The sales of smartphones fell in the third quarter, reporting its weakest year-on-year growth since Gartner began tracking the industry, the research firm said today. Worldwide smartphone sales to consumers totaled 36.5 million units in the third quarter, an 11.5 percent increase from the same period in 2007. Going forward, the smartphone market is still expected to grow, but at a much slower pace as the downturn hurts consumer demand. The report shows the competition stepping up on Nokia (NYSE: NOK), the current leader in smartphone sales, with both RIM (NSDQ: RIMM) and Apple (NSDQ: AAPL) stealing market share. Nokia was also hurt by its lack of a touchscreen device, with principal analyst Roberta Cozza calling it “unfortunate” that Nokia’s recently announced N97 flagship phone won’t reach stores until the first half of next year, as the device “is a competitive product in today’s market.”

Other Highlights:

— For the first time, Nokia’s sales of smartphones dipped 3 percent, while Apple’s surged 327 percent. Of course, these are year on year figures, meaning that Apple’s performance in Q3 is being compared to a period when the iPhone was first being launched. Still, Apple now ranks as the third largest smartphone vendors with sales of 4.720 million devices giving it a 12.9 percent market share in Q3. In comparison, Nokia retains the top slot, selling 15.472 million units, giving it a 42.4 percent of the market, while RIM boosted sales by 81.7 per cent in the third quarter, to sell 5.8 million units, for a 15.9 percent share.

— Regionally, North America was the fastest growing smartphone market, with a 68 per cent increase in the third quarter of 2008, not great news for Nokia, where the market is dominated by leader RIM (70 percent) and Apple (25.4 percent). Smartphone sales in Europe, Middle East and Africa (EMEA) grew 14 percent compared to last year, but Nokia’s share dropped nearly 8 percentage points. Apple pushed its way up to the number two slot, with 15.6 percent of the market, stealing ahead of RIM and HTC.