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Apple and Google in Christmas showdown
The fight for dominance in the smartphone market has intensified in the key selling period leading up to Christmas, with the fierce contest between Apple and Google’s Android leaving little room for rivals as they battle for supremacy.
The number of devices using the Android operating system knocked Apple’s iPhone into second place in the third quarter, with Samsung, a minor player in the market only a year ago, overtaking Apple to become the world’s largest seller of smartphones
Even so, analysts expect Apple to bounce back with exceptionally strong sales in the fourth quarter running up to Christmas following the launch of the iPhone 4S in October. In both the UK and US, Apple’s iPhone 4S was the most successful phone in the run-up to the holiday season, taking almost a quarter of UK sales in the past two weeks, which could see it take back leadership of the overall market. The networks AT&T, Verizon Wireless and Sprint Nextel in the US have confirmed that consumers who had delayed smartphone purchases ahead of the iPhone 4S have returned with a vengeance.
The success of Apple and of Samsung’s Android range has left little room for other manufacturers, in spite of a desire by operators to see competition from rivals such as Windows and Research In Motion. RIM and HTC, which makes both Android and Windows phones, have warned of weak holiday sales.
Pierre Ferragu, analyst at Bernstein, said: “The iPhone has clearly revolutionised the handset market. On its tail, Android has flourished and we now have a strong conviction that the two ecosystems won’t leave much room for any alternative.”
RIM has suffered a torrid year, and appeared to be the biggest loser in the US this holiday season as it struggled to halt the falling market share of BlackBerry ahead of the launch of a new operating system next year.
HTC is also not looking forward to a happy holiday sales season. The world’s fifth-biggest smartphone vendor by volume last month surprised investors by slashing its fourth-quarter revenue forecast by a fifth, just three weeks after it had issued an already conservative guidance.
Of all the big bets being made in the smartphone market this year, it was the partnership between Nokia and Microsoft that has been under the most scrutiny as the Finnish handset maker sought to rebuild its franchise in the sector again.
Nokia lacked a high-end smartphone until the October launch of the Windows-run Lumia. But data seen by the Financial Times suggest it has struggled to make an impact in the UK, one of its launch markets, with its handset not even in the top 10 for sales despite heavy advertising.
Goldman Sachs on Wednesday lowered its forecasts for Nokia given what it sees as a slower-than-expected start for Lumia in Europe. It now forecasts sales of about 1m, down from expectations of 1.5m, saying “with Nokia launching in limited markets and facing heavy iPhone competition it is too early to judge whether Lumia is a success, but risks are clearly increasing”.
The competition is set to intensify further next year, with phones featuring RIM’s new operating system as well as new models from Nokia. There should be new devices from Apple, Samsung and HTC, and lower-cost options from ZTEand Huawei.

What this year has proved is that the smartphone market cannot be ignored by manufacturers. This week JPMorgan also raised its estimates on sales of smartphones. It expects 657m smartphones to be sold in 2012, up from 459m this year.