Smartphone sales continued to surge in the second quarter, with worldwide unit shipments growing 27 percent to 40.9 million units in comparison to the year-earlier period, according to Gartner. The robust sales contrasted sharply with the global cell-phone market overall, which fell 6.1 percent year over year to 286.1 million units.
Cellular handsets with touchscreens and QWERTY keyboards were the main drivers of replacement sales in the quarter, but a continuing decline in average selling prices (ASPs) particularly affected manufacturers that focus on mid-tier and low-end devices where margins are already slim, noted Gartner Research Director Carolina Milanesi.
“Given the higher margins, smartphones offer the biggest opportunity for manufacturers,” Milanesi said. “It is the fastest-growing market segment and the most resistant to declining ASPs.”
Uneasy Lies The Crown
Though Nokia continued to lead the cell-phone market in the second quarter, its portfolio remained heavily skewed toward low-end devices. Nokia’s flagship N97 smartphone “has sold just 500,000 units in the channel since it started to ship in June,” Milanesi observed. By contrast, Apple shipped one million iPhone 3GS smartphones in its first weekend of availability, she said.
“The right high-end product and an increased focus on services and content are vital for Nokia if it wants to both revamp its brand and please investors with a more promising outlook in ASPs and margins,” Milanesi said.
Apple continued its expansion into a larger number of countries in the second quarter, which drove a 51 percent rise in iPhone sales to 5.4 million units. Moreover, the iPhone 3GS only reached the market at the end of June, which means “its full sales potential will only start to show in the second half of this year,” Milanesi said.
Apple executives noted last month that the company was having trouble keeping up with demand for the iPhone 3GS and was…