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Smartphone market jumps 47% in Q4 2011

Record iPhone sales drives up global smartphone market

Apple saved the smartphone market in Q4, says Cozza, but Nokia proved it can execute its new strategy.
Apple saved the smartphone market in Q4, says Cozza, but Nokia proved it can execute its new strategy.

Smartphone sales spiked in the fourth quarter of 2011, up 47.3% to 149 million units according to Gartner.

The market was mainly driven by record sales of Apple iPhones, the analyst company said, making Apple the leading vendor of smartphones, with 23.8% market share, and the third largest vendor of smartphones overall.

"Western Europe and North America led most of the smartphone growth for Apple during the fourth quarter of 2011," said Roberta Cozza, principal research analyst at Gartner. "In Western Europe the spike in iPhone sales in the fourth quarter saved the overall smartphone market after two consecutive quarters of slow sales." 

For 2011 as a whole, smartphone sales reached 472 million units, accounting for one third of all mobile device sales.

Market leaders Samsung and Apple strengthened their positions, as vendors such as LG, Sony Ericsson, Motorola and Research In Motion (RIM) recorded disappointing results as they struggled to improve volumes and profits significantly. These vendors also faced growing competition from midrange and low end smartphone vendors such as ZTE and Huawei.

Worldwide mobile device sales to end users totaled 476.5 million units in the fourth quarter of 2011, a 5.4 % increase from the same period in 2010. In 2011 as a whole, end users bought 1.8 billion units, an 11.1% increase from 2010.

"Expectations for 2012 are for the overall market to grow by about 7%, while smartphone growth is expected to slow to around 39%," said Annette Zimmermann, principal research analyst at Gartner.

In the fourth quarter of 2011, Nokia's mobile phone sales numbered 111.7 million units, an 8.7% decrease from last year.

"Samsung closed the gap with Nokia in overall market share," said Cozza. "Samsung profited from strong smartphone sales of 34 million units in the fourth quarter of 2011. The troubled economic environment in Europe and Nokia's weakened brand status posed challenges that were hard to overcome in just one quarter. However, Nokia proved its ability to execute and deliver on time with its new Lumia 710 and 800 handsets. Nokia will have to continue to offer aggressive prices to encourage communications service providers (CSPs) to add its products to portfolios currently dominated by Android-based devices."

Apple had an exceptional fourth quarter, selling 35.5 million smartphones to end users, a 121.4% increase year on year. Apple's continued attention to channel management helped it take full advantage of the strong quarter to further close the gap with Samsung, which saw some inventory build up for its smartphone range. Apple's strong performance will continue into the first quarter of 2012 as availability of the iPhone 4S widens. However, since Apple will not benefit from delayed purchases as it did in the fourth quarter of 2011, Gartner analysts expect its sales to decline quarter-on-quarter.

After Apple, ZTE and Huawei were the fastest-growing vendors in the fourth quarter of 2011.

"These vendors expanded their market reach and kept on improving the user experience of their Android devices," said Cozza.

In the fourth quarter of 2011, ZTE moved into fourth place in the global handset market. ZTE posted a strong smartphone sales increase of 71% sequentially. The company was able to extend its portfolio to three CSPs in its home market and benefited from consumers' interest in low-cost smartphones. Huawei moved ahead of LG in the Android marketplace to become a top-four Android manufacturer, thanks to strong smartphone growth in the quarter. Huawei has made significant progress in moving to its own-branded devices, and it has continued to expand its portfolio into higher tiers as its tries to build more iconic products.

RIM dropped to the No. 7 spot in the fourth quarter of 2011, with a 10.7% decline. RIM's delay with its BlackBerry 10 platform will further impair its ability to retain users. However, RIM's biggest challenge is still to expand the developer base around its ecosystem and convince developers to work and innovate with BlackBerry 10.

In the smartphone OS market, competition between Google and Apple intensified. Android's share declined slightly sequentially. This was due to strong iPhone sales, driven in particular by the iPhone 4S in mature markets and the weakness of key Android vendors as they struggled to create unique and differentiated devices. Samsung remained the main contributor to Android share gains in the second half of 2011. iOS's market share grew 8 percentage points year-on-year, but Gartner analysts expect Apple's share to drop in the next couple of quarters as the upgrade cycle to the iPhone 4S slows. Nokia's first Windows Phone smartphones, the Lumia 710 and 800, made their debut, but, as expected, sales were not enough to prevent a fall in Microsoft's smartphone market share.