While technology businesses continue to suffer because of the downturn in the economy, the smartphone market continues to thrive, according a report by IDC, a technology research firm. In fact, in the third quarter the market set a new record for quarterly shipments, according to IDC. Vendors shipped 43.3 million units worldwide during the quarter, an increase of 4.2 percent from the 41.5 million shipped in the same quarter in 2008.

The five mobile-device makers leading the market are Apple, HTC, Nokia, Research In Motion, and Samsung. Nokia had the highest market share in the quarter with 37.9 percent and 16.4 million units shipped.

Behind Nokia was RIM, with 19 percent of the market and 8.2 million units shipped. Apple, HTC and Samsung each had less than eight percent of the market.

Driving Force

There is no one driving force behind the increase in shipments of smartphones for the quarter, analysts say.

"It is a perfect storm," said Ramon Llamas, mobile analyst with IDC's Mobile Devices Technology and Trends team. "Even though there is a recession going on, demand has been steady because people are willing to pay more because they are more than just phones to make phone calls."

"Think of your smartphone as not just a phone but a mobile computer sitting in the palm of your hand," Llamas added.

Another factor increasing shipments was a lowering of prices. Apple dropped the price of its iPhone to $199.

"That was a strategic move, because they were able to catch a lot more users that way," Llamas said.

Other vendors, including RIM and Palm, followed Apple's move, dropping prices for BlackBerry devices and the Palm Pre.

Paying Attention

Wireless carriers are sitting up and paying attention by reshaping their product portfolios as smartphones take an increasing share of the subscriber base and users are increasingly becoming interested in Android-based phones.

"With the release of Android-based handsets from several different OEMs, most recently Motorola but also HTC, Samsung, LG and Sony Ericsson, the buzz surrounding the Android OS is reaching critical mass," said William Stofega, research manager with IDC.

HTC was first to deliver an Android-based device and others, such as Motorola, have followed.

"The release of new Android devices has picked up dramatically over the past several months and the release of version 2.0 demonstrates that Android is rapidly evolving and responsive to suggestions from OEMs and developers," Stofega said. "With an expanding portfolio of handsets and a just-released update of the code, Android is poised to mount a serious challenge to the incumbent smartphone OEMs for the first time in its brief history."

And the next quarter is where the market will see an even greater increase, according to Llamas. "Third quarter is just a ramp-up and the fourth quarter is when things will really start to shine because of the holiday season," he said.