Worldwide mobile phone sales declined last year by 1.7 percent, with sales totaling 1.75 billion units.
According to Gartner principal research analyst, Anshul Gupta, this is the first the worldwide mobile phone market declined since 2009.
"Tough economic conditions, shifting consumer preferences and intense market competition weakened the worldwide mobile phone market this year," he said.
Demand for feature phones remained weak in 2012, with sales of 264.4 million units in the fourth quarter.
This is a decrease of 19.3 per cent year-on-year, with Gupta not expecting a reversal of this trend in 2013.
"Sales of worldwide smartphone sales to end users will be close to one billion units in 2013, and overall mobile phone sales to end users are estimated to reach 1.9 billion units," he said.
The decline, however, can not be attributed to smartphones, which have racked up 207.7 million units in sales in the fourth quarter of 2012.
This is a jump of 38.3 per cent from the same period last year, with industry heavyweights Apple and Samsung together raised their worldwide smartphone market share to 52 per cent from 46.4 per cent from a quarter earlier.
When it came to sales numbers in 2012, Samsung took the pole position in both worldwide smartphone sales and overall mobile phone sales.
"The success of Apple and Samsung is based on the strength of their brands as much as their actual products," he said.
"Their direct competitors, including those with comparable products, struggle to achieve the same brand appreciation among consumers, who, in a tough economic environment, go for cheaper products over brand."
Slow but steady
Gartner was unwilling to crowng a single manufacturer with the third spot in global smartphone sales, though Huawei's strong fourth quarter finally pushed it into the third position in the smartphone category for the first time.
The vendor sold 27.2 million smartphones to end users in 2012, up 73.8 percent from a year earlier.
"Both, the Ascend D2 and Mate announced at this year's CES [Computer Electronics Show] aim to grow the company's brand perception as a premium product and increase its mobile phone margins," Gupta said.
To that end, international markets and improve the product mix to a higher tier are expected to be key areas for Huawei's growth in 2013.
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