Worldwide handset shipments decreased 1.9 percent YoY to 387.3 million units in Q3 2012, according to new data from market intelligence firm ABI Research. Worldwide smartphone shipments increased 32.8 percent  YoY to 155.5 million over the same period. Samsung retained the lead position in both handset and smartphone shipments. Underscoring its accomplishment, Samsung shipped more than double the smartphones of second place Apple. “Samsung looks to be running away from the pack while Apple’s new product portfolio continues to eat into its decreasing gross margins,” says senior analyst Michael Morgan. “Apple will need to ship over 94 million smartphones in Q4 if it wants to match its 2011 shipment growth of 96 percent.”

Nokia smartphone shipments declined 38 percent from Q2 2012 to 6.3 million as its current Lumia line of smartphones cannot be upgraded to the upcoming Windows Phone 8 software release. With competing OEMs looking to take advantage of the WP8 platform, Nokia will have trouble remaining a top ten smartphone OEM in Q4. LG returned to profitability on the back of strong LTE smartphone shipment growth while ZTE showed the best YoY smartphone shipment growth of 168.4 percent. RIM and HTC both continued to struggle with their smartphone strategies and portfolios by experiencing YoY smartphone shipment declines of 37.2 percent and 54.6 percent respectively.

Smartphone shipments accounted for 40.2 percent of all handset shipments in Q3 up from 39.3 percent in the previous quarter. As the overall handset market shifts towards a smartphone reality, OEMs will need to consider following Samsung’s lead in offering a range of smartphone products at ever lower price points to maintain market share growth. It is becoming clear that Samsung and Apple will continue to be the masters of the premium smartphone segment “The strain of rapid growth makes Apple appear to be running out of room at the high end," says senior practice director Jeff Orr. "The company's warning of additional margin pressures with its new device line up make it increasingly difficult for Apple to move downstream to the rapidly growing low-cost smartphone market.”

These findings are part of ABI Research’s Mobile Handset Markets Database.