Apple, Samsung Dominate Smartphone Market as Feature Phone Sales Fall Off a Cliff

Waning demand for feature phones caused worldwide mobile handset sales to decline for the first time in three years, according to the latest data released by Gartner. Mobile phone sales totaled 1.75 billion units in 2012, down 1.7 percent from 2011, though smartphone sales picked up the slack with a record 207.7 million units sold in the fourth quarter of 2012, up 38.3 percent year-over-year.

Gartner said the last time the mobile phone market constricted was in 2009. The research firm blamed the recent downturn on tough economic conditions, shifting consumer preferences (from feature phones to smartphones), and intense market competition.

Feature phone sales totaled 264.4 million units in Q4 2012, down 19.3 percent year-on-year. Gartner predicts sales of feature phones will continue to fall throughout 2013, while smartphone sales are expected to be close to 1 billion units, pushing all mobile phone sales to 1.9 billion units.

Samsung Galaxy S III

As the market shifts to smartphone sales, Apple and Samsung continue to be the primary beneficiaries. The two frenemies raised their combined worldwide smartphone market share to 52 percent in Q4 2012, up from 46.4 percent in the third quarter of 2012. Samsung performed especially well and sold 64.5 million smartphones in Q4, up 85.3 percent from one year prior.

Apple, meanwhile, sold 43.5 million iPhones in the fourth quarter of 2012, up 22.6 percent year-on-year. For the entire year, Apple's iPhone sales totaled 130 million units.