iPhone trumps RAZR as most purchased US consumer handset

[AppleInsider]

Apple's iPhone 3G dethroned the top-ranked Motorola RAZR as the leading handset purchased by adult consumers in the U.S. during the third quarter of the year, according to market research firm NPD.

The shift puts an end to the RAZR's three-year run atop the market, with the Motorola handset falling to the second slot, followed by Research in Motion's Blackberry Curve, LG's Rumor, and LG's enV2, respectively.

"The displacement of the RAZR by the iPhone 3G represents a watershed shift in handset design from fashion to fashionable functionality," said Ross Rubin, director of industry analysis for NPD. "Four of the five best-selling handsets in the third quarter were optimized for messaging and other advanced Internet features."

Despite stronger consumer sales of iPhone, the mobile phone segment failed to see its normal seasonal jump following the close of the second quarter, with domestic handset sales to adult consumers declining 15 percent year over year in the third quarter to 32 million units. Similarly, consumer handset sales revenue fell 10 percent to $2.9 billion, even as the average selling price (ASP) rose 6 percent to $88.

Word of the iPhone's rising popularity amongst average consumers comes just weeks after Apple announced that it sold more handsets in the third quarter than rival Research in Motion, making it the second largest smartphone manufacturer in the world by volume. NPD says it does not track corporate or enterprise handset purchases.

When it comes to the specific features that motivated U.S. consumers to purchase last quarter, the firm said 43 percent of handset buyers cited the need for a camera and 36 percent noted the ability to send and receive text messages.

Still, phones with a physical QWERTY keyboard experienced the greatest year-over-year rise in sales, according to NPD. About 30 percent of handsets sold during the quarter had this feature, up from just 11 percent the year prior. In addition, 83 percent of phones purchased by consumers were Bluetooth enabled (versus 72 percent last year), and nearly seven in 10 (68 percent) of phones purchased were music enabled (versus 49 percent last year).

"A growing data divide continues in cellular handsets," Rubin said. "Those who see the value in wireless Internet access are justifying the investment, whereas voice-centric users have little incentive to upgrade, which is obviously detrimental to operators who seek to sell data plans and media access services to their subscribers."

NPD says its reports on the matter are compiled based on an analysis of mobile device sales data based on more than 150,000 completed online consumer research surveys each month.

[ View this article at AppleInsider.com ]

[PG4G]

OMG!

Geez, watch the rise of Apple, the world's next biggest phone marketer.

You think Apple will take over the phone industry like it did the mobile media player industry?

[Denton]

Originally Posted by AppleInsider

"A growing data divide continues in cellular handsets," Rubin said. "Those who see the value in wireless Internet access are justifying the investment, whereas voice-centric users have little incentive to upgrade, which is obviously detrimental to operators who seek to sell data plans and media access services to their subscribers."

Oh, poor telecoms: should I weep for you?

I must say, I have yet to be convinced that I need the internet with me at all times. I'd rather have a new Macbook than a new iPhone. Good for Apple on both fronts, however...

[greendave]

Apple are not the 2nd largest by volume as stated in the article - in fact they have just 1 to 2% of the market by volume. Steve Jobs clearly stated they are 2nd by revenue because they sell such an expensive phone and their revenue is based on how much the carriers are willing to subsidise the iPhone to have it on their network. It has been claimed that Apple receive in the order of $600 per phone (Retail $699 without contract, or normally subsidy of from $325 to $399 from AT&T/network provider in country). Furthermore, do all other manufacturers count phones in the distribution channel? Apple stated they have around 2 million of the 6.5 million sales "in the channel". Furthermore, there was massive pent-up demand from the 2 months that Apple couldn't offer a phone for sale because they stopped selling the 2G. Let us see what the figures are next quarter before we really know just how big a player Apple has become. Personally, I can't wait for Microsoft's Ballmer to eat his words as Windows mobile falls into irrelevance.

[hittrj01]

Originally Posted by greendave

Personally, I can't wait for Microsoft's Ballmer to eat his words as Windows mobile falls into irrelevance.

What do you mean? Here I was under the impression this had already happened, other than the "Ballmer eating his words" part.

