The economic climate is affecting sales of higher-end devices, as well, according to Roberta Cozza, principal analyst at Gartner.

Thirty-six and a half million smartphones where sold in the third quarter, an 11.5 percent increase compared to the same period last year. Sales grew in the second quarter by about 16 percent over last year.

Going forward, Gartner expects the smartphone market to continue to grow but at a slower pace.

The big winner among the vendors was Apple, which more than quadrupled its sales compared to the same period in 2007 as a result of wider geographical availability of its iPhone, a new business model and lower pricing, according to Gartner.

Apple sold 4.7 million phones and its market share now stands at 12.9 percent.

For the first time Apple outsold Microsoft and its Windows Mobile platform -- both worldwide and in North America -- by a margin of almost 700,000 phones, according to Gartner.

Windows Mobile sales decreased by 3 percent to 4 million phones.

The lack of a competitive user interface hampers Microsoft in the consumer space, according to Gartner.

Research In Motion (RIM) also experienced significant growth during the third quarter, and it maintains bigger market share than Apple with 15.9 percent. Sales of RIM's BlackBerry devices increased 81.7 percent to 5.8 million units. The fourth quarter also looks good for RIM thanks to the Storm, which has the potential to be a major product for the company.

The source of Apple's and RIM's success can to a large extent be found in North America. It was the fastest-growing market during the third quarter, with a 68 percent sales increase.

Nokia, on the other hand, is facing a slowdown in its smartphone sales. The company experienced its first-ever decline in the category. Sales dropped by 3.1 percent to 15.2 million phones, which still makes it the number one smartphone vendor.

Its lack of a touch-screen device in its smartphone portfolio has hurt sales. The new N97, which was announced this week, is a much-needed addition, according to Gartner.

"It is unfortunate that the device will not be available before the first half of 2009 as this is a competitive product in today's market," said Cozza.

Yet another loser was the Symbian platform, which experienced a 12 percent sales drop thanks to Nokia's problems and a weak Japanese market. Its market share went below the 50 percent mark for the first time, and Gartner expects Symbian's share to continue to erode next year -- when it will turn into Symbian Foundation -- but maintain its leading position in the market.