Smartphone sales overtook sales of basic models for the first time this quarter, with Samsung reatining the No.1 spot

Sales of smartphones exceed basic models

Smartphone sales have exceed the sale of basic models for the first time, according to new research.

Research by Gartner, found that smartphone sales to end users reached 225 million units, up 46.5 per cent from the second quarter of 2012, while sales of basic, or feature, models totalled just 210 million units and declined 21 per cent year-over-year.

Worldwide mobile phone sales totalled 435 million units in the second quarter of 2013, an increase of 3.6 per cent from the same period last year, with the Asia-Pacific, Latin America and Eastern Europe regions exhibiting the highest smartphone growth rates of 74.1 per cent, 55.7 per cent and 31.6 per cent respectively, as smartphone sales grew in all regions.

“Smartphones accounted for 51.8 per cent 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.

“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 1.82bn 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.”

Samsung maintained the No. 1 position in the global smartphone market, as its share of smartphone sales reached 31.7 per cent, up from 29.7 per cent in the second quarter of 2012, while Apple’s smartphone sales reached 32 million units in the second quarter of 2013, up 10.2 per cent from a year ago.

“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,” said Gupta.

In the smartphone operating system (OS) market Microsoft overtook BlackBerry for the first time, taking the No. 3 spot with 3.3 per cent market share in the second quarter of 2013, while Android continued to increase its lead garnering 79 per cent of the market in the second quarter.

“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,” said Gupta.

Nokia’s mobile phone sales totalled just 61 million units, down from 83 million units a year ago, but its Lumia sales grew 112.7 per cent 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,” said 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.”

And while Apple’s 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, 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,” said 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 per cent to reach 11 million units in the second quarter of 2013, while its smartphone sales grew 144 per cent year-over-year and helped it rise to the No. 4 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 per cent of its sale as it struggles to expand outside China due to weaker relationships with communications service providers.

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