartner, which sees even stronger sales for the fourth quarter due to the recent iPhone rollout in China and 16 other new countries.
This echoes a separate study by Strategy Analytics, which cited the iPhone maker as outpacing even Nokia in terms of profit. That study said Apple’s iPhone unit posted a $1.6 billion operating profit for Q3, compared to Nokia’s $1.1 billion.
Despite some issues pertaining to fragmentation and lower ASP for smartphones, overall, the sector is still slated to continue its upward climb, Milanesi said.
“Smartphones continued to represent the fastest-growing segment of the mobile-devices market and we remain confident about the potential for smartphones in the fourth quarter of 2009 and in 2010,” she said.