Apple, RIM Steal Nokia's Milk Money

Nokia ( NOK) paid the dumb price as Research In Motion ( RIMM) and Apple ( AAPL) led the smartphone sales surge in the first quarter.

The Finnish tech shop sold 97.4 million phones in the first quarter, the lowest level in two years, as the average selling price for Nokia phones dropped 18%, according to Gartner. The slump cost the No. 1 phonemaker nearly 3 percentage points of market share in the quarter, falling to 36.2% of the total market, down from 39.1% in the year-ago period.

Nokia has been hampered by arriving two years late to the touchscreen party, but the company expects to have three new entries in that category later this year. The delay, and the miserable first-quarter performance, make it even more important that Nokia delivers a few blockbuster phones soon.

Smartphone wars will heat up in the coming months as Palm introduces its hotly anticipated Pre phone and Apple starts selling the newest version of the iPhone. Samsung, Motorola ( MOT) and HTC are also expected to have new Google ( GOOG) Android phones available.

The wireless market is in a slump with the global recession weighing heavily on consumer spending, curbing appetites for new phones and phone upgrades. Overall, mobile phone sales fell 9.4% in the first quarter compared to year-ago levels.

Smartphones, however, continued to enjoy strong demand as sales grew 12.7% over first-quarter 2008 levels. Research In Motion and Apple continued to rob sales from Nokia in the first quarter. Apple's iPhone doubled its market share to 10.8% of the smartphone market, while RIM's BlackBerries grew 50% to 19.9% of all smartphones sold in the first quarter compared with year-ago levels.

Meanwhile, Nokia has lost more of its leading grip on the smartphone lead thanks to a lackluster lineup. Nokia's share dropped to 49.3% of the smartphone market, down from 56.9% last year.

No. 2 Samsung, with a range of new phones from the low-end to high-end touchscreen devices, grew its share by a third to 19.1% of the market.

And for the first time in three years, Motorola reversed its steady slide and reclaimed the No. 4 slot in the first quarter, due to the popularity of its phones with Sprint's Boost Mobile prepaid service. Motorola also benefited from the collapse of Sony ( SNE) Ericsson ( ERIC).

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