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iPhone Wins Over Both Consumers and Businesses

Displaces Motorola's RAZR and the Blackberry from top spots

November 11, 2008

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Apple's iPhone 3G has become the top selling cell phone for both businesses and consumers.

Among consumers, Apple's iPhone 3G surpassed the Motorola RAZR as the leading handset purchased by adult consumers in the U.S. in the third quarter of 2008, according to research by the NPD Group. RAZR had been ranked by NPD as the top-selling consumer handset for the past 12 quarters.

Even with stronger consumer sales of iPhone, and the mobile phone market's normal seasonal uplift after the second quarter, domestic handset purchases by adult consumers declined 15 percent year over year in Q3 to 32 million units.

Consumer handset sales revenue fell 10 percent to $2.9 billion, even as the average selling price rose six percent to $88.

"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."

The top handset models in rank order, based on unit sales in the third quarter, were as follows:

• Apple iPhone 3G
• Motorola RAZR V3 (all models)
• RIM Blackberry Curve (all models)
• LG Rumor
• LG enV2.

Business rankings

At the same time, iPhones are getting a solid thumbs up from businesses that use smartphones.

According to the J.D. Power and Associates 2008 Business Wireless Smartphone Customer Satisfaction Study, Apple ranks highest in overall smartphone customer satisfaction with a score of 778 on a 1,000-point scale, performing particularly well in the ease of operation, physical design and handset feature factors.

BlackBerry manufacturer RIM placed second and Samsung was third.

The study, now in its second year, measures business customer satisfaction with wireless smartphones -- defined as mobile phones offering advanced capabilities and personal computer-like functionality.

Overall satisfaction is measured across five key factors. In order of importance, they are: ease of operation; operating system; physical design; handset features; and battery aspects.

"With the introduction of the iPhone in 2007, Apple has clearly differentiated itself from the competition in areas that are most important to business smartphone users," said Kirk Parsons, senior director of wireless services for J.D. Power and Associates. "By making basic applications and features easy to use and providing functionality in a thin, lightweight device, Apple has performed well in exceeding customer expectations."

At the same time, the study finds that one-fourth of users report experiencing at least one software-related issue or problem with their current smartphone device.

The software-related issues reported most often include the need to reboot the phone, application malfunction/freeze and issues related to touch screen malfunction.

Popular features

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

Mobile phones with a QWERTY keyboard experienced the greatest year-over-year rise in sales; 30 percent of handsets were sold with this feature in the third quarter of 2008, versus just 11 percent the year prior.

Also this quarter 83 percent of phones purchased were Bluetooth enabled, versus 72 percent last year, and 68 percent of phones purchased in Q3 were music enabled, whle only 49 percent were 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."

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