Nokia slides as Samsung and Apple take more than half the mobile market

samsung galaxy note 2

1.75-billion. That’s how many new mobile phones landed up in the hands of people worldwide last year. But if you aren’t Samsung or Apple, you’re pretty much scrapping for leftovers.

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If you’re wondering so much attention was given to the two companies’ legal battles last year, the fact that they’ve completely dominated the mobile market for some time now should give you a hint.

The pie they’re fighting over is a pretty big one too. Recent estimates from IDC suggest that mobile device sales were worth US$170-billion in the fourth quarter of 2012 alone.

Of the two, Samsung is becoming increasingly dominant. It rounded off the year by securing the number one spot in both smartphone sales and overall mobile phone sales, according to the latest report from research firm Gartner. The South Korean manufacturer’s smartphone sales grew by a massive 85% year on year.

Second place in the manufacturer’s race went to Apple, with the two companies securing a combined 52% of worldwide cellphone marketshare in the last three months of 2012. Yep, more than half of the newest phones globally are either iPhones or carrying a Samsung logo.

But it was the Chinese manufacturer whose name no one can pronounce that had a particularly good quarter. Huawei devices were the third most popular at the end of last year, with 27.2-million smartphones sold, up 73% from 2011.

“There is no manufacturer that can firmly lay claim to the number three spot in global smartphone sales,” said principal research analyst Anshul Gupta. “The success of Apple and Samsung is based on the strength of their brands as much as their actual products. Their direct competitors, including those with comparable products, struggle to achieve the same brand appreciation among consumers, who, in a tough economic environment, go for cheaper products over brand.”

It’s not surprising, then, that Samsung and Apple devices were among the most popular mobile phones last year, beating out up-and-comers like ZTE and Huawei as well as industry regulars HTC and BlackBerry. Nokia’s decline continued: even strong sales of its popular budget Asha series and a few million Lumias couldn’t prevent it from securing its lowest chunk of the global market to date: just 18% of phones sold in Q4 were Nokias, while it secured third place in the year’s total sales rankings for a category it once dominated.

The report also confirms that feature phones are slowly on their way down (and out). In the fourth quarter of 2012, there were more feature phones sold than smartphones — 264.4-million units against 207.7 million smartphones — but feature phone sales were down 19% year on year, while smartphones sales were up 38%.

When it comes to operating systems, Android is still (predictably) winning the world, driven largely by the popularity of Samsung’s Galaxy devices. “With Samsung commanding over 42.5% of the Android market globally, and the next vendor at just 6 percent share, the Android brand is being overshadowed by Samsung’s brand with the Galaxy name nearly a synonym for Android phones in consumers’ mind share,” said Gupta.

As Android grew, newly renamed RIM/BlackBerry continued to struggle, as its operating system marketshare dropped 44% from the end of 2011 to the end of 2012. But Microsoft’s Windows Phone is climbing: sure, its share only grew 1.2%, but its smartphone sales increased by 124% year-on-year.

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