The worldwide mobile phone market experienced an unusual downturn in the normally robust fourth quarter of 2008, according to IDC's Worldwide Mobile Phone Tracker.

The study found that vendors shipped a total of 289 million units, down 12.6 percent from the 330.8 million units shipped during the same quarter last year. Vendors shipped a total of 1.18 billion units worldwide for the entire year, which is 3.5 percent greater than the 1.14 billion units shipped during 2007.

"The overall finding is that we are in a tough time and this market sustained growth in the past while other markets have suffered," said Ryan Reith, senior research analyst at IDC, Framingham, MA. "It is unusual, because the fourth quarter is usually the very best in this market in terms of consumer holiday spending."

The research also found that the smartphone market grew 22.5 percent in 2008 from the year before, clearly outpacing the rest of the industry.

Regardless of this growth, IDC expects that 2009 will be more difficult than 2008. The company said that handset vendors, chipset manufacturers and carriers will all have to work in sync to rebuild consumer interest in mobile spending.

"Overall it's going to be a challenge to find people willing to spend in the mobile space," Mr. Reith said. "Mobile advertising may serve as a catalyst to get consumers interested in mobile offerings especially if they are getting deals for cheaper rates."

Overall, the North American market suffered both sequential and year-over-year declines in the fourth quarter of last year.

IDC claims this is a result of that fact that economic conditions worsened.

Handset manufacturer Nokia gave early indications that the quarter would be challenging due to the economic downturn. By quarter's end, its sales for devices and services had declined nearly 27 percent from the previous year.

Nokia also recently downsized its staff to lower overall costs.

Other manufacturers also reported slowdowns.

Samsung experienced lower sales than expected due to the global recession and saw its operating margin suffer.

Motorola ended the quarter posting operating losses driven not only by the global economic crisis, but also due to its ongoing restructuring and gaps in its product portfolio.

The one bright spot in the fourth quarter was the smartphone market.

Strong consumer interest, growing popularity of unlimited calling and data plans and market leaders Research In Motion and Apple keeping channels stocked with their devices drove this category forward.

"[The smartphone segment] is unique and unlike the rest of the market," Mr. Reith said. "Data attachment rates for these devices is well beyond that of traditional mobile phones, and the devices and services catering to this segment were more readily available than ever before in 2008.

"As long as carriers are able to continue to subsidize these devices and developers continue to enhance applications, then this segment will be a silver lining to an otherwise gloomy market," he said.