Samsung set to overtake Nokia as No. 1 cellphone brand worldwide

For the first time in 14 years, Nokia will not be the No. 1 cellphone brand in the world.

Samsung is set to claim the top spot in the mobile handset market, accounting for 29% of worldwide cellphone shipments this year, according to market research firm IHS. That’s up from 24% last year.

Nokia, meanwhile, will see its market share this year drop to 24% from 30% in 2011.

This year will mark the first time Samsung will occupy the top position on a yearly basis. The South Korean’s rise was helped by strong sales of its smartphones, IHS said.

Global smartphone shipments are projected to rise 35.5% this year, while overall cellphone shipments will increase by about 1%. This rapid growth will propel 2012 smartphone penetration among consumers to 47%, up from 35% last year.

“The competitive reality of the cellphone market in 2012 was ‘live by the smartphone, die by the smartphone,’” said Wayne Lam, senior analyst for wireless communications at IHS. “Smartphones represent the fastest-growing segment of the cellphone market and will account for nearly half of all wireless handset shipments for all of 2012. Samsung’s successes and Nokia’s struggles in the cellphone market this year were determined entirely by the two companies’ divergent fortunes in the smartphone sector.”

Samsung’s success has been built on its “fast follower” strategy for design and manufacturing, IHS said. The electronics giant produces dozens of new smartphone models every year that address all segments of the market, from the high end to the low end.

Meanwhile, Finnish-based Nokia is “mired in transitioning its smartphone line to the Windows operating system,” resulting in declining shipments for the company, IHS said. Sales of the company’s older phones have plunged, while its new Microsoft Windows 7-based handsets haven’t been able to make up for the loss so far.

Samsung is also pulling ahead of rival Apple in the smartphone market: Samsung and Apple ended 2011 in a neck-and-neck battle for leadership in the smartphone market, with only 1 percentage point of market share separating them. However, entering 2012, Samsung “moved ahead decisively” of Apple with a wide range of Android smartphone offerings at multiple price points, IHS said.

Together, Samsung and Apple smartphones accounted for nearly half of shipments in 2012, up from 39% last year.

IHS said it expects that the smartphone penetration rate in 2013 will elevate smartphones into the majority among all phone segments, at 56%. The change will mark a significant tipping point in the mobile handset market.

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