Is the golden age of smartphone profits coming to an end?

Even as smartphone sales close on one billion declining profits could force the big players to shift focus to wearables.

According to the latest numbers from the mobile phone analyst Juniper Research, 980m smartphones were sold in 2013 which was a 39 percent year-on-year growth. These figures were helped by a particularly strong fourth quarter which saw sales reach 280m.

These figures were more conservative than those issued by IDC which said that sales for the whole of 2013 went over the magic 1 billion units for the first time. 

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Samsung is seen as the biggest winner here, having shipped some 300m units in 2013 — almost a third of the market at 30 percent. Juniper noted that Samsung's sales represented 40 percent year-on-year growth compared to 2012.

But what was perhaps more remarkable for Samsung was that it had record figures despite the fact that its sales dropped to 81m in the fourth quarter.

Apple was one of the stars in the market as it posted a record quarter of 51 million iPhone sales, which was 51 percent growth quarter-on-quarter.

Nokia was another smartphone suppler to take a hit as its handset sales dropped by nearly 30 percent in the fourth quarter with sales of the Lumia range falling to 8.2 million in the fourth quarter, compared to 8.8 million in Q3 2013. Around 30 million Lumia smartphones were sold throughout 2013, compared to 13 million in 2012, according to Juniper's figures.

The South Korean supplier LG was another big winner as it posted another record quarter with quarterly smartphone sale exceeding 13 million for the first time, representing an increase of over 50 percent compared to Q4 2012.

Commenting on the research, Nitin Bhas, senior analyst with Jupiter Research, said: "The future for smartphone shipments will, naturally, follow a bright trajectory globally, although shipments will begin to stall in the mature European and North American regions."

In the longer term, Bhas said he sees the market splitting across the world. "The shift in the smartphone market away from focusing on the high margin, mature North American and European markets to the far less saturated emerging markets, and a growing split between the mature and emerging markets, will become evident," he said.

Samsung is unsurprisingly likely to remain the smartphone leader in 2014, but the analyst warned that all smartphone vendors will be experiencing an enlarged market which will come at the cost of much lower margins compared to the current "golden age" of very high margins.

"This discomfort with the new markets may see these vendors shift their investments to newer, high-margin growth areas (Juniper feels wearables would be a likely candidate) which could potentially mean a decline in the share price and market capitalisation of the major vendors, a situation that is perhaps starting to occur with Apple and Samsung," Bhas said.

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