[greendave]

Originally Posted by hittrj01

What do you mean? Here I was under the impression this had already happened, other than the "Ballmer eating his words" part.

I just want to hear him retract his: "Would I trade 96% of the market for 4% of the market? (Laughter.) I want to have products that appeal to everybody. Now we’ll get a chance to go through this again in phones and music players. There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get."

(A Canalys report indicated that Windows Mobile had a 14% worldwide market share. Markitecture data had Microsoft holding just a 5.6% mobile phone market share with Windows Mobile products)

[TheToe]

Originally Posted by AppleInsider

"The displacement of the RAZR by the iPhone 3G represents a watershed shift in handset design from fashion to fashionable functionality," said Ross Rubin, director of industry analysis for NPD.

Why do industry analysts always make over-assumptions like this? I would state this as:
"The displacement of the RAZR by the iPhone 3G represents a watershed shift in handset design from good functionality to more functionality."

The appeal of the RAZR is it's extremely usable, portable, compact design. The appeal of the iPhone is it's extremely expandable functionality and easy interface. All of those have to do with functionality. Did anyone really think the RAZR was a fashion statement?

[Turley Muller]

Originally Posted by greendave

Furthermore, do all other manufacturers count phones in the distribution channel? Apple stated they have around 2 million of the 6.5 million sales "in the channel". Furthermore, there was massive pent-up demand from the 2 months that Apple couldn't offer a phone for sale because they stopped selling the 2G. Let us see what the figures are next quarter before we really know just how big a player Apple has become. Personally, I can't wait for Microsoft's Ballmer to eat his words as Windows mobile falls into irrelevance.

Do other handset makers count units in the channel? Yes. They are sold. Resellers order phones from Apple, and then it's on them to sell them to consumers. If resellers order too many, then they might have to cut prices to move inventory. Their loss.

However, if Apple lowers it's price, and a reseller has supply at the higher price from before, then Apple gives price protection and will reimburse the difference. That's about the only liability for Apple.

[Xian Zhu Xuande]

Originally Posted by TheToe

The appeal of the RAZR is it's extremely usable, portable, compact design. The appeal of the iPhone is it's extremely expandable functionality and easy interface. All of those have to do with functionality. Did anyone really think the RAZR was a fashion statement?

Sure it was. RAZR didn't sell so well because kids carefully considered the value of the phone in terms of features and usability. Heck, a RAZR is not a particularly durable phone--and it uses the same crappy OS used in other Motorola phones, which absolutely sucks. Many people bought it because it looked cool to them, and was also perceived as cool. When it first became big the key selling point was how slim it was and its appearance. And on top of everything, it was easy enough to get for $80 or less (all the way down to 'free') with a new subscription.

Easy interface? I would never describe the OS in Motorola phones that way...

[aaarrrgggh]

Originally Posted by greendave

Apple are not the 2nd largest by volume as stated in the article - in fact they have just 1 to 2% of the market by volume.

No, they were something closer to 10% (I think I recall 16%, but too lazy to look it up) of the US market sales, which is what the article is about.

What would be far more interesting though is to look at a 3-year history of unit shipments for the five most popular phones. One quarter with significant pent-up demand for iPhones hardly gets me excited, but I would be curious to see how it trends compared to other popular phones.

[RichL]

The big question for me is why are Americans still buying the RAZR? It's three years old. Even back in 2005, it had nothing going for it apart from the industrial design - and now that's looking dated.

[hittrj01]

Originally Posted by RichL

The big question for me is why are Americans still buying the RAZR? It's three years old. Even back in 2005, it had nothing going for it apart from the industrial design - and now that's looking dated.

You can get the RAZR for free from any carrier nowadays. Also, never forget the amount of people who know absolutely nothing about cell phones, have heard and seen RAZR's all over the place over the last few years, see one for free, and snatch it up, even if the free phone next to it is 2 years newer and has twice as many features. There are a lot of ill-informed people out there, and it's these people that still buy RAZR's.

[zanshin]

Originally Posted by RichL

Even back in 2005, it had nothing going for it apart from the industrial design - and now that's looking dated.

