Worldwide shipments of high-end smartphones will increase tenfold by 2007, according to a new report from ARC Group.

The London-based research company said Tuesday that it expects annual shipments of these devices to grow from around 3.5 million units in 2002 to 45 million units by 2007. ARC said the connected handheld market will remain a small segment of the total handset market in the next five years, accounting for 5 percent of shipments in 2007, compared with less than 1 percent in 2002.

ARC said that Symbian, the predominant smartphone operating system with a 60 percent market share, will lose some ground in the coming years to rivals Palm and Microsoft, falling to a 39 percent market share by 2007. The Palm OS, which currently has a 22 percent market share, is expected to take an even bigger hit, falling to just under 5.5 percent.

Microsoft is expected to be the big winner, with its Pocket PC Phone Edition and Smartphone operating systems capturing the top spot by 2007 with a 40 percent market share. Microsoft had a 6.6 percent share in 2002.