Growing smartphone battle seen hitting vendors profits

Earlier on Friday, Samsung reported telecom division margins slumping to 7.2%, as it boosted marketing spending in the absence of a strong smartphone model.

Samsung is making a big bet on its top model Galaxy S, which went on sale last month, while Nokia is betting on its upcoming N8 model to win a larger share of the high-end market.

Market growing again

The cellphone market grew in April-June for the third quarter in a row, boosted by demand for low-end models in emerging markets and for high-end phones with touchscreens in mature regions.

Growth in the global cellphone market is set to slow slightly to 12% in the July-September quarter, but there are no signs of a major slowdown, Strategy Analytics said.

The research firm said the market grew 13% in April-June quarter, while rival IDC estimated on Friday the growth at 14.5%, and top vendor Nokia said last week the market grew 14% from a year ago.

"There are no credible signs yet of any major double-dip downturn in the handset industry, but that could of course quickly change if overall economic conditions were to deteriorate again across the major markets," Strategy Analytics said.

The phone market saw a sharp downturn last year as consumers sapped spending on new gadgets amid a recession.

Canada's Research in Motion which broke into the No. 4 position in the global market last quarter held on to it, selling 11.2 million Blackberries in the April-June quarter, just ahead of Sony Ericsson's 11 million phones.

Both firms held roughly 3.6% of the global market.

Market shares of the top 3- Nokia , Samsung and LG Electronics -- changed little in the quarter, with Nokia holding onto 36 percent of the market, Strategy Analytics said.

Samsung holds 21% of the market and LG 10%.