(Adds detail, comment from Gartner analyst in paragraphs 5-6, 9, 11-12.)
By Sven Grundberg and Gustav Sandstrom
Samsung Electronics Co. (005930.SE) snatched the title of world's largest mobile handset vendor from Nokia Corp. (NOK) in the first three months of the year, confirming Nokia's continued decline as it struggles to keep pace with fast moving competition.
Research firm Gartner, which counts sales of handsets to customers, rather than the numbers shipped by manufacturers, said Samsung sold 86.6 million mobile devices in the quarter and had a global market share of 20.7%, up from 16.1% the year before.
Nokia, which sold 83.2 million handsets, saw its global market share fall to 19.8% from 25.1% a year ago.
The report is yet another sign of how Nokia continues to be battered by bruising competition both at the expensive end of the market from Apple Inc.'s (>> Apple Inc.) iPhone, and from cheaper devices running Google Inc.'s (>> Google Inc) Android software.
Nokia has yet to make a mark with its new Lumia devices, Gartner's principal research analyst Anshul Gupta told Dow Jones Newswires Wednesday.
Lumia smartphones, the company's first line of handsets powered by Microsoft Corp.'s (MSFT) Windows Phone software, have sold in surprisingly low numbers in Western Europe, and they haven't been able to compensate for slumping sales of Nokia's older Symbian-powered handsets, he added.
Overall, 144 million smartphones were sold in the quarter, up 45% from the same period in 2011. Smartphones running Google Inc.'s (>> Google Inc) Android operating system accounted for 56.1% of all smartphone sales, up from 36.4%, while Apple's iOS platform is powering 22.9% of the smartphones sold, up from 16.9% a year earlier.
Nokia's outdated Symbian operating system accounted for 8.6% of smartphone sales in the quarter, falling from 27.7% a year ago.
Nokia's sales volumes should get a boost from new partnerships with Chinese carriers and launches of cheaper Lumia phones that can compete with low-end Android devices in emerging markets, but it may take until next year before it starts regaining smartphone market share, Gartner's Anshul Gupta said.
Total mobile device sales declined 2% year-on-year in the quarter to 419.1 million units.
The downturn, which comes after 10 straight quarters of growth, was due to economic weakness in mature markets and to slowing demand in Asia Pacific as consumers there waited for new smartphone launches, said Gupta.
Gartner, which had predicted handset volumes would grow to 1.9 billion in 2012 from 1.77 billion in 2011, might have to reduce that growth forecast by around 20 million units, Gupta said. Still, upcoming smartphone launches from Apple, Android and Windows manufacturers, and Chinese vendors could still boost market growth later this year, he added.
-By Sven Grundberg and Gustav Sandstrom, Dow Jones Newswires; +46-8-5451-3098; firstname.lastname@example.org