Given that "industrial design" generally includes that the product form enhances the functionality to the user, the RAZR is anything but.

Buttons mounted on the side where a user cannot help but bump them in handling, poor battery life, difficult to open in haste, unlit keys that are difficult to see in the dark, and other features that typically make the handset less easily operated under all conditions are hardly beneficial.

I admit to being seduced by a RAZR years ago for its slim profile, but have hated it for its ridiculous form; it's easy to carry but a pain to use. I've never had a phone that would pocket-dial so easily, or had such poor battery life.

Of course, your mileage may vary.

[JeffDM]

Originally Posted by Denton

Oh, poor telecoms: should I weep for you?

I must say, I have yet to be convinced that I need the internet with me at all times. I'd rather have a new Macbook than a new iPhone. Good for Apple on both fronts, however...

It can be pretty handy. Riding in a car, I can use the internet to get information. Or at a store, I see something that I think is a good deal, I quickly look it up and see if the convenience is worth the price difference, or if it's a good deal at all. I've even thought of something I needed to get when on the road, looked up the kind of store that would have them, found one that's near my planned route and got contact information and directions pretty quickly.

Originally Posted by TheToe

Why do industry analysts always make over-assumptions like this? I would state this as:
"The displacement of the RAZR by the iPhone 3G represents a watershed shift in handset design from good functionality to more functionality."

The appeal of the RAZR is it's extremely usable, portable, compact design. The appeal of the iPhone is it's extremely expandable functionality and easy interface. All of those have to do with functionality. Did anyone really think the RAZR was a fashion statement?

RAZR popularity was in large part due to being a fashion statement. Especially so early on, and still such when they offered it in 20 different color combinations, many of them exclusive to a certain carrier. Even though they're small and light enough to fit in a pocket, so many people bought belt clips for them anyway!

I don't think it was really all that useable.

[Johnny Mozzarella]

Originally Posted by TheToe

Did anyone really think the RAZR was a fashion statement?

Yeah! They are horrible phones but... thin was in.

[Dueces]

Originally Posted by RichL

The big question for me is why are Americans still buying the RAZR? It's three years old. Even back in 2005, it had nothing going for it apart from the industrial design - and now that's looking dated.

They're not, thats whats sad. First we had the article last week with Apple beating out Nokia, even though Nokia's are virtually non-existent in the US. Now we have the iphone trumping the Razr, which was a top selling device 3 or 4 years ago and hasn't been updated in well over a year, the carriers that still even carry it, only do so as a giveaway device to get the ultra-low income people into a phone for free.

Jesus, whats next an article on the Aluminum iMac outselling Pentium III desktops and Pentium M laptops combined? An article of the Macbook outselling the Commodore 64 and Atari 7800 for 6 straight quarters?

[solipsism]

Originally Posted by Dueces

...the carriers that still even carry it, only do so as a giveaway device to get the ultra-low income people into a phone for free.

The extreme price drop over the last three years to the current free with contract pricing, is why the RAZR had a "three-year run atop the market" through Q2-2008. So yes, Americans are still buying the RAZR as "the Motorola handset [falls] to the second slot, followed by Research in Motion's Blackberry Curve, LG's Rumor, and LG's enV2, respectively."

[Denton]

Originally Posted by JeffDM

It can be pretty handy. Riding in a car, I can use the internet to get information. Or at a store, I see something that I think is a good deal, I quickly look it up and see if the convenience is worth the price difference, or if it's a good deal at all. I've even thought of something I needed to get when on the road, looked up the kind of store that would have them, found one that's near my planned route and got contact information and directions pretty quickly.

Oh, I understand the concept. It's just not worth $30 per month in addition to the $65 per month I pay for my phone or the $40 per month that I pay for internet. I would use it if it was free or I would pay for it if I didn't also have to pay for internet access at home.

[Chris_CA]

Whatya' got to say now, Steve (Balmer)?

"I'm an idiot".

Finally, something that rings true...

