Reports: Feature Phone Sales Decline, Apple Now Top Smartphone Vendor


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Sales of mobile devices aren’t growing as fast as market researcher IDC had predicted they would during 2011, but for a different reason than you might expect. Sales of feature phones are tumbling as the world rapidly switches to smartphones, sales of which were up 76 percent in the second quarter according to a separate report from Strategy Analytics.

The overall mobile phone market grew just 11.3 percent in the second quarter as feature phone sales declined 4 percent, the first decline in that category since the depths of the Great Recession in the third quarter of 2009 according to IDC. This is affecting the top players in the phone market very differently: Apple (NSDQ: AAPL) and Samsung are unconcerned, as sales of their more profitable smartphones continue to grow, while companies like Nokia (NYSE: NOK) and LG (SEO: 066570) are in trouble, caught with a much larger portion of their product mix in the feature phone category. This also doesn’t bode well for Motorola, which still relies on feature phones for 60 percent of the 11 million units it shipped last quarter.

“While this is not a new trend–smartphones have been the primary engine of growth for the last several quarters–it does mark something of a transition point, as demonstrated by the growing number and variety of smartphones featured in the vendors’ portfolios,” said Ramon Llamas, an IDC analyst, in its report.

Nokia is still the leader in the overall market, although it is sinking fast as Samsung nips at its heels with a still-large segment of feature-phone sales and a fast-growing segment of smartphone sales. However, Apple is now the fourth-largest phone vendor when measured on an overall basis without having a feature phone in its lineup.

And when it comes to just smartphones, Apple is now the world’s largest smartphone vendor on the strength of the 20 million iPhones it shipped last quarter, according to Strategy Analytics. Samsung is very close behind with 19.2 million units, and Nokia is still in third with 16.7 million units but heading in the wrong direction with a decline of almost 30 percent. Nokia’s first Windows Phone 7 handsets can’t come soon enough.

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