(AAPL) Apple iPhone Leads Smartphone Market According to Research Firm Strategy Analytics

Apple Inc. (AAPL) added another feather to its success story as it outsold Nokia Corp (NOK) and Samsung to become the largest smartphone maker in the second quarter of 2011 in terms of global shipments of smartphones. Research firm Strategy Analytics confirmed Apple’s iPhones to have grabbed an estimated 18.5% market share, compared with 13.5% a year earlier.

With an estimated 17.5% market share (19.2 million units), Samsung is close on the heels of Apple. However, Nokia narrated a sad story as it tumbled from the first rank to the third after its market share dropped to 15.2% (16.7 million units) from the comparable prior-year quarter’s 38.1%.

In the recently concluded quarter, iPhone continued to be a star performer for Apple, with strong growth in both the Americas and the Asia-Pacific regions. Overall, iPhone unit sales were 20.3 million during the quarter, representing a surge of 142.0% from the year-ago quarter.

iPhone sales growth also outpaced IDC’s estimated growth of 67% for the global smartphone market in the June quarter. iPhones accounted for 46.6% of revenues at Apple.

Revenues from iPhone handset sales, accessory sales and carrier payments totaled $13.3 billion, compared with $5.33 billion in the year-ago quarter, a significant increase of 150.0%. The company had iPhone distribution agreements with 228 carriers in 105 countries at the end of the quarter.

Apple’s ability to spur the popularity of the smartphones in developing nations, where it’s less successful, will help dictate the company’s smartphone fortunes in future.

Though Apple snatched the number one spot in the smartphones market, Nokia has maintained its lead in the overall mobile phone market. While Nokia commanded 24.2% market share in the second quarter of 2011, Apple managed the fourth spot with a 5.6% market share, according to IDC.

It has also been rumored that the company is looking to launch the iPhone 5 in September. The hype around the new iPhone has already scaled new heights and if Apple can realize revenues from iPhone 5 for an entire month (if it chooses to release the product in early September), it will be major revenue driver going forward.

However, Apple continues to face tough competition in the smartphone and tablet market from Research In Motion Ltd. (RIMM), Hewlett-Packard Co. (HPQ), Dell Inc. (DELL), Samsung, Cisco Systems Inc. (CSCO), Toshiba and Acer.

As Apple remains heavily dependent on iPhone and iPad sales (68.8% of the third quarter revenue), the company is taking every possible step to safeguard its dominant position in the smartphone and tablet market.

Apple remains entangled in a number of lawsuits against Eastman Kodak (EK), Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT) over a number of issues. As the outcome remains uncertain, we believe the lawsuits will remain an overhang on the stock going forward.

We maintain our Neutral rating over the long term (6-12 months). Currently, Apple has a Zacks #1 Rank, which implies a Strong Buy rating in the near term.

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