Nokia of Finland strengthened its position as the world's best selling phone maker while South Korea's Samsung moved up to second place and American maker Motorola dropped back to third, according to the Strategy Analytics study.

Apple's much vaunted iPhone was not as big a hit as expected however, the study said.

Sales increased about 10 per cent from one billion in 2006 to 1.12 billion in 2007 and for 2008 Strategy Analytics predicted another 10 per cent surge to 1.24 billion phones.

'Emerging regions, particularly Africa, will continue to drive shipments,' it said. 'Saturated Western markets - many of them likely to see weak GDP growth - will remain sluggish in 2008.'

The market information firm said Nokia made sizeable gains in Africa and the Middle East 'despite fierce competition from dozens of rivals in every price tier.'

It sold 437 million handsets in 2007, up from 347 million in 2006 to grab a 38.8 per cent market share.

Samsung increased sales from 113 million to 161 million - growing three times faster than the industry average - to move ahead of Motorola which saw sales collapse from 217 million to 159 million.

'Motorola's device portfolio remains weak; without a more attractive lineup of handsets the pain is likely to continue into the second half of 2008.'

The study said better third generation (3G) phones and 'cooler sub-branding' by Samsung, LG Electronics and Nokia ate into Sony Ericsson's market share.

The study said Apple with its iPhone came in 'slightly below our expectations,' sending 2.3 million phones for a 0.6 per cent market share.

'The European launch in France, Germany and the UK was handled successfully, but demand from buyers was less frenzied than the US entry in June, 2007,' said Strategic Analytics.

'High retail prices for the iPhone have been one issue,' it stressed.

The phone costs 399 euros (S$837) in France and 269 pounds in Britain.

Apple Inc on Tuesday reported its best quarter ever as profits soared to US$1.58 billion in the last three months of 2007 on demand for its iPhones, Macintosh computers and iPods.

Its chief executive Steve Jobs said last week that Apple has sold more than four million iPhones, touch-screen mobile devices that combine telephone, video, music and Internet access. -- AFP