Nokia, battling to keep up with Samsung and Apple in the global phone race, lost almost 5 percentage points of market share in the first quarter, research company Gartner said on Tuesday.
Overall global sales figures for mobile phones rose 0.7 percent in the first three months of the year, driven by demand for smartphones and strong growth in the Asia Pacific region which helped to offset much weaker sales elsewhere.
Of the different vendors, Samsung (Seoul, South Korea) took much of the gains, remaining in the number one position with a market share of 23.6 percent, ahead of Nokia (Helsinki, Finland) on 14.8 percent and Apple (Cupertino, CA, USA) on 9 percent.
Nokia had held a 19.7 percent share just a year ago.
Those figures followed a 13 percent rise in sales by Samsung, a 16 percent increase by Apple, and a 24 percent fall by Nokia, compared with the same period last year.
So-called "smart feature phones" like those in Nokia's Asha range have limited smartphone capabilities such as Internet and email access and touch screens but are cheaper than the likes of Samsung's high-end Galaxy models or Apple's iPhone.
They are crucial to Nokia's future as it defends its leading market share in emerging economies such as India and Africa, while struggling to keep up in the smartphone race.
Worryingly for Nokia, however, Gartner said that overall sales of the cheaper feature phones were slowing, as consumers kept hold of their phones for longer.
"Nokia's mobile phone share dropped 4.9 percentage points in the first quarter of 2013 mainly due to a steep decline in feature phone sales," said Gartner in its quarterly report on the industry, which is closely watched for moves among vendors.
"Although Nokia's Windows Phone sales have sequentially improved, reaching a volume of 5.1 million units, Nokia is yet to see high growth in the smartphone segment.
Nokia's position in the smartphone market dropped to No. 10 in the first quarter of 2013, from No. 8 in the fourth quarter of 2012."
Gartner said smartphones accounted for 49.3 percent of sales of mobile phones globally, up from 44 percent in the fourth quarter of 2012.
"Feature phones users across the world are either finding their existing phones good enough or are waiting for smartphones prices to drop further," said research analyst Anshul Gupta.
"Either way the prospect of longer replacement cycles is certainly not a good news for both vendors and carriers looking to move users forward."
(Reporting by Kate Holton; Editing by Mark Potter)