Interest for Nokia phones waning: market share plunged to 8%

Samsung dominates the smartphones market by taking 31% of the pie but Apple is fastly catching up.

Two years ago Samsung's market share was just 3%, but their wider range of handset models and expansion into the Android OS put them in the lead.

Fitch expects Samsung to maintain its number one position in terms of annual unit sales for at least the next two years, although Apple's sales volume on a quarterly basis could overtake Samsung during the particular quarters when it releases its updated iPhone models.

Here's more from Fitch:

Fitch Ratings expects Samsung Electronics to maintain its leading position in smartphone unit sales over the next two years. This view reflects an ability to continue to develop attractive new products in a variety of sizes and price points; technology leadership in key smartphone components; and broad acceptance of the Android operating system.

Fitch recently affirmed Samsung's rating at 'A+'/Stable, the highest among the agency's Asia-Pacific portfolio of rated technology companies. Fitch forecasts record revenue and EBIT again in 2012, driven by growth in the higher-margin smartphone business. The telecom segment's EBIT margin was 18.4% in Q112, significantly higher than 10.7% in Q111, boosting the overall EBIT margin to 12.9% from 8%.

Samsung's market share of smartphone unit sales has risen to a leading 31% from just 3% two years ago. In 2011, the company sold 96.7 million smartphones to Apple's 91.3 million, and 45 million in Q112 to Apple's 35.1 million. Apple's unit market share increased to 24% from 16%, but Nokia plunged to 8% from 38%.

Fitch expects Samsung to maintain its number one position in terms of annual unit sales for at least the next two years, although Apple's sales volume on a quarterly basis could overtake Samsung during the particular quarters when it releases its updated iPhone models.

Samsung has a wider range of handset models, enabling a more effective penetration of both developed and emerging markets. Samsung also continues to forge ahead as the undisputed leader for key smartphone components - including display, processor and memory chip technologies - reinforcing the likelihood that its future smartphone models will be equipped with cutting-edge technology. Ongoing expansion of the Android OS market share, which stood at 56% in Q112 versus 23% for Apple's iOS, suggests that the perceived gap in terms of user-preference between Apple's iOS and Android's OS has narrowed significantly.

Samsung's Galaxy Note model, with a larger screen size of 5.3 inches, sold 7 million units between December 2011 and May 2012, illustrating the benefits of a broad smartphone product mix. Samsung has been quick to capitalise on the growing preference among second-time smartphone buyers for a device that is still portable but offers a better user experience via a larger display, and hence the larger screen sizes for even its mainstream Galaxy models compared with the iPhone 4S.

Samsung has amassed a record 10 million pre-orders for its latest Galaxy S3 model, which was launched on a global basis in June 2012. Fitch forecasts that Samsung will sell around 400 million mobile handsets during 2012, of which 220 million will be smartphones. A higher proportion of smartphone sales with higher average selling prices will drive an overall improvement in Samsung's margins.