Worldwide sales of mobile phones to end users dipped to 419 million units in the second quarter of 2012, a 2.3 percent decline from the second quarter of 2011, according to Gartner.
Smartphone sales accounted for 36.7 percent of total mobile phone sales and grew 42.7 percent in the second quarter of 2012.
Anshul Gupta, principal research analyst at Gartner, attributed the decline to the challenging economic environment and users postponing upgrades to take advantage of high-profile device launches and promotions available later in the year, such as the impending release of the next iPhone.
Demand of feature phones continued to decline, significantly weakening the overall mobile phone market, Gartner found.
Samsung and Apple took the top of the hill again. Samsung's second quarter mobile phone sales remained very strong, up 29.5 percent annually, and managed to extend its lead over both Apple and Nokia quarter on quarter. Gartner reports that Samsung’s growth was driven by record sales of Galaxy smartphones. Smartphones now account for 50.4 percent of all Samsung mobile devices, or 45.6 million units.
Demand for the new Samsung Galaxy S3 was particularly strong, exceeding Samsung's own expectations, with a reported 10 million units reached in the two months after its release. The Galaxy S3 was the best-selling Android product in the quarter and could have been higher but for product shortages.
Apple’s sales fell slightly, if predictably, as consumers wait for the next model to launch. iPhone sales fell 12.6 percent from the first quarter of 2012, but grew 47.4 percent year on year.
Depending on the exact launch date of the new iPhone, Apple might experience another weaker-than-usual third quarter of 2012, while Apple will be ready to take advantage of the strong holiday sales in North America and Western Europe that have historically remained immune to economic pressure.
"Samsung and Apple continued to dominate the smartphone market, together taking about half the market share, and widening the gap to other manufacturers. No other smartphone vendors had share close to 10 percent," Anshul said. "In the race to be top smartphone manufacturer in 2012, Samsung has consistently increased its lead over Apple, and its open OS market share increased to one-and-a-half times that of Apple in the second quarter of 2012."
In the smartphone OS market, Android extended its lead with an increase of 20.7 percentage points in market share in the second quarter of 2012. While Apple's iOS share grew 0.6 percent year over year, it declined 3.7 percentage points sequentially.
Gartner analysts said the arrival of the iPhone 5 should provide the greatest upgrade opportunity yet as the expected new design with a larger screen and likely other stylistic changes to the form factor will make a strong case for iPhone 4 users to upgrade.