HTC Cracks Top 10 Mobile Phone Makers

HTC rode the popularity of its Android phones into the list of the world's top 10 phone makers in the second quarter, as the market as a whole sold more mobile phones by cutting prices, a research firm says.

HTC's debut in the top 10 was driven by a 139.1% increase in shipments from the same period a year ago, Gartner said in a quarterly report released Thursday. Also helping HTC to the number eight slot was a more aggressive branding strategy.

One of HTC's biggest successes with phones built around Google's operating system was the Droid Incredible, which Verizon Wireless started selling at the end of April. Many retailers sold out within a day, as people snatched what some industry observers said was Verizon's best smartphone to date.

Overall mobile-phone sales to end users in the quarter rose 13.8% from a year ago to 325.6 million units worldwide, Gartner said. Smartphone sales accounted for 19% of the of the total, an increase of 50.5%.

But despite the double-digit growth in the overall market, average selling prices were lower than expected and profit margins fell, Gartner said.

"We attribute the decline in ASPs to a stronger dollar, a depreciating euro, and intense competition that drove price adjustments and changes to the product mix," Gartner analyst Carolina Milanesi said in a statement.

Companies that used lower prices to grab market share were LG and Samsung. But this approach proved risky for LG, which saw a 27.8% decline in average selling price in the quarter.

As Gartner expected, the introduction of the Apple iPad, a tablet-style computer that some industry observers said could hurt smartphone sales, had no impact on the mobile phone market.

"We believe that most tablet users still feel the need for a truly pocketable, yet highly capable, device for those situations when it's inconvenient to carry a device with a larger form factor," Milanesi said.

Nokia remained the number one mobile phone vendor, shipping 111.5 million units for a 34.2% share. However, Nokia's share of the high-end of the market, which includes smartphones, fell 2.6% year over year.

Samsung continued in the number two slot by selling 65.3 million phones for a 20.1% market share, compared to 19.3% a year ago. During the quarter, Samsung's sales in developing markets were strong, as the vendor shifted its product mix to sell more low-cost phones in the regions. At the same time, Samsung launched several new devices in the middle tier of the market.

Samsung's is pursuing a strategy of reaching all market segments by keeping its platform options open. As a result, the company is expected to be one of the first manufacturers to bring devices based on Microsoft's Windows Phone 7 to market, when the OS is released in the fourth quarter, Gartner said.

Research In Motion sold 11.2 million units to increase its share to 3.4% from 2.7% a year ago. New RIM phones running the BlackBerry OS 6.0 are expected in the third quarter. Those phones include the Torch, which is the company's first phone with a touch screen and QWERTY slide-out.

However, Gartner believes the device will appeal more to RIM's business customers, its largest market, than consumers, and will likely keep customers from defecting, as opposed to attracting new customers.

Finally, Apple's mobile phone sales reached 8.7 million units in quarter for a 2.7% share of the overall market, but a 14.2% share of the smartphone market, Gartner said. The company's maintained its number seven position in the overall market and held the number three slot in the smartphone market.

Apple's sales would have been higher, but the vendor was forced to tighten inventory management in preparation for the launch of the iPhone 4 at the end of the quarter. With a wider global rollout of the iPhone 4 on schedule, Gartner believes Apple will sustain its "sales momentum" throughout the second half of the year.

In the smartphone operating system market, Android phones overtook Apple's iPhone OS to become the third most popular OS in the world, Gartner said. In the United States, Android also overtook RIM's BlackBerry OS to become the number one smartphone OS in the region.

The NPD Group, which tracks smartphone sales to consumers, also reported this month that Android toppled RIM's OS from the top slot.

"A non-exclusive strategy that produces products selling across many communication service providers, and the backing of so many device manufacturers, which are bringing more attractive devices to market at several different price points, were among the factors that yielded its growth this quarter," Milanesi said.

The top four smartphone OSes, including Symbian, the BlackBerry OS, Android and Apple's iOS, respectively, accounted for 91% of the global smartphone OS market, up 6% from a year ago, Gartner said.

Further Reading:

-- HTC's Droid Incredible Flies Off Verizon Shelves

-- Android Takes Lead In U.S. Smartphone Market