Growing smartphone battle seen hitting vendors profits

An increasingly heated battle in the global smartphone market is set to weigh on handset vendors' profit margins during the remainder of the year, analysts said on Friday.

All top cellphone vendors, including Nokia, Samsung Electronics and Research in Motion, are rolling out new smartphone models for the holiday sales-fuelled fourth quarter.

"We expect the second half of the year to be categorized by an escalation in the 3G wars, as Nokia, Samsung, LG, RIM, Sony Ericsson, Motorola, ZTE, Huawei and others flood the market with smartphones and superphones in their attempts to gain share in these high-value markets," Strategy Analytics said.

"The ramp-up in supply will drive higher volumes, but this will inevitably place downward pressure on margins as vendors fight to outsmart rivals," the research firm said.

The world's three largest cellphone makers, Nokia, Samsung and LG Electronics all saw smartphone rivalry hitting their profit margins in the April-June quarter.

"Each is in the midst of refreshing its respective product portfolio, with greater emphasis on smartphones during the second half of this year," said IDC analyst Ramon Llamas.

"Still, the upward pressure from vendors outside the current top five vendors, particularly Apple and Motorola, will provide tough competition in the quarters to come," Llamas said.