Mobile phone sales declined across the globe by 1.7 percent, according to Gartner.
The research firm's latest report suggests that difficult economic conditions, shifting consumer interest and intense market competition has resulted in a worldwide drop in sales, which has not declined since 2009.
Gartner said Wednesday that worldwide sales reached a total of 1.75 billion units in 2012, a 1.7 slump from 2011. In addition, fourth-quarter 2012 smartphone sales continued to drive overall sales, as Q4's 38.3 percent hike based on the same period last year reveal. Smartphone sales in Q4 2012 reached record levels of 207.7 million units.
However, in 2012 and in the fourth quarter, demand for feature phones remained weak. Overall sales in Q4 for feature phones totalled 264.4 million units, down 19.3 year year-on-year.
The research firm expects worldwide sales of smartphones to dominate the overall market in 2013 -- reaching close to one billion units -- whereas total mobile phone sales are predicted to reach 1.9 billion units this year. Feature phone sales are expected to continue to slide.
iPad and iPhone maker Apple and rival South Korean firm Samsung continued to dominate with a combined marketshare of 52 percent in Q4 2012, up from 46.4 percent, Gartner said. According to the research firm, Samsung secured the top spot in both worldwide smartphone sales and overall mobile phone sales.
Anshul Gupta, analyst at Gartner, said:
"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."
The former mobile phone market leader Nokia -- which is facing tough times with company restructuring and tightening its belt through employee lay-offs and abandoning real estate -- reached 39.3 million smartphone sales worldwide, down 53.6 percent from 2011. Even though Nokia had a good Q4 due to the Asha mobile phone range and the launch of Lumia Windows Phone 8 models, the firm still managed to lose market share. Nokia now lays claim to 18 percent of the market, which is the lowest it has ever been. Citing analysts, Gartner commented:
"Nokia needs to build on 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."
Huawei, however, had a successful Q4 in 2012, reaching the third position among smartphone manufacturers for the first time. In 2012, the Chinese firm managed to sell 27.2 million smartphones, up 73.8 percent from the previous year. In order to keep its rates of sales going, Gartner says that international markets are "key" for growth, "as well as being able to improve its product mix to a higher tier."