Apple impresses as smartphone sales grow

The success of the iPhone continues as other devices struggle to gain market share

The iPhone continued to shine as the sales of smartphones to end users grew by 27 percent during the second quarter compared to the same period last year, according to Gartner.

A total of about 41 million smartphones were sold. The increase in sales can be explained by the combination of more choice for consumers and lower prices, said Carolina Milanesi, research director at Gartner.

Sales of the iPhone continue to impress. Apple sold 5.4 million units during the second quarter. But some other devices are having a hard time capturing the same level of interest among consumers.

The launch of the Nokia N97 in June was met with little enthusiasm, and sales of the Palm Pre reached just 205,000 units despite it getting lots of media attention, according to Gartner.

The difference in sales underscores the continued attraction that the iPhone has to consumers, who are willing to pay a relatively high price for the device and sign expensive contracts, according to Milanesi.

The bottom line is that the other vendors still can't come up with a device that can compete with Apple's brand prestige, the iPhone's usability and large applications store, she said.

Nokia is still the biggest smartphone vendor, followed by Research In Motion, Apple and HTC. Palm is ranked at number 10.

Nokia's market share now stands at 45 percent, which is a drop compared to the same period last year but better than the 41.2 percent it commanded during the first quarter. It continues to have problems with its high-end devices, which the lukewarm reception of the N97 shows. But the company does its best to make up for that with lower-priced products like the 5800 XpressMusic, which has been a big success.

RIM's second-quarter market share was 18.7 percent. That is an improvement over the same period last year, but a small drop compared to the first three months of 2009.

Apple and HTC grew their respective market shares -- now at 13.3 and 6 percent -- during the second quarter compared to both last year and the first quarter of the year.

On the platform side, the problems continue for Microsoft. The gap between the iPhone OS and Windows Mobile in third and fourth spot is widening compared to the first quarter, Milanesi said.

Windows Mobile 6.5 is right around the corner, but that upgrade won't save Microsoft, according to Milanesi. It isn't enough of an improvement in the operating system to capture consumer interest.

"The usability issues are still there," Milanesi said. "The only hope it has is that HTC and Samsung continue to develop their own user interfaces."

A platform that is getting a lot of attention these days is Google's Android. Between 700,000 and 800,000 Android units were sold during the second quarter. That translates into a market share of about 2 percent, which isn't much. But it has a rosy future, and it will probably become the second largest platform in a couple of years, Milanesi said.

Overall sales of mobile phones dropped by 6.1 per cent and ended up at about 286 million, which was better than expected.

"The market is starting to stabilize a little bit...and we started seeing the channel prepare for the second half of the year," Milanesi said.

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