Gartner: iPhone Technology, Economic Slowdown Hurt Smartphone Sales

The popularity of touchscreen devices such as Apple’s (News - Alert) iPhone and a slower global economy led to a reduced rate for smartphone sales in the first half of 2008, according to the Egham, England-based European headquarters of a market research firm with U.S. offices in Stamford, Connecticut.

 

Officials at Gartner say that although 32.2 million smartphones were sold in the second quarter of 2008 – a 15.7 per cent increase from the year-ago quarter – sales increased at a slower rate than in the previous year.

 

“The current economic environment continues to negatively impact the market, limiting consumer spending and replacement purchases in general,” said Roberta Cozza, a principal analyst at Gartner (News - Alert). “In addition, smartphone sales slowed down as a result of new compelling touch technology mainly available on enhanced phones (based on proprietary operating systems) rather than smartphones.”

 

According to the study, Nokia (News - Alert) held the number one position with a 47.5 per cent market share in the second quarter of 2008, though its year-over-year growth was about half of the market average. The company is facing increased competition in the market, Gartner said.

 

Research In Motion saw a near-doubling of its market share, from 8.9 to 17.4 percent, while HTC also saw a sharp increase in market share, from 2.2 to 4.1 percent.

 

According to reports, Nokia needs more design variations among its N-series multimedia phones to stay ahead.

 

“The company has only tweaked its N-series lineup so far this year and many analysts expect it to lose more market share in smartphones in coming quarters,” according to Tamro Virki.

 

Credit Suisse said it expects Nokia’s smartphone market share to fall to 41.6 percent in 2009, hurting profit margins, Virki reports.

 

As demand for smartphones among casual users grows, TMCnet Contributing Editor Susan J. Campbell reports, companies such as RIM and Palm are seeing more pressure.

 

“The smartphone is appealing to more than just the business user, forcing a change in the marketing approach in order to dominate the market,” Campbell wrote in a recent article.

 

“According to John Moore in a CNBC.com special report, both Palm and RIM are prepared to do battle as Apple and High Tech Computer (News - Alert) focusing on consumer-friendly features and design,” Campbell writes.

 

According to Gartner, on a regional level, the North American market remained among the fastest-growing markets in the second quarter of 2008 with an increase of 78.7 per cent year over year.

 

“The region also accounted for almost 25 per cent of the global smartphone sales to end users,” Gartner reports. “Europe, the Middle East and Africa exhibited 21 per cent growth year over year; Western Europe drove much of the growth in the region with a 29.3 per cent increase. Finally, the markets of Asia/Pacific and Japan declined 4.8 per cent and 24 per cent, respectively.”