Research firm Strategy Analytics said that Apple and Samsung outpaced Nokia in the second quarter, with the sector posting record quarterly shipments of 110 million units, or a 76.3% year-on-year rise.
"Just four years after the release of the original iPhone, Apple has become the worlds largest smartphone vendor by volume," the report said.
The company's global market share grew to 18.5%, up from 13.5 percent last year, and propelling it to top spot in the smartphone market, Research Analytics said.
"Apple's growth remained strong as it expanded distribution worldwide, particularly in China and Asia," it added.
Samsung's smartphone market share in the second quarter jumped to 17.5% from five percent a year earlier, making its the world's second-biggest smartphone producer, the report added.
Nokia's market share meanwhile slumped to 15.2% from 38.1% during the second quarter last year.
"This is a tough year for the company," said Nokia spokesman Doug Dawson. In terms of volume, Samsung sold 19.2 million smartphones in the second quarter, a whopping 519 percent increase from the second quarter in 2010.
Apple took the top slot with 20.3 million smartphones sold, with Nokia surrendering the lead for the first time with just 16.7 million smartphone sales.
Last week, Nokia reported only its second quarterly loss since 1998 with a shortfall of 368 million euros (US$525 million), compared with a net profit of 227 million euros one year earlier.
On July 27, ratings agency Moody's downgraded Nokia's debt by two notches, citing the firm's lost market share. Moody's also said it was giving the new rating a negative outlook, meaning that it might lower it further.
"We're in a transition, but it's a necessary one to put down the foundation for a stronger Nokia," Dawson said.
Nokia's fortunes have been in a tailspin since February, when chief executive Stephen Elop, who had run the company for less than half a year, launched a radical strategic shift which included abandoning Nokia's smartphone platform Symbian in favor of a tie-in with Microsoft.
While admitting that the transition would be a rocky one, Nokia is gambling its future on the hope that in 2012, they can begin clawing back lost market share when the first Microsoft phones begin shipping in volume.
Copyright Agence France-Presse, 2011