Smartphone operating system developer Symbian on Tuesday reported a 16.5 per cent year on year increase in unit shipments, with 18.5 million Symbian devices sold in the first quarter.

Revenues also climbed slightly from $41.3m in the first quarter to 2007 to $43.5m in 2008, with 206 million cumulative Symbian OS shipments across 235 different phone models since the company’s inception.

However, analysts note that Symbian’s bravado hides a less pretty picture. Dean Bubley of Disruptive Analysis notes that sales are down not just seasonally since Christmas, but are even below the level of mid-2007. “Against continued shipment growth of the overall market to above 1.1bn phones a year, that’s not looking too promising for some observers’ expectations of 30% penetration of smartphones in a few years’ time,” he said.

The crux of this argument is that, with the exception of a few super users, the average consumer doesn’t care about a ‘smart’ operating system. The main concerns are whether the phone looks cool, has a good camera or comes in ‘silver-pink’.

Bubley speculates that the sequential decline is down to a number of factors, including of course the ‘wow’ factor of the Apple iPhone as well as a shift to 18 month or even two year contracts by operators. Symbian’s biggest customer, Nokia, also, “doesn’t seem to be pushing the open OS harder down into the mid-tier,” Bubley said. “Put simply, customers would rather have that extra $4 of software spent instead on a better camera, or more memory.”

To a degree, Symbian CEO Nigel Clifford, appears to be aware of the predicament of smartphones, and said the company continues to look beyond the smartphone space. “Symbian continues to lead the smartphone OS market but is focused on increasing its share of the overall mobile phone market from 7% at the end of 2007,” he said.