Nokia retains lead in smartphone market

In the second quarter of 2008, smartphones enjoyed near-record shipment levels in EMEA, but analysts warn tougher times may lie ahead

Despite the credit crunch, smartphones enjoyed near-record levels of shipments in Europe, the Middle East and Africa in the second quarter of this year.

A report from analyst Canalys claims 12.6 million smartphones shipped in EMEA in the second quarter — the second-biggest quarter on record for the high-end mobile devices, and up 28 percent on the same period a year ago.

However, while demand remains strong, the growth rate was the lowest figure seen for 18 months, the report states, and a significant drop from the first quarter of the year, when growth stood at 44 percent, 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 predicted that 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 smartphones, with more than a third (38 percent) of the phones shipping in Emea in the second quarter packing the location technology; while more than half (58 percent) have integrated Wi-Fi. Touchscreens are still relatively rare, with less than a fifth (13 percent) of smartphones sporting such user interfaces.

Nokia retained 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 called steady progress towards the one-million-shipments-per-quarter mark in Emea; Canalys 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 smartphone users, according to Canalys. Gartner testers recently reported the iPhone 3G "seldom" yielded a full day of use, even when used only for email and limited browsing, not voice calls.

Senior Canalys 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," added Cunningham.

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