It said Korean major Samsung widened the gap with Apple taking the share of such handsets to 39.6 percent of the total cellular phones sales.
Smartphones continued to fuel sales of mobile phones worldwide with sales rising to 169.2 million units in the third quarter, Gartner said, adding that the smartphone market is dominated by Samsung and Apple.
The quarter also saw Samsung becoming the largest mobile handset market with 22.9 percent of the overall market share, selling 98 million units, up from 18.7 percent a year ago, it said.
This has had the Finnish major Nokia slipping to No. 2 slot with only 19.2 percent global share, down from 23.9 percent a year ago, Gartner said. The iconic Apple is at a distant third place with 5.5 percent, up from 3.9 percent a year ago, it added.
"Both vendors together controlled 46.5 percent of smartphone market leaving a handful of vendors fighting over a distant third spot," it said.
The quarter saw Samsung further widening the gap with Apple in the smartphone market, selling 55 million units, driven by its Galaxy series across different price points. The Korean company commanding 32.5 percent of the global smartphone market during the quarter.
Overall, Samsung's mobile phones sales accelerated, totalling almost 98 million units in Q3, up 18.6 percent year-on-year.
According to the latest Garnter numbers, sales of mobile phones reached almost 428 million units in Q3, down 3.1 percent from a year ago, even as smartphone sales accounted for 39.6 percent of total mobile phone sales, as smartphone sales zoomed 46.9 percent.
"After two consecutive quarters of decline in mobile phone sales, demand has improved in both developed and emerging markets as sales increased sequentially," said Anshul Gupta, principal research analyst at Gartner.
He added that the growth was driven by the qworld's largest market China where sales growth was driven by
smartphones, but demand of feature phones remained weak, while mature markets finally saw replacement sales picking up with the launch of new devices in the quarter.
Nokia slipped from the No. 3 slot in the second quarter to a distant No. 7 in smartphones in Q3, while RIM moved to the No. 3 spot followed by HTC at No. 4.
"Both HTC and RIM have seen their sales declining in the past few quarters, and the challenges might prevent them from holding on to their current rankings in coming quarters," Gupta added.
While seasonality in the fourth quarter will help end-of-year sales, Gartner warned that there will be a lower-than-usual boost from the holiday season as "consumers are either cautious with their spending or finding new gadgets like tablets, as more attractive presents".
Nokia's sales declined 21.9 percent, but overall sales at 82.3 million were better than Gartner's early estimate, largely driven by increased sales of the Asha full-touch range.
Nokia had a particularly bad quarter with smartphone sales, and it tumbled to the No 7 worldwide position with 7.2 million smartphones sold in the third quarter.
The arrival of the new Lumia devices on Windows 8 should help to halt the decline in share in the fourth quarter, although it won't be until 2013 to see a significant improvement in Nokia's position, says the report.
Apple's sales totalled 23.6 million units, up 36.2 percent year-on-year.
"We saw inventory built up into the channel as Apple prepared for the coming holiday season, global expansions and the launch into China in the fourth quarter," Gupta said, adding with iPhone 5 launching in more territories in the current quarter, including China, and the upcoming holiday season Gartner analysts expect Apple will have its traditionally strongest quarter.
In the smartphone market, Android continued to increase its market share, up 19.9 percentage points. Although RIM lost market share, it climbed to the No 3 position as Symbian is nearing the end of its lifecycle.