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Gartner: Apple Tops Microsoft in Q3

Apple Inc. (Nasdaq: AAPL) toppled Microsoft Corp. (Nasdaq: MSFT) in the third quarter from the No. 3 spot in the smartphone operating system market, as the success of the iPhone 3G propelled the Mac OS X passed Windows Mobile for the first time worldwide and in the United States, a market research firm said Thursday.

While the latest smartphone market numbers from Gartner had good news for Apple, the industry as a whole didn't do so well, recording its weakest year-on-year growth rate since Gartner began tracking the industry. Sales in the quarter rose by 11.5% from the same period last year to 36.5 million units.

Apple, however, saw iPhone sales soar more than 320% to 4.7 million units, making the company the third biggest seller of smartphones and smartphone operating systems. Sales of Microsoft Windows Mobile, on the other hand, fell 3% to 4.1 million units. Gartner expects fourth-place Microsoft to feel even more competitive pressure in the future not just from Apple, but from open source initiatives like Android and Symbian Foundation, which are expected to challenge Windows Mobile's licensing model. In addition, the user interface on the Microsoft OS is falling behind competitors' UIs, particularly in the consumer market, Gartner said.

Symbian Ltd. , which is used by the leading smartphone maker, Nokia Corp. (NYSE: NOK), tops the market of smartphone operating systems, followed by BlackBerry 's BlackBerry OS. Rounding out the top six were Linux, which came in at No. 5 with a 7.2% share, followed by Palm OS, 2.1%.

Among vendors, Nokia remained No. 1, with a 42.4% market share. However, sales fell 3% year over year, marking the first time Nokia had recorded a drop. "Nokia is feeling the pressure from increased competition in the consumer smartphone market," Gartner analyst Roberta Cozza said in a statement.

Nokia's lackluster performance stems from the company's lack of a touch-screen device in its smartphone portfolio, a feature in high demand among consumers, Gartner said. Nokia is expected to fill the gap with the N97, but the smartphone isn't expected until the first half of next year.

Meanwhile, second-place RIM saw BlackBerry sales rise 81.7%, as the company continued to expand its presence in the consumer market with new models, such as the BlackBerry Bold. In the fourth quarter, RIM is expected to receive a boost with its latest consumer model, the BlackBerry Storm, Gartner said.

Apple regained its No. 3 position in the third quarter with a 12.9% share. Besides the success of the iPhone 3G, Apple also benefited from making the device available in more geographies and lowering pricing, Gartner said. Rounding out the top five vendors were HTC, which had a 4.5% share, and Sharp, 3.4%.

Next year, applications available for the various smartphones will become increasingly important in boosting sales. Apple has had particular success in this arena with the App Store for the iPhone.

"In 2009, application portfolios will become one of the key strategic considerations for smartphone market players and, if successful, they deliver an alternative revenue stream and will improve consumer stickiness," Cozza said.

Nevertheless, the current economic slowdown is expected to dampen smartphone sales, particularly since monthly data-plan rates offered by wireless carriers remain too expensive for the mainstream user, Gartner said.

"The current economic climate is negatively impacting sales of higher-end devices," Cozza said. "Going forward, we should expect the smartphone device market to continue to grow but at a slower pace."

— Antone Gonsalves, InformationWeek

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