Canalys has released its full, fourth-quarter 2011 country-level smartphone shipment estimates to clients, so completing the picture for the year. One notable result was that total annual global shipments of smartphones exceeded those of client PCs (including pads) for the first time.

Vendors shipped 158.5 million smartphones in the fourth quarter of 2011, up 57% on the 101.2 million units shipped in the fourth quarter of 2010. This bumper quarter took total global shipments for the whole of 2011 to 488 million units, up 63% on the 299.7 million smartphones shipped throughout 2010. By comparison, the global client PC market grew 15% in 2011 to 414.6 million units, with 274% growth in pad shipments. Pads accounted for 15% of all client PC shipments in 2011.

" In 2011 we saw a fall in demand for netbooks, and slowing demand for notebooks and desktops as a direct result of rising interest in pads," said Chris Jones, Canalys VP and Principal Analyst. " But pads have had negligible impact on smartphone volumes and markets across the globe have seen persistent and substantial growth through 2011. Smartphone shipments overtaking those of client PCs should be seen as a significant milestone. In the space of a few years, smartphones have grown from being a niche product segment at the high-end of the mobile phone market to becoming a truly mass-market proposition. The greater availability of smartphones at lower price points has helped tremendously, but there has been a driving trend of increasing consumer appetite for Internet browsing, content consumption and engaging with apps and services on mobile devices."

However, Canalys expects to see smartphone market growth slow in 2012 as vendors exercise greater cost control and discipline, and put more focus on profitability. Notably, even vendors who have focused on conquering the low-end of the market with aggressive pricing, such as Huawei, ZTE and LG, are now placing greater attention on the higher tiers. Flagship models aimed at raising selling prices and improving margins will feature more heavily this year.

Apple's impressive end to the year resulted in it becoming the leading smartphone and client PC vendor in the fourth quarter of 2011, with shipments of 37 million iPhones, 15.4 million iPads and 5.2 million Macs. It also smashed the record for the most smartphones shipped globally by any single vendor in one quarter, beating Nokia's previous record of 28.3 million shipped in the fourth quarter of 2010. Moreover, Apple's performance meant that it displaced Nokia, for the first time, as the leading smartphone vendor by annual shipments. Apple shipped 93.1 million iPhones in 2011, representing growth of 96% over 2010. The iPhone 4S benefited from pent-up demand resulting from the launch coming in October rather than June, but Apple's overall volume was also buoyed by continued shipments of the now more aggressively priced iPhone 4 and 3GS models.

Samsung also finished 2011 with a flourish. It shipped 35.3 million smartphones in the fourth quarter of 2011 under its own brand, bringing its total to 91.9 million for the year, compared to just 24.9 million in 2010. This excludes shipments of rebranded products, such as the Nexus S and Galaxy Nexus, which Canalys counts under the Google brand. Samsung continued to spend big on marketing activities, and its strong product portfolio, particularly the Android-based Galaxy S II, performed well.

Despite a disappointing set of financial results, Nokia's smartphone performance in the fourth quarter gave cause for optimism. It shipped 19.6 million smartphones, down 31% from the record high of a year earlier, but up 17% on the third quarter of 2011. The total was helped by 1.2 million and 0.6 million shipments of its Windows Phone and MeeGo-based products respectively, as well as improved Symbian Belle volumes from competitively priced devices such as the Nokia 500, 700 and 701. Its total smart phone shipments for the year came in at 77.3 million globally.

" Its first Windows Phone products, the Lumia 800 and 710, along with the recently announced Lumia 900 through AT& T in the US, have improved the outlook for Nokia," said Canalys Senior Analyst, Tim Shepherd. " They are well-designed, competitive devices that demonstrate innovation is still alive within Nokia. But the battle is not over and it has huge challenges ahead. Nokia must continue to build out its Lumia portfolio with devices tailored to address all price points and all the markets in which it aims to compete. It must hasten its transition from Symbian to Windows Phone around the world and, with Microsoft, promote and generate excitement for the platform and new products. And it must succeed in attracting more developers to build high quality, locally relevant apps."

RIM's demise in 2011 has been over played by some, with the company ending the year as the fourth largest smartphone vendor and delivering annual unit growth of 5%. " There is no denying that RIM has had a tough year," said Canalys Principal Analyst, Pete Cunningham. " But when you consider that it is transitioning to a new platform it has done well to increase volume while remaining profitable the latter point being something that many other vendors struggle with. The appointment of Thorsten Heins as CEO will bring new energy to the company while ensuring that it does not radically deviate from its overall strategy in this transitional year. However, 2012 will become even more competitive and RIM needs BlackBerry 10 devices out there to ensure it retains its status as a major player."

At a platform level, Android accounted for 52% of global smartphones shipments in the fourth quarter of 2011, with iOS representing 23% and Symbian 12%. Android was also the leading smart phone platform by volume for the whole year, accounting for 49% of all devices shipped in 2011 and ahead of iOS with 19% share and Symbian with 16%. Collectively, Android smart phone shipments grew 149% year on year in the fourth quarter of 2011 to 81.9 million units, resulting in a total of 237.8 million for the full year, up 244% on 2010. Samsung's success and focus on Android have contributed substantially to the growth of the platform, but other vendors, such as Sony Ericsson, Huawei, Motorola, LG and particularly HTC, have also seen significant growth in their Android volumes over the course of 2011.

Source: Canalys, compiled by Digitimes, February 2012

Source: Canalys, compiled by Digitimes, February 2012

Source: Canalys, compiled by Digitimes, February 2012

The global market for feature phones has continued to dwindle recently, since most branded handset vendors have shifted their focuses to the development of smartphones on the back of strong demand. The shift of focus has resulted in an easing in competition in the feature phone segment, and therefore enhancing the opportunity for vendors to make more profits from the production of feature phones.

Nokia, Samsung Electronics and China-based handset makers are being indicated as those who are still competing eagerly in the feature phone sector.

Market sources have indicated that global shipments of feature phones suffered a setback of 10% on year in the fourth quarter of 2011, while smartphone shipments advanced by 55% during the same period, pushing the ratio of smartphones in the global handset market to 35%.

The advancement of smartphones come as major branded vendors, including Samsung, Motorola Mobility, LG Electronics, Huawei Device and ZTE, have continued to pour resources into the development of smartphones. Moreover, some vendors such as Sony have even phased out from the feature phone market.

Given that market size for feature phones still reaches over one billion units a year, the production of feature phones could turn out to be a cash cow for vendors due to less capital commitment for R& D and marketing efforts as compared to the development of smartphones.

Profits generated by feature phones and smartphones at Nokia varied widely in the fourth quarter of 2011, in which sales of feature phones yield an operating margin of 13.5% versus a negative 7% generated by smartphone models.