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Apple Now The World's #3 Smartphone Maker


Chicago (IL) - Apple has become the world’s third largest smartphone maker and the second largest in the U.S., according to a new market estimate released by Gartner earlier today. Despite doubts over the success of the iPhone so far, Apple has entered the top 3 and has its sight on Research in Motion (RIM) now. But taking on the Blackberry maker and especially Nokia will be a different ballgame.

Gartner believes that about 32.2 million smartphones were sold in the first quarter globally, up almost one third (29%) on a year-over-year basis. The smartphone product category accounts for 11% of the global mobile device market, about flat with what the segment accounted for last year. However, the U.S. smartphone market appears to have a dynamic of its own and showed a 106% growth, hitting unit sales of 7.3 million units in the first quarter.

Worldwide, Nokia dominated the segment in Q1 with 14.6 million units sold, which translates into a 45.2% market share. RIM was second with 4.3 million units (13.4%), followed by Apple with 1.7 million (5.3%). Compared to Q1 2007, Nokia was able to grow its unit sales by 25.3% and RIM by 107.3%.

"Despite economic concerns, the smartphone market continued to expand in the United States, driven by heavy advertising and strong marketing promotions as more devices reached mass market price points. North American operators are giving these devices strong support, as they provide higher average revenue per unit," said Gartner’s principal analyst for mobile devices Hugues De La Vergne.

Recent IDC research summarized by Reuters indicated that RIM’s BlackBerry has been increasing its US smartphone market share at the expense of iPhone and Motorola. IDC research puts RIM’s first quarter US smartphone market share at 44.5% (Gartner: 42%), a significant increase from 35.1% in the fourth quarter. At the same time, the iPhone dropped from 26.7% in the fourth quarter to 19.2% (Gartner: 20%) in the first quarter, well behind RIM but ahead of Palm, which took 13.4% of the market in Q1, up from 7.9% in Q4 2007.

IDC analyst Ramon Llamas said that RIM’s gains are a result of a strong consumer-focused campaign, including TV advertising, which pushed the handset’s appeal beyond business customers deep into the mainstream crowd. The iPhone’s market share gains in the fourth quarter were explained with the holiday shopping season. Slower than expected sales in Europe and building 3G iPhone rumors, which apparently led to customers delaying planned iPhone purchases until June are the factors believed to have contributed to the iPhone’s declining share in the first quarter. The gains and losses between Apple and iPhone are signs of a growing rivalry between the two companies, which should be interesting to watch over the next few months and years.

Although Apple is the third smartphone maker globally and the second in the US in terms of market share, the company has some catching to do if it wants to close the gap to the BlackBerry maker which holds over twice the iPhone’s U.S. market share. To crack RIM, Apple has to overcome several major obstacles. Most importantly, RIM and its BlackBerry is the de facto standard in corporate environments due to its security standards and reputation of reliability. Enterprises single out these two features as the most important for any device considered to be used as a business device. Enterprise-grade security and reliability additions are yet to come to the iPhone when iPhone 2.0 firmware update is released within this month.

RIM’s officials have dismissed the iPhone as a "multimedia machine" with serious security problems, calling BlackBerry a business tool for "power users."

"The iPhone and BlackBerry are two very different tools. An eleven-year-old could crack the iPhone’s security. Who wants that? Security is very important to our customers," RIM’s Mike Lazaridis recently said. The company’s president also noted that RIM customers have repeatedly said they cannot type as fast on the iPhone’s virtual touch-screen based keyboard as they can on BlackBerry’s physical keyboard. This fact, Lazaridis said, is "one big reason" why RIM’s handset is a better fit for business purposes.

Apple’s focus on the enterprise with its iPhone handset will be much clearer when the company releases the upcoming iPhone 2.0 firmware update - which we do expect to see next Monday as part of the Apple WWDC event.