A heated competition in the global smart phone market may not bode well for handset vendors’ profit margins, Reuters reported.

Handset vendors such as Nokia, Samsung Electronics and Research in Motion are rolling out new models in anticipation of the holiday shopping season. But the ramp-up, which suppliers hope will boost profits, may have unintended consequences.

“The smart phone market is becoming heavily congested as a host of players seek to boost margins,” said Geoff Blaber, an analyst with British consultancy CCS Insight. “The reality in the second half is set to be very different. The market will swell in volume, but price erosion will inevitably result in casualties as value is captured by a minority rather than the majority.”

The global cell phone market, which grew in April-June for the third consecutive quarter, is expected slow slightly in third quarter, according to Strategy Analytics. That research firm said that as increased supply drives higher volumes, there will also be downward pressure on profit margins as vendors fight to outsmart their counterparts.

In 2009, the cell phone market saw a sharp decline as consumers spent less on new gadgets.