Apple beats Samsung in Q4 smartphone sales

SAN FRANCISCO — There's a new smartphone king. At least for the moment.

Apple snatched the top sales spot during the fourth quarter, displacing rival Samsung Electronics, which has held the crown since 2011, according to a report from market research firm Gartner.

The news is yet another laurel in the Cupertino, Calif., company's crown. It recently hit a $700 billion market cap, coyly brushed off rumors that it was developing a car and, come Monday, is likely to introduce the world to its new Watch.

The launch of the ultra-popular iPhone 6 and 6 Plus propelled Apple to the No. 1 position for worldwide smartphone sales, commanding a 20.4% share of the market. Samsung finished second, with 19.9%, down nearly 10% from a year ago. For Apple, it was the company's best quarter ever, selling 74.8 million smartphones worldwide. The shift to larger screens was met by big demand in the U.S. and China.

Apple shares were up slightly Tuesday, closing at $129.36.

But Apple isn't likely to gloat much over the sales data, which reveal that Samsung dominates the global phone market (20% market share to Apple's 10%) and that while Apple won last quarter's battle, Samsung won 2014's war (24% to Apple's 15% share).

Nevertheless, the South Korean electronics powerhouse has some reason for concern. Its four-year dominance was due largely to its ability to cater to a broad market segment that isn't shopping for a premium-priced Apple product. But that position increasingly is being squeezed by Chinese vendors offering feature-packed phones at lower prices.

Gartner data show that upstart brands Huawei and Xiaomi have grown from almost non-existent in 2011 to capturing about 5% of the global smartphone market in 2014. Xiaomi's new Mi Note looks and feels remarkably like an iPhone 6, which might concern Apple given that Chinese consumers represent a formidable and growing middle-class market.

"Apple's growth in emerging markets really is limited unless they come down-market with a new phone, and they haven't done that with any product to date," says Tuong Nguyen, smartphone analyst at Gartner.

"In a sense, Apple's ability to grow market share in this segment comes down to either going downmarket, coming up with a product for which there's pent-up demand, like the iPhone 6, or completely revolutionizing the category again like it did with the first iPhone."

Samsung's forte, says Nguyen, is "rolling out hard and fast with features that people have shown they want, but at the same time they're not the kind of company that discovers a secret sauce."

But Samsung hopes it has found just that with its latest offerings, the Galaxy S6 and S6 Edge, unveiled during this week's Mobile World Congress in Barcelona. Both devices are slated to launch this spring.

Overall, sales of smartphones worldwide topped 1.2 billion, up 28% from last year. The biggest winner wasn't Apple or Samsung but Xiaomi, more than tripling its sales numbers compared with a year ago.