“Sales of feature phones declined 25 percent in the third quarter of 2014 because the difference in price between feature phones and low-cost Android smartphones is reducing further,” said Roberta Cozza, research director at Gartner.

In the third quarter of 2014, smartphones accounted for 66 percent of the total mobile phone market, and Gartner estimates that by 2018, nine out of 10 phones will be smartphones.

From a regional perspective, emerging markets exhibited some of the highest growths ever recorded with Eastern Europe and the Middle East and Africa achieving the highest increase in the third quarter of 2014, with sales of smartphones growing almost 50 percent year-over-year. Among the mature markets, the U.S. achieved the highest growth, with an 18.9 percent increase in the third quarter of 2014, fostered by the launch of the iPhones 6 and 6 Plus. Western Europe saw a decline of 5.2 percent, the third consecutive decline this year.

“Over the holidays we expect record sales of the iPhone 6 and iPhone 6 Plus, but we should not underestimate the Chinese vendors and local brands,” said Annette Zimmermann, research director at Gartner.

“Chinese players will continue to look at expanding in overseas emerging markets. In Europe prepaid country markets and attractive lost-cost LTE phones will also offer key opportunities for these brands.” Gartner expects sales of smartphones to reach 1.2 billion units in 2014.

In the third quarter of 2014, three of the top five smartphone vendors were Chinese. Huawei, Xiaomi and Lenovo grew their collective market share by 4.1 percentage points.

“With the ability to undercut cost and offer top specs Chinese brands are well positioned to expand in the premium phone market too and address the needs of upgrade users that aspire to premium phones, but cannot afford Apple or Samsung high-end products,” said Ms. Cozza. Apple’s and Samsung’s combined smartphone share totaled 37 percent in the third quarter of 2014, down 7 percentage points from the same period last year.

“The smartphone market is more than ever in flux as more players step up their game in this space,” added Ms. Cozza.