Mobile-phone Competition Heats up as Sales Slow

The faltering economy produced dismal mobile-phone sales at the end of last year, leading to heightened competition among phone makers, according to a few recent analyst reports.

Mobile-phone sales reached 314.7 million units in the fourth quarter, down 4.6 percent from the same quarter a year earlier, Gartner said on Monday. The phone market did expand for the full year, however, growing 6 percent compared to 2007.

Despite the reluctance of end-users to buy new phones, when they do make a purchase they are more frequently opting for a smartphone, said In-Stat. Researchers there predict that by 2013, smartphones will double their share of all cell phones worldwide to about 20 percent.

Gartner found that North America has already reached that level. New products like Research In Motion's Storm and the Android G1 helped smartphone sales account for roughly 20 percent of sales in the region, Gartner said.

People are drawn to smartphones because of the ability to download new applications, In-Stat said.

The slower growth is creating an opportunity for new entrants in the smartphone market. In-Stat believes that smartphones with the Linux operating system will see the most growth, though they will be second-best in volume behind Symbian. That means Linux will outpace Windows Mobile, RIM and the iPhone, In-Stat said.

Even though Symbian is expected to remain in the top position among software platforms, Nokia, the number-one phone maker in the world and a Symbian user, continues to struggle to hang onto its market share. Nokia's delay in introducing touch-screen products led to poor smartphone sales, Gartner said. Unit sales for Nokia were down in the fourth quarter, giving it a 38 percent market share, compared to 40 percent in the same period a year earlier.

Samsung, which quickly rolled out touch-screen devices, fared better. In the fourth quarter, it boosted its market share to 18 percent, up from 13 percent in the corresponding period in 2007.

LG also did well, moving into third place, while struggling Sony Ericsson and Motorola both slipped in their rankings, according to Gartner.

The iPhone didn't sell enough phones to make it into Gartner's top five and so is included with other phone makers in a category that comprises 20 percent of the market.

Yet iPhone users continue to generate the most mobile Web usage. New research from Net Applications found that iPhone users make up two-thirds of the mobile browsing market. Phones using Java ME to browse make up 9 percent of the market, followed by Windows Mobile users with 7 percent. Despite its relatively recent market entrance, Android users are responsible for 6.3 percent of mobile browsing, just beating Symbian phones, with their massive user base. Symbian phones generated 6.2 percent of the mobile browsing market, according to Net Applications.