Although overall sales of mobile handsets is in decline, the market share of smartphones is still on the rise. Applied market intelligence Company, iSuppli estimates an 11.1% increase in smartphone sales during 2009.

173.6 million smartphone ‘units’ were sold in 2008. iSuppli defines a smartphone by its high-level operating system. The list includes phones running Apple’s iPhone OS, Microsoft’s Windows Mobile, Nokia’s Symbian, Research in Motion’s BlackBerry OS, Google’s Android, Palm OS and other Linux-based systems. The pessimistic outlook for growth is only 6% during 2009, or 183.9 million units. Optimistically, iSuppli believes sales could reach as high as 192.3 million units.

The El Segundo, Calif. based research firm believes that “applications are everything. Beyond the friendliness of user interfaces, the availability of a variety of applications is the key factor attracting consumer interest to smart phone products.” Companies are starting to develop “mini-ecosystems” of applications and support to create consumer loyalty. Different approaches of this can be seen through Microsoft’s launch of MyPhone, Nokia’s Ovi and the Android Marketplace. The Apple iPhone however has a big headstart with over 17 million units and more than 20,000 apps. The race is on.

[via Fortune]