Garnter: Smartphone Shipments Up, Prices Down

This has been a banner year so far for the mobile device market, which saw sales skyrocket to 325.6 million units in the second quarter alone, says market research firm Gartner. That's a 13.8 percent increase over the same period one year ago, and it's largely thanks to the smartphone frenzy that's sweeping the globe. According to Gartner, smartphone sales accounted for 19 percent of all mobile devices, representing an impressive 50.5 percent increase over one year ago. That's a bitter-sweet number for smartphone makers to chew on, because even though sales are way up, profit margins are not.

"Although the mobile communication devices market showed double-digit growth this quarter, average selling prices (ASPs) were lower than expected and margins fell," said Carolina Milanesi, research vice president at Gartner. :We attribute the decline in ASPs to a stronger dollar, a depreciating euro, and intense competition that drove price adjustments and changes to the product mix."

Source: Gartner (August 2010)

Adding to the challenge (for manufacturers) was a shortage of components, especially active matrix organix LED (AMOLED) displays, which Gartner says threw a wrench into the sales plans associated with some of the most popular smartphones.

One company who is probably more than content to let the chips fall where they may is HTC, which doubled its smartphone market share from 2009 and, for the first time, broke into the top 10 worldwide rankings at No. 8. This was due to both agressive marketing of new devices, and the strength of Google's Android platform, even in the face of an emerging tablet market, Gartner says.

"Crucially, as we predicted, the sudden growth in media tablets, such as the Apple iPad, did not appear to hold back smartphone sales. We believe that most tablet users still feel the need for a truly pocketable, yet highly capable, device for those situations when it's inconvenient to carry a device with a larger form factor," said Ms. Milanesi.

Gartner now has Android claiming a larger smartphone OS market share than iOS at 17.2 percent versus 14.2 percent. Both trail Research In Motion (RIM) with 18.2 percent and Symbian at a commanding 41.2 percent.