Smartphone sales rocket in 2013

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Sales of smartphones up 46.5% in second quarter of 2013, while Microsoft overtakes BlackBerry in operating system popularity

Smartphone sales have risen considerably year on year, overtaking sales of feature phones for the first time, while Android continues to reign supreme in the operating system rankings according to new research.

Smartphone sales to end users reached 225 million units, up 46.5% from the second quarter of 2012, while sales of feature phones to end users totalled 210 million units and declined 21% year on year. Worldwide mobile phone sales to end users totalled 435 million units in the second quarter of 2013, an increase of 3.6% from the same period last year, according to Gartner.

'Smartphones accounted for 51.8% of mobile phone sales in the second quarter of 2013, resulting in smartphone sales surpassing feature phone sales for the first time,' said Anshul Gupta, principal research analyst at Gartner.

Asia-Pacific, Latin America and Eastern Europe exhibited the highest smartphone growth rates of 74.1%, 55.7% and 31.6% respectively, as smartphone sales grew in all regions.

Samsung maintained the number one position in the global smartphone market, as its share of smartphone sales reached 31.7% with 71,380 shipments in the quarter, up from 29.7% in the second quarter of 2012.

Apple's smartphone sales reached almost 32 million units in the second quarter of 2013, up 10.2% from a year ago. Apple now has 14.2% of the smartphone market.

LG hit third place with 5.1% marketshare and 11,473 shipments in the quarter, up from 3.8% in the same period last year when it made 5,827 shipments. Lenovo was in fourth place with 4.7% marketshare, and ZTE in fifth with 4.3%.

In the smartphone operating system (OS) market, Microsoft took over BlackBerry for the first time, taking the number three spot with 3.3% marketshare in the second quarter of 2013, up from 2.6% previously. BlackBerry now sits in fourth place with 2.7% marketshare, down by more than half from the second quarter 2012 when it had 5.2%.

'While Microsoft has managed to increase share and volume in the quarter, Microsoft should continue to focus on growing interest from app developers to help grow its appeal among users,' commented Gupta.

Android continued to increase its lead from the pack, garnering 79% of the market in the second quarter, up from 64.2% in the same period last year.

Apple's iOS maintained its second place position at 14.2% marketshare, which was down from 18.8% in the previous year's quarter.

In the overall mobile handset market (feature and smart), Samsung remained in the number one position in the overall mobile phone market, with sales to end users growing 19% in the second quarter of 2013.

'We see demand in the premium smartphone market come mainly from the lower end of this segment in the $400-and-below ASP mark. It will be critical for Samsung to step up its game in the mid tier and also be more aggressive in emerging markets. Innovation cannot be limited to the high end,' stated Gupta.

Slowing demand of feature phone sales across many markets worldwide and fierce competition in the smartphone segment affected Nokia's mobile phone sales in the second quarter of 2013. Nokia's mobile phone sales totalled 61 million units, down from 83 million units a year ago. Nokia's Lumia sales grew 112.7% in the second quarter of 2013 thanks to its expanded Lumia portfolio, which now include Lumia 520 and Lumia 720.

'With the recent announcement of the Lumia 1020, Nokia has built a wide portfolio of devices at multiple price points, which should boost Lumia sales in the second half of 2013,' remarked Gupta. 'However, Nokia is facing tough competition from Android devices, especially from regional and Chinese manufacturers which are more aggressive in terms of price points.'

For Apple, while sales continued to grow, the company faced a significant drop in the average selling price (ASP) of its smartphones. Despite the iPhone 5 being the most popular model, its ASP declined to the lowest figure registered by Apple since the iPhone's launch in 2007. The ASP reduction is due to strong sales of the iPhone 4, which is sold at a strongly discounted price.

'While Apple's ASP demonstrates the need for a new flagship model, it is risky for Apple to introduce a new lower-priced model too,' commented Gupta. 'Although the possible new lower priced device may be priced similarly to the iPhone 4 at $300 to $400, the potential for cannibalization will be much greater than what is seen today with the iPhone 4. Despite being seen as the less expensive sibling of the flagship product, it would represent a new device with the hype of the marketing associated with it.'

Lenovo's mobile phone sales grew 60.6% to reach 11 million units in the second quarter of 2013. Lenovo's quarter performance was bolstered by smartphone sales. Its smartphone sales grew 144% year on year and helped it rise to the number four spot in the worldwide smartphone market for the first time. Lenovo continues to rely heavily on its home market in China, which represents more than 95% of its sales. It remains challenging for Lenovo to expand outside China as it has to strengthen its direct channel as well as its relationships with communications service providers.

'With second quarter of 2013 sales broadly on track, we see little need to adjust our expectations for worldwide mobile phone sales forecast to total 1.82 billion units this year. Flagship devices brought to market in time for the holidays, and the continued price reduction of smartphones will drive consumer adoption in the second half of the year,' concluded Gupta.

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