The latest report by Gartner, the technology research company, shows that demand for smartphones such as the iPhone and BlackBerry will make up 70 per cent of the market by 2012, while sales of 'mid-tier' mobile phones will continue to decline.
Despite the recession, smartphones sold well as consumers who would usually have purchased standard midrange devices moved up the range to get more features for their money.
Carolina Milanesi, research director at Gartner, said devices with touchscreens and qwerty keyboards were a main driver is smartphone sales growth, while midtier and low-end devices, where margins are already slim, suffered.
Worldwide mobile phone sales totalled 286.1 million units in the second quarter of 2009, a 6.1 per cent decrease from the second quarter of 2008.
Milanesi said: "Given the higher margins, smartphones offer the biggest opportunity for manufacturers. It is the fastest-growing market segment and the most resistant to declining average selling prices."
Apple's expansion into a larger number of countries in the past year has produced a clear effect on sales volumes, as have the recent price adjustments on the 8GB 3G iPhone.
Sales of 5.4 million units in the second quarter of 2009 indicated a 509 per cent growth in shipments and helped Apple maintain the No. 3 position in the smartphone market, where it has stayed since the third quarter of 2008.
Nokia, currently the market leader, was able to maintain its position, despite its portfolio being "heavily skewed toward low-end devices."
Its flagship high-end N97 smartphone was met little enthusiasm at its launch in the second quarter of 2009 and has sold just 500,000 units in the channel since it started to ship in June, compared to Apple's iPhone 3G S, which sold 1 million units in its first weekend.
Samsung and LG both had a very strong second quarter of 2009 with sales of 55 million units and 30.5 million units, respectively.
Sony Ericsson's market share dropped 2.8 percentage points year-on-year in the second quarter of 2009 but its volume dropped 41 per cent, attributed to its "uncompetitive range of handsets".
This quarter also saw the debut of the long-awaited Palm Pre based on the new web operating system, which attracted a lot of media attention but showed mixed results at the cash register as sales only reached 205,000 units.
Milanesi said: "For the remainder of 2009, manufacturers must offer products with the features that consumers and operators are demanding most strongly - like touchscreens, focus on user interfaces and application/content ecosystems - and work hard to keep operators loyal.
Gartner expects competition to intensify in the second half of 2009 as operators are likely to drive competition among manufacturers as they start selling e-book readers and mini-notebooks from other manufacturers to foster mobile broadband subscriptions.
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