Nokia slips down smartphone rankings

Nokia attracted headlines last week as it dropped out of the top five list of smartphone makers for the first time since the category ranking was created in 2004 by IDC.

The Finnish company saw its market share drop to 3.5%, shipping 6.3 million smartphones compared to 56.3 million sold by Samsung in the third quarter - pushing it below RIM, ZTE and HTC. All this from a firm that led the smartphone category as recently as 2Q11.

While much of the focus was on Nokia's decline and Samsung's rise (doubling shipments in the quarter and adding 8.6 percentage points to its market share - now 31.3%), there was less attention on Apple, which is now third in total handset shipments.

iPhone shipments increased 57% year-on-year to 26.9 million units in 3Q - outpacing LG, whose sales dipped by 33% to 14 million units, and ZTE, which saw shipments decline 22% to 13.7 million units. That is quite a reversal for the Chinese firm, which saw handset shipments increase 32% to 18.5 million units in 3Q11 - propelling it into fourth place.

Overall handset sales in the quarter edged up just 2.4% to 445.5 million, according to IDC. Smartphone shipments meanwhile rose 45% to 179.7 million.

It's interesting to remember that Nokia a year ago was the top global handset producer, with a 24.5% market share (albeit down from 32% in 2010) and Samsung was number two with a 20% share. Now Samsung is on top with a 23.7% share and Nokia is second at 18.7%. What is most shocking, though, is that Nokia sold 23 million fewer handsets in the last quarter than a year ago (82.9 million compared to 106 million) while Samsung shipped 21% more (105.4 million).

Based on its performance over the past year, and unless Windows Phone works some amazing magic for Nokia, it looks like Samsung will be on top for sometime. But merely being a top handset marker doesn't have much weight in the market these days, given the thin margins on feature phones. With smartphones accounting for 53% of its handset sales, Samsung's margins are certainly second only to Apple.

For Nokia, smartphones now represent less than 8% of mobile phone shipments - ouch!