Nokia retains smart phone crown

And is Apple biting at RIM's heels?

The high street may be suffering with the credit crunch but smart phones are marching on - at least for now - showing near-record levels of shipments in Europe, the Middle East and Africa (Emea) in the second quarter of this year.

A report from analyst Canalys shows 12.6 million smart phones shipped in Emea in Q2 - the second biggest quarter on record for the high end mobile devices and up 28 per cent on the same period a year ago.

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However, while demand remains strong, this growth rate was the lowest figure seen for 18 months, the report said, and a significant drop from the first quarter of the year, when growth stood at 44 per cent - suggesting tougher times are ahead for high end phones.

As economic gloom continues the analyst said operators are likely to become even more unwilling to heavily subsidise high-end devices without adequate proof of return, and it predicts contract lengths and the time between upgrades will increase - which in turn is likely to impact on device shipments.

The report shows GPS is well established in smart phones, with more than a third (38 per cent) of the phones shipping in Emea in Q2 packing the location tech; while more than half (58 per cent) have integrated wi-fi. Touchscreens are still relatively rare, with less than a fifth (13 per cent) of smart phones sporting the touchy-feely user interfaces.

Nokia keeps its market lead by some margin but other vendors in the top five posted much higher than average year-on-year growth, with second-placed BlackBerry-maker RIM closing the market share gap by several points, and HTC, Motorola and Samsung more than doubling their shipments.

But HTC and RIM have reason to look over their shoulder - despite making what the analyst calls steady progress towards the one million shipments per quarter mark in Emea - as it said it is possible they will be overtaken by Apple in the third quarter following the iPhone 3G launch.

There may be trouble ahead for Apple, however, as battery life is a big concern for smart phone users, according to Canalys. Gartner testers recently report the iPhone 3G "seldom" yielded a full day of use - even when used only for email and limited browsing, not voice calls.

Senior analyst Pete Cunningham said in a statement: "People are… wary of draining their battery and not being able to make calls. Battery life isn't helped by having GPS and wi-fi turned on, nor by having a large, bright screen for navigation or web browsing.

"But there is clear demand for those features and applications, and advances in battery technology would enable quite substantial changes in usage patterns, with all the service revenue benefits that would bring."

Concern over usage costs also looms large for smart phone consumers, said Cunningham, though he added the wider availability of flat rate data plans will help.