iPhone Claims Top Spot, RAZR Rusts

Apple's (Nasdaq: AAPL) iPhone is now the best selling mobile phone in the United States, according to recent analysis by research firm NPD Group. To take the top spot in the third quarter of this year, the iPhone had to beat out the Motorola (NYSE: MOT) RAZR, a phone that's been on the market since 2004.

The Motorola RAZR is a thin flip feature phone, and it was actually debuted at an asking price of US$600. In the ensuing years, however, it's entered the mainstream with a variety of price drops, colors, versions and plans.

The phone's design certainly raised eyebrows when it debuted earlier this decade, but what's the RAZR been up to lately?

"Well, you know, it has become a giveaway phone with a new contract, and while we have seen its units decline steadily over the past several quarters, it is still a phone that's selling in very high volumes after all these years," Ross Rubin, director of industry analysis for consumer technology for NPD Group, told MacNewsWorld.

"The RAZR offers good value and fit to the needs of a consumer who is primarily interested in voice," he added.

First Smartphone to Win Top Spot

Interestingly, this is the first time NPD Group has seen a smartphone snag the top sales spot to become the best-selling handset in the U.S.

"That said, the No. 1 brand in the U.S. was LG, and that company has not offered any smartphones for sale in the U.S. -- so the smartphone is not yet a silver bullet that will ensure success in the U.S.," Rubin said. Motorola's RAZR, he noted, has been losing steam partially because its text messaging abilities aren't as "optimized" as they are in the two best-selling LG phones, the Rumor and enV2, which were the fourth and fifth most acquired devices.

RIM's BlackBerry Curve took the number three spot in sales in the third quarter in the U.S.

Winter on the Way

With a $200-plus price tag and a $30-per-month data plan to stack on top of the user's voice plan, the iPhone is not exactly a low-cost option for consumers, especially considering the state of the U.S. economy.

"It's going to be a challenging fourth quarter for all consumer technology," Rubin said, noting that many consumers have a tendency to opt for bargains during the holiday season.

Historically, some retailers have slashed price points on competing MP3 players, for example, which has dropped Apple's iPod market share -- even though the fourth quarter is still usually strong for Apple. The cell phone market, Rubin noted, isn't as volatile as it is with other consumer electronics, so the outlook for the iPhone remains solid.

"The iPhone is prominently positioned at Apple retail stores, which drive a lot of traffic in the holiday season," he said.

In addition, "Consumers are downloading millions of applications, and so that bodes very well for the iPhone as a platform, which will help lock in usage and should help build loyalty -- though it remains to be seen how many applications that have been purchased for the iPhone 3G would be transferable to new handsets," he noted.

Strong Competition Coming

"Of course, we have the G1 and the Blackberry Storm -- and Samsung and LG will likely bring more Android-based smartphones to the U.S. sometime next year," Rubin said.

NPD Group also sees a bifurcation in the market between consumers who simply want a solid handset for voice calling and those who appreciate the value of Internet access on the go and are willing to invest in premium devices -- and the data plans that accompany them. Consumers who are focused on voice see fewer compelling reasons to upgrade, according to NPD.

iPhone Not Just for Gadget Geeks

Part of the iPhone's success may even be coming from less traditional places. While gadget geeks would camp out in front of Apple retail stores in big cities across the country before official launch days, the iPhone's virtues are trickling into small towns and farms.

Vickie Trout, a mother of four and a proud grandmother who lives in rural Idaho, just this week purchased an iPhone 3G to replace the household and farm dial-up Internet connection.

"With the iPhone, it's faster and easier to get Internet and e-mail," she told MacNewsWorld.

Plus, the iPhone's ability to access the Internet on the go lets her keep an eye on changing grain prices. With a simple tap on an icon on her home screen, Trout can launch a local grain cooperative pricing Web page via iPhone's Safari browser.