Summary:

It was five years ago that Nokia (NYSE: NOK) executives brushed off the idea of Apple (NSDQ: AAPL) as “not a threat” to Nokia’s top position…

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It was five years ago that Nokia (NYSE: NOK) executives brushed off the idea of Apple (NSDQ: AAPL) as “not a threat” to Nokia’s top position in mobile sales. After all, Apple was only making smartphones and Nokia was still leading in that still-niche category, as well as mobiles overall. Fast forward to today, and the swift rise of Apple underscores (once more) how short-sighted that view really was.

According to Q4 figures out from IDC, Apple is now the third-largest handset maker in the world, jumping two places from its number-five position in Q3. The reason for the rise, note the analysts, was not so much because it’s now selling cheaper, older iPhones — it is — but because of strong sales of its newest (and therefore premium-priced) iPhone 4S handset.

But it’s not just Apple that is a smartphone force, of course. The other three in the top-five rankings also make feature phones, but they are all also part of the huge push that Google (NSDQ: GOOG) has made into smartphones via its Android platform. Having a feature phone and smartphone strategy is a double-threat to Nokia.

Apple’s rise still puts it at 8.7 market share — some 14 percent behind the Nokia and Samsung bracket — but it is an example of how a much the market has turned around in the last few years, that a handset maker can even be in spitting distance of the lead on the strength of a smartphone-only portfolio.

Apple saw astounding growth in Q4 and 2011 overall — 128 percent and 96 percent respectively. However, it will be worth watching whether that trend will continue in the quarters ahead amidst bigger economic factors:

IDC notes that the mobile phone market grew less in the last quarter than it has in the past two years, with vendors shipping 427.4 million units. “The mobile phone market exhibited unusually low growth last quarter, which shows it is not immune to weaker macroeconomic conditions worldwide,” writes analyst Ramon Llamas.

Ironically, that seemed to translate to a bigger-than-expected decline in cheaper feature phones than a slowdown in pricier smartphones. Despite that, IDC says that feature phone sales still accounted for the majority of handset sales in the last quarter.

Nokia — which actually saw sales of feature phones rise in the last quarter as it continued its decline in smartphones — seems catching only part of the wave that IDC describes. It is still holding on to the number-one slot, but given that its biggest driver right now is still feature phones, that leadership may well continue on its fast decline.

But if IDC’s forecast is a wave, then it is really Samsung that is the big Kahuna at the moment, with both strong feature phone and smartphone stories and reaching record levels of 90 million units overall for the quarter and more than 300 million for the year. IDC notes that fewer than 20 million units separated it from Nokia in the last quarter. Samsung earlier in 2011 already surpassed Nokia as the world’s biggest smartphone vendor, according to IDC figures.

Apple and Samsung are not the only ones benefiting from a strong smartphone offering in the top-five.

ZTE, which started to introduce smartphones into its portfolio last year and has huge ambitions in this space both on its own brand and partnering with carriers, took a big leap, the second-biggest after Apple for the year, in fact.

In contrast, LG (SEO: 066570), which has been somewhat rudderless in its smartphone strategy and equally less exciting in its feature phone offerings, saw very big declines, much bigger than Nokia’s: over 24 percent over the year compared to Nokia’s eight percent.

With ZTE just behind LG at the moment, it looks like those two might be swapping places in the quarters ahead if LG doesn’t manage to turn things around. So which should it concentrate on fixing first: smartphones or feature devices?

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