Smartphone sales continue to buck the recession

Sales of mobile phones fell last year as consumers spent less, but the recession failed to derail the rise and rise of high-end smartphones such as Apple's iPhone and the BlackBerry.

Sales of mobiles fell almost 1 per cent to 1.2 billion in the last year over 2008, according to Gartner, although the market returned to growth in last quarter.

Carolina Milanesi, research director, said following the dip brought on by the economic climate, the market "finished on a very positive note, driven by growth in smartphones and low-end devices", adding it was a "taste of things to come".

Smartphone sales hit 172.4 million, a year-on-year rise of almost a quarter. Those that run the Symbian software – predominantly Nokia devices – continue to dominate the market, but its lead declined from 52.4 per cent of the market two years ago to 46.9 per cent. Ms Milanesi blamed its lack of a high-end phone. The second most popular smartphone was the BlackBerry, favoured in the boardroom and increasingly among teenage girls, boosted market share from 16.6 per cent to 19.9 per cent. The iPhone's share rose from 8.2 per cent to 14.4 per cent, replacing Microsoft's Windows phones in third position. Google's Android operating system, which can be found on a range of devices including the Nexus One, was another big winner, lifting its share from 0.5 per cent to 3.9 per cent.

The overall share of the market held by Nokia, the largest handset company, fell from a 38.6 per cent to 36.4 per cent. While it beat industry expectations at the end of the year, it faces an increasingly tough task in competition from smartphone rivals. Ms Milanesi said: "Its very strong mid-tier portfolio will help it hold market share, but its ongoing weakness at the high end of the portfolio will hurt its share of market value."

Nokia is set to overhaul the Symbian software that runs its smartphones and is to launch a platform together with Intel. Gartner feared it could fall behind as the products will not hit the market until after the summer, adding that much was riding on the new software.

Motorola and Sony Ericsson's market share also declined. Gartner said Samsung was the "clear winner" among the top five handset makers as it lifted market share 3.2 percentage points by improving its distribution and reach.

Gartner said the "intense price competition" had driven down the average prices of phones around the world, but expects the economic environment to help stabilise pricing this year.

Ms Milanesi said 2010 would be about operating systems, services and applications rather than hardware. "Sales will return to low double-digit growth, but competition will continue to put a strain on vendors' margins."