[mdriftmeyer]

Originally Posted by greendave

Apple are not the 2nd largest by volume as stated in the article - in fact they have just 1 to 2% of the market by volume. Steve Jobs clearly stated they are 2nd by revenue because they sell such an expensive phone and their revenue is based on how much the carriers are willing to subsidise the iPhone to have it on their network. It has been claimed that Apple receive in the order of $600 per phone (Retail $699 without contract, or normally subsidy of from $325 to $399 from AT&T/network provider in country). Furthermore, do all other manufacturers count phones in the distribution channel? Apple stated they have around 2 million of the 6.5 million sales "in the channel". Furthermore, there was massive pent-up demand from the 2 months that Apple couldn't offer a phone for sale because they stopped selling the 2G. Let us see what the figures are next quarter before we really know just how big a player Apple has become. Personally, I can't wait for Microsoft's Ballmer to eat his words as Windows mobile falls into irrelevance.

Of course not. They are the leader of the market segment that actually makes money. The other market is a fully subsidized trade between phone provider and telco.

[nonstopdesign]

Originally Posted by TheToe

The appeal of the RAZR is it's extremely usable, portable, compact design. The appeal of the iPhone is it's extremely expandable functionality and easy interface. All of those have to do with functionality. Did anyone really think the RAZR was a fashion statement?

Ugh, a friend showed me her razr the other day, what a piece of crap.

[TheToe]

Originally Posted by JeffDM

RAZR popularity was in large part due to being a fashion statement

Originally Posted by Johnny Mozzarella

Yeah! They are horrible phones but... thin was in.

So everything Americans do is just an attempt to get other people to think they're cool? I want to say that's ridiculous, but I have a sinking feeling it may be true.

Here I thought I owned a Mac and an iPhone because they were compact, easy to use, and had the functionalities I want. And I thought I had given serious thought to a RAZR because it would fit well in my pocket. But then again, I guess I'm not your typical American. Heck I even take the bus sometimes, despite having a perfectly functional car.

[solipsism]

Originally Posted by TheToe

So everything Americans do is just an attempt to get other people to think they're cool? I want to say that's ridiculous, but I have a sinking feeling it may be true.

It's a human thing, not an American thing. There isn't a culture in the world that doesn't act in ways to appeal to others.

Here I thought I owned a Mac and an iPhone because they were compact, easy to use, and had the functionalities I want. And I thought I had given serious thought to a RAZR because it would fit well in my pocket. But then again, I guess I'm not your typical American. Heck I even take the bus sometimes, despite having a perfectly functional car.

I'm with you on this, I buy products because they fit my utilitarian needs and my nomadic nature which requires as few personal items as possible, which is why I like my MacBook, my MSI Wind, my iPhone and iPod Shuffle, but I would not hesitate to jump ship if something better comes along. While the RAZR may have fit your pocket space requirements, most people were buying them because of their styling, which includes the "it's so small" effect, which is a common draw for CE.

I'm sure you'll agree that some are buying Macs and iPhones because they are considered cool right now, while other, more informed people, are buying them because they fit their needs.

[greendave]

Hey I have just seen second hand 2Gs selling for over £250 on eBay! Should I sell my unlocked 2G (£20/month T-mobile) and go legit with a contract 3G (£35/month O2) and increase Apple sales figures for this quarter?

[inkswamp]

Originally Posted by greendave

Personally, I can't wait for Microsoft's Ballmer to eat his words as Windows mobile falls into irrelevance.

Oh for frig's sake, let it go already. Steve Ballmer made those comments under a totally different set of circumstances, before the final feature set of the iPhone was known (remember back then, no SDK in the foreseeable future, no serious enterprise support, and some of the major features were hazy at best) and back when the price was stupid expensive. Apple proved him right a mere month after release by lowering the price.

Come on. I'm no fan of Steve Ballmer, but the constant drumbeat of "Ballmer was wrong" across Apple forums is embarrassing. The worst you can nail him for is not having the foresight to see that Apple was going to do with the iPhone what they did with the iPod (lower costs, expand features, etc.) But as far as his criticism back when the iPhone was announced, he was dead-on accurate.

What's really curious about that however is it makes you wonder why he can't turn a critical eye like that to his own company. He can zero in on Apple's faults pretty precisely but seems blinded to those of Microsoft itself.