Apple's sales of handsets to end users reached 38.3 million in the first quarter as the firm was able to burn some of the inventory built at the end of 2012 as iPhone 5 was rolling out in more markets, Gartner said. China is a key contributor to overall sales for Apple, and Gartner analysts saw evidence of this in the first quarter of 2013, when sales reached close to 7 million units in mainland China thanks to the lower price of the iPhone 4.
"Apple is faced with the challenge of being increasingly dependent on the replacement market as its addressable market is capped," Gupta said. "The next two quarters will also be challenging, as there are no new products are expected to be coming before the third quarter of 2013."
LG Electronics passed China's ZTE in the first quarter to take the No. 4 position in handset sales, Gartner said. ZTE failed grow its smartphone sales, selling 7.9 million smartphones in the first quarter, down 5.1 percent from the fourth quarter of 2012, Gartner said.
Gupta said China saw its mobile phone sales increase by nearly 8 percent in the first quarter, with its sales representing about 26 percent of global mobile phone sales.
"The Chinese and local manufacturers have been exemplary at addressing the demands of buyers by offering affordable devices with optimum features such as 2.5G (EDGE) instead of 3G in a smartphone," Gupta said. "In the smartphone market, local and Chinese manufacturers are making faster inroads as they account for 29 percent share in the first quarter of 2013, up from 13.2 percent a year ago."