Smartphone Growth Slowed to 11.5%, Says Gartner

In the third quarter of 2008, the global
smartphone market reached its weakest year-on-year growth since
Gartner, Inc. began tracking the industry. Worldwide smartphone sales
to end-users totalled 36.5 million units in the third quarter of 2008,
an 11.5 per cent increase from the same period in 2007.

"The current economic climate is negatively impacting sales of
higher end devices," said Roberta Cozza, principal analyst at Gartner.
"Going forward, we should expect the smartphone device market to
continue to grow but at a slower pace. Although leading mobile
operators are subsidising more smartphones, to reach lower prices they
tie the device to two year contracts with monthly data plan rates which
remain too expensive for the mainstream user." Nokia maintained its No. 1 position with 42.4 per cent market
share in the third quarter of 2008, but for the first time it recorded
a decline in sales of 3 per cent year-on-year (see Table 1). "Nokia is
feeling the pressure from increased competition in the consumer
smartphone market," said Ms Cozza. "The company introduced solid
Nseries products with top features, but its lack of a commercial
touch-screen device in its smartphone portfolio prevented Nokia from
capitalising from consumer demand for this feature. The recently
announced N97 is a much needed evolution for the
n9x series of products. It is unfortunate that the device will not be
available before the first half of 2009 as this is a competitive
product in today's market."

Table 1
Worldwide: Preliminary Smartphone Sales to End Users byVendor, 3Q08 (Thousands of Units)

Note: Under the name HTC, Gartner counts only the company's
own-branded devices. The devices that HTC designs for mobile operators
are shown separately under the operators' names in these statistics.
Source: Gartner (December 2008)

Sales of Research In Motion's BlackBerry smartphones increased 81.7 per
cent in the third quarter of 2008. RIM continued to expand its presence
within the consumer segment and refreshed its portfolio with new models
and form factors. RIM sales will receive a boost from its new products
in the fourth quarter. Analysts said the Storm is RIM's most important
product launch to date and has the potential to be a major product for
the company.

Apple regained its No. 3 position in the global smartphone market and
improved its market share to 12.9 per cent in the third quarter of
2008. Apple's shipments into the channel during the third quarter of
2008 approached 7 million units. However, Apple built up around 2
million units of inventory and Gartner's sales unit estimate reflects
this. Apple's sales increased more than four times compared to the same
period in 2007 as a result of wider geographical availability, new
business model and lower pricing.

For the smartphone operating system (OS) market, Symbian
commanded 49.8 per cent of the global sales to end users in the third
quarter of 2008 (see Table 2) and for the first time its share went
below the 50 per cent mark. Nokia's decline in smartphone sales during
the quarter, and continued weakness of the Japanese mobile device
market, have impacted Symbian's share. Gartner expects Symbian share to
continue to erode next year but maintain its leading position in the
market.

Table 2
Worldwide: Preliminary Smartphone Sales to End Users by Operating System, 3Q08 (Thousands of Units)

Note: The "Others" category includes sales of Sharp Sidekick devices based on the Danger platform.
Source: Gartner (December 2008)

The success of iPhone 3G sales in the third quarter
of 2008 propelled the Mac OS X to the No. 3 position in the global OS
provider rankings. For the first time, iPhone sales exceeded sales of
Microsoft Windows Mobile devices worldwide and in North America. In
the shorter term, open-source initiatives like Android and Symbian
Foundation will challenge Windows Mobile's licensing model. In
addition, the lack of a competitive user interface will continue to
limit Microsoft's mobile device usability when facing competitive
consumer smartphones.

"In 2009, application portfolios will become one of the key strategic
considerations for smartphone market players and, if successful, they
deliver an alternative revenue stream and will improve consumer
stickiness," Ms Cozza said.

On a regional level, North America was the fastest growing market, with
a 68 per cent increase in the third quarter of 2008. RIM and Apple did
particularly well in the region with both vendors accounting for more
than 70 per cent of the smartphone market in the third quarter of 2008.
Apple regained second position behind RIM with 25.4 per cent market
share. Smartphone sales in Europe, the Middle East and Africa (EMEA)
increased 14 per cent year-on-year. The region saw Nokia's share
decline nearly 8 percentage points in the third quarter of 2008 but
still maintaining its leading position and saw Apple gain the No. 2
spot with 15.6 per cent share, moving in front of HTC and RIM. 

The markets in Asia/Pacific and Japan declined 11 per cent and 23 per
cent, respectively in the third quarter of 2008. In Latin America,
despite the decline in sales for all handsets, the smartphone market
grew 56 per cent in the third quarter of 2008. The sales were bolstered
by the official introduction of Apple's iPhone 3G across a dozen of
countries.

Additional information is available in the Gartner report "Market Share: Smartphones, Worldwide, 3Q08."