The global mobile phone sales fell 1.7 per cent to 1.75 billion units, while smartphones continued to drive overall mobile phone sales in 2012.
The fourth quarter of 2012 saw record smartphone sales of 207.7 million units, up 38.3 per cent from the same period last year, according to study by research and advisory firm Gartner.
''The last time the worldwide mobile phone market declined was in 2009. Tough economic conditions, shifting consumer preferences and intense market competition weakened the worldwide mobile phone market this year,'' said Anshul Gupta, principal research analyst at Gartner.
Demand for feature phones remained weak in 2012 and also in the fourth quarter. Feature phone sales totalled 264.4 million units in the fourth quarter of 2012, down 19.3 per cent year-on-year. Gartner analysts expect feature phones sales to continue to fall in 2013.
Gartner predicts that sales of worldwide smartphone sales to end users will be close to 1 billion units in 2013, and overall mobile phone sales to end users are estimated to reach 1.9 billion units.
In the fourth quarter of 2012, Apple and Samsung together raised their worldwide smartphone market share to 52 per cent from 46.4 per cent in the third quarter of 2012. Samsung ended the year in the number one position, in both worldwide smartphone sales and overall mobile phone sales.
''There is no manufacturer that can firmly lay claim to the number three spot in global smartphone sales. 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,'' Gupta added.
Huawei had a good fourth quarter, which helped it reach the third position among smartphone vendors for the first time.
In 2012, Huawei sold 27.2 million smartphones to end users, up 73.8 per cent from 2011. Both, the Ascend D2 and Mate announced at this year's Computer Electronics Show (CES) aim to grow the company's brand perception as a premium product and increase its mobile phone margins.
Gartner analysts said international markets are key for Huawei's growth in 2013, as well as being able to improve its product mix to a higher tier.
In the fourth quarter of 2012, Samsung's overall smartphone sales continued to accelerate totalling 64.5 million units, up 85.3 per cent from the fourth quarter of 2011. In 2012, Samsung totalled 384.6 million mobile phones sales, of which 53.5 per cent (up from 28 percent in 2011) were smartphone sales.
Samsung's resources and ability to build a broad market reach is an advantage that no other competitor can easily match. However, the competition will intensify in 2013 as players such as Sony and Nokia improve.
''With Samsung commanding over 42.5 per cent of the Android market globally, and the next vendor at just 6 per cent 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,'' Gupta said.
Apple's sales reached 43.5 million units in the fourth quarter of 2012, up 22.6 per cent year-on-year. In 2012, Apple totalled 130 million smartphone sales worldwide. While the demand for iPhones in the fourth quarter remained strong, consumers' demand favoured the less expensive iPhone 4 and 4S models. The arrival of the iPad Mini also created a dilemma for some users when deciding if to upgrade an iPhone 4 or iPhone 4S to an iPhone 5, or buy the new tablet.
In the fourth quarter of 2012, Nokia's handset sales improved from a good response to its Asha mobile phones and the launch of the latest Lumia Windows Phone 8 models. It was not sufficient to stop Nokia to lose further market share, totalling 18 per cent, the lowest it has ever been.
In 2012, Nokia reached 39.3 million smartphone sales worldwide, down 53.6 per cent from 2011.
Analysts said that aside from the continued focus on Lumia, Nokia needs to build on the momentum around Asha in 2013 by adding devices and apps to further enhance its overall value proposition and, in doing so, moving up the price point slightly to achieve better margins breaching the gap left by Symbian.
In the smartphone operating system (OS) market, Android captured more than 50 per cent of the OS market, widening the gap with Apple's iOS.
While Android grew 87.8 per cent in the fourth quarter of 2012, RIM declined 44.4 per cent in the same period. Microsoft had a better fourth quarter, with its share growing 1.2 percentage points, and its smartphone sales increasing 124.2 per cent year-on-year.
''2013 will be the year of the rise of the third ecosystem as the battle between the new BlackBerry10 and Widows Phone intensifies,'' said Gupta.
''As carriers and vendors feel the pressure of the strong Android's growth, alternative operating systems such as Tizen, Firefox, Ubuntu and Jolla will try and carve out an opportunity by positioning themselves as profitable alternatives,'' Gupta added.
Table 1: Worldwide Mobile Phone Sales to End Users by Vendor in 4Q12 (Thousands of Units)
Source: Gartner (February 2013)
Table 2: Worldwide Mobile Phone Sales to End Users by Vendor in 2012 (Thousands of Units)
Source: Gartner (February 2013)