Despite record-breaking smart phone sales worldwide, Canadian mobile phone shipments have continued to stay in the red, according to a new IDC Canada Ltd. report.

Kevin Restivo, lead analyst for IDC’s mobile phone tracker in Canada, said mobile shipments dropped eight per cent during Q3 2009, compared to the same period last year. This marks the third straight declining quarter for the country’s mobile handset industry, which hasn’t been able to carry itself into the black despite significant growth in smart phone sales.

“What’s noteworthy here is that there’s a sustained weakness in the mobile phone market in Canada, and that’s due in large part to the traditional phone market,” he said. Many consumers with traditional phones have rode out the recession by hanging on to their devices for longer than normal, he added.

The report also found that handset manufacturers, which shipped four per cent fewer devices to carriers and channel partners in Q3 2009 compared to the same time period in 2008, experienced a 1.7 per cent decrease from Q2 2009 numbers.

While Restivo attributed the numbers mainly to the struggling economy and the low turnover rate of consumers using traditional feature phones, the decrease in mobile handset purchases among Canadian businesses have also have played a factor.

“If there are fewer employees in the organization and there is a refresh of handsets forthcoming, that number would obviously be smaller than in previous years,” he said.

In addition to Canadian businesses, Restivo suspects that some wireless carriers might also be responsible for the third quarter drop.

“With Bell and Telus specifically, they were leading up to the launch of their new HSPA networks,” he said. “They were in this transition phase where they weren’t going to replenish smart phones on their CDMA networks. It was this kind of destocking effect in Q3 that hampered demand for handset manufacturers in Canada.”

While IDC Canada expects the market rebound to be evitable, Restivo isn’t banking on any positive results in 2009.

“We’re not breaking out our Q4 forecast yet, but we don’t expect the market to be back in the black by the end of year,” he said. Restivo did add, however, that Q4 is expected to be bigger than Q3.

In the U.S., the recovery has been progressing faster, Restivo said, which might be due to the fact that “the U.S. cell phone market recession started earlier” than it did in Canada.

According to a recent IDC Corp. report, shipments by manufacturers increased by 5.6 per cent in Q3 2009 compared with the previous quarter. The results for the quarter were still down by six per cent compared to Q3 2008, but the quarter-to-quarter growth represents an improvement that the Canadian market has yet to see.

The good news, according to Restivo, is that the future of the Canadian cell phone market will be predicated on the booming smart phone market.

Last week, IDC announced record high smart phone shipments, which were up 4.2 per cent globally in the Q3 2009 compared to Q3 2008. Smart phone vendors shipped 43.3 million smart phones worldwide throughout the quarter.