Samsung has dislodged Nokia to grab the tot slot in global cellphone business for the first time in 14 years, according to research firm IHS iSuppli. 
 
The latest report by HIS indicates that Samsung is expected to account for 29 percent of worldwide cellphone shipments, up from 24 percent in 2011. Nokia’s share this year will drop to 24 percent, down from 30 percent last year.
 
A dislodged Nokia will cause Samsung to rise to first place for the full year of 2012, up from the second rank in 2011, the first time the South Korean electronics titan will occupy the top on a yearly basis. Nokia will fall to the runner-up spot, the first time since 1998 it won’t be in peak position for overall cellphone shipments during a full calendar year.
 
“The competitive reality of the cellphone market in 2012 was ‘live by the smartphone; die by the smartphone,” said Wayne Lam, senior analyst for wireless communications at IHS. “Smartphones represent the fastest-growing segment of the cellphone market and will account for nearly half of all wireless handset shipments for all of 2012. Samsung’s successes and Nokia’s struggles in the cellphone market this year were determined entirely by the two companies’ divergent fortunes in the smartphone sector.”
 
Global smartphone shipments are set to rise by 35.5 percent this year, while overall cellphone shipments will increase by approximately 1 percent. This rapid growth will propel 2012 smartphone penetration to 47 percent, up from 35 percent in 2011.
 
The report says that Samsung's success has been built on its “fast follower” strategy for design and manufacturing. The company produces dozens of new smartphone models every year that address all segments of the market, from the high end to the low end. Samsung monitors the big trends in smartphone design, user needs and unmet market opportunities, then creates products to fit those markets quickly and efficiently.
 
Meanwhile, Finnish-based Nokia is mired in transitioning its smartphone line to the Windows operating system, resulting in declining shipments for the company. Sales of the company’s older Symbian-based phones have plunged, while its new Microsoft Windows 7-based handsets haven’t been able to make up for the loss so far.
 
Samsung is expected to post the best performance among the Top 5 smartphone brands in 2012, with its share of global smartphone shipments rising 8 points to 28 percent, up from 20 percent in 2011. In contrast, Nokia will suffer the biggest decrease, with its share forecast to plunge by 11 points to 5 percent in 2012, down from 16 percent in 2011.
 
Samsung and Apple ended 2011 in a neck-and-neck battle for leadership in the smartphone market, with only 1 percentage point of market share separating them. However, entering the 2012 year, Samsung moved ahead decisively ahead of Apple with a wide range of Android smartphone offerings. Samsung made significant gains in both the high end as well as the low-cost market with its Galaxy line of smartphones. This diversified market approach has allowed Samsung to address a larger target audience for its phones than Apple’s limited premium iPhone line.
 
The Samsung and Apple duopoly represents the dominant force in the smartphone market, with the two companies accounting for 49 percent of shipments in 2012, up from 39 percent in 2011. While Nokia and Canada’s Research in Motion (RIM) also held double-digit shares of the market in 2011, Samsung and Apple remain the only two players that will each command a double-digit portion of the smartphone space in 2012.
 
Along with Nokia, two other entities, HTC of Taiwan, as well as RIM, struggled throughout 2012 in the smartphone market.
 
HTC is facing a tough battle against Samsung, an acknowledged technology powerhouse, in the Android smartphone market. Market share for HTC will shrink to 5 percent in 2012, down from 9 percent in 2011.
 
RIM, meanwhile, lacking a fresh new version of its operating system, has seen its market share slip as the company’s traditional enterprise consumers left the platform for both Apple’s iOS and Google’s Android. RIM’s share will fall to 5 percent in 2012, down from 11 percent in 2011.
 
With the growth momentum behind smartphones, IHS anticipates that the smartphone penetration rate in 2013 will elevate smartphones into the majority among all phone segments, at 56 percent. This event will mark a significant tipping point in the mobile handset market, as the smartphone takes a dominant position in the industry.