Smartphone Sales Up but at a Slower Pace

Worldwide smartphone sales are ebbing but the slow-down in growth isn’t crimping top-sellers like the iPhone and BlackBerry, according to a new Gartner report released on Thursday.

In terms of smartphone leadership, Nokia continues to have a tight hold on first place, with 15.4 million in sales and 42.4 percent of the market as of third quarter in 2008. But the Finnish vendor has lost ground, suffering about a 3.1 percent drop in growth compared to the third quarter of 2007 when it held 48.7 percent market share and sold 15.9 million devices.

Gartner analyst Roberta Cozza told InternetNews.com that she expects wireless carriers to decrease data plan fees to combat the slowdown in sales. Handset vendors, she predicted, will likely push out more mid-tier products in 2009.

New products, such as the Nokia N97 that arrived this Tuesday, are driving sales but it’s not enough, according to Cozza.

“Nokia is feeling the pressure from increased competition,” said the analyst, noting the vendor’s portfolio lacks a commercial touch-screen device.

Apple iPhone 3G sales hit 4.7 million units in the third quarter of 2008 and it now holds 12.9 percent market share. The smartphone player, in third place behind Nokia and Research in Motion (NASDAQ: RIMM), has enjoyed a 327.5 percent annual sales spike since the third quarter of 2007. That growth pushed Apple (NASDAQ: AAPL) from 10th place in the second quarter of 2008 to its current third place spot.

RIM has seen 81.7 percent growth year-to-year. The number two vendor shipped 5.8 million units in the third quarter of 2008 and owned 15.9 percent market share. In third quarter of 2007 the BlackBerry maker held 9.7 percent share and sold 3.1 million units.

Tough times ahead

But despite the top players’ boom in sales, the overall market’s 11.5 percent growth between the third quarter of 2007 to the third quarter of 2008 is the lowest since the research firm began tracking worldwide smartphone sales. Gartner said 36.5 million smartphones were shipped in the third quarter of 2008.

The market view comes just weeks before the holidays, a critical electronic device sales time every year but even more compelling given the past months of doom and gloom economics. Consumers and businesses are thinking twice about purchases despite increased discounts coming from retailers and manufacturers.

HTC, currently in fourth place with 4.5 percent market share, sold 1.6 million sales in the third quarter. Gartner said sales figures do not include the Google Android G1 device that debuted in October. It has seen a 25.9 percent annual growth since the third quarter of 2007.

Sharp sold 1.2 million handsets and holds 3.4 percent market share as of the third quarter of 2008. The vendor has experienced the worse drop in growth, a plunge of 19.3 percent, since the third quarter of 2007 when it held 4.7 percent market share.

When it comes to smartphone operating system leadership, Symbian remains steadfast but showing some weakness. The platform maker drove nearly half, 49.8 percent, of global sales for the third quarter of 2008. Yet, as Gartner noted, it’s the first time its market share fell below 50 percent.

RIM’s OS holds 15.9 percent of market share, while Apple’s iPhone OS X is in third with 12.9 share.

Gartner said it’s the first time iPhone sales have exceeded sales of Microsoft Windows Mobile devices worldwide and in North America.

Microsoft’s Windows Mobile, which lost 3 percent in growth from third quarter of 2007, has 11.1 percent share compared to 12.8 in third quarter of 2007.

“In the shorter term, open-source initiatives like Android and Symbian Foundation will challenge Windows Mobile’s licensing model,” said Cozza.

Linux is ahead of Palm with 7.2 percent and 2.1 percent, respectively.