Smartphones (finally!) outsold feature phones last quarter

Worldwide smartphone sales to end users accounted for nearly 52 percent of mobile phone sales in the second quarter, surpassing feature phones sales for the first time as a result of growth in Asian countries like China, Gartner said.

Smartphone sales grew by 46.5 percent to reach 225 million units, while feature phones sales dropped by 21 percent year-on-year to 210 million, the research firm said Wednesday.

"There is one stand out reason for why smartphones surpassed feature phones in the second quarter and that was Asia Pacific where sales grew by 74 percent year-on-year, and within the region countries like China and India were driving the growth," said Anshul Gupta, principal research analyst at Gartner.

In these countries, low-cost smartphones rule. The average cost of a smartphone in China is about $120 without subsidies, while users in countries like India, Indonesia and the Philippines pay a little less, according to Gupta. Users pay closer to $100 or even a little less for their smartphones in these countries, he said.

Much of the future growth in the smartphone sector is expected to come from the low-end segment. For example, in India, only 15 percent of phones sold during the quarter were smartphones. Because of that fact, much of the innovation going forward is needed in the sub-$200 segment, Gupta said.

Samsung maintained the top position in the global smartphone market, as its share reached 31.7 percent, up from 29.7 percent in the second quarter last year. The company sold 71.4 million smartphones.

Apple was in second place and while the company increased sales to 31.9 million units, it couldn't keep up with the overall growth of the market and its share dropped from 18.8 percent to 14.2 percent year-on-year.

Much has been made of rumors that Apple will put out a new lower cost version of the iPhone along with a new high-end model next month.

"A cheaper iPhone device will impact the average sales price negatively. Then again it might help in terms of penetrating emerging markets, but I doubt it will do better than the iPhone 4 which is doing really well in most of these markets," Gupta said.

The popularity of the iPhone 4 has already resulted in Apple's average sales price dropping during the second quarter.

LG Electronics and Lenovo were the two big winners during second the quarter. LG held on to third place as its unit sales grew from 5.8 million to 11.5 million year-on-year, resulting in a 5.1 percent market share. Thanks to the expanding Chinese market, Lenovo's smartphone unit sales grew by 144 percent year-on-year to 10.7 million, a 4.7 percent share, and the fourth spot worldwide. China represents more than 95 percent of Lenovo's sales.

The top five was rounded out by ZTE whose year-on-year growth was a little more modest, from 6.3 million to 9.7 million and a 4.3 percent share.

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