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Apple Grabs Bigger Slice of Smartphone Pie

By Walaika Haskins MacNewsWorld ECT News Network
Oct 7, 2008 1:40 PM PT

Sales of Apple's iPhone 3G have given the hardware maker a six-point boost in the consumer smartphone market, from 11 percent to 17 percent, according to a new report from The NPD Group, a consumer sales tracking firm.

Apple Grabs Bigger Slice of Smartphone Pie

The report placed the iPhone in the top spot among the four best-selling smartphones based on unit sales to customers from June through August. Research In Motion's BlackBerry Curve and Pearl handsets came in second and third, respectively, with the Palm Centro ranked at No. 4. The report is based on more than 150,000 completed online consumer surveys.

NPD also found that most iPhone 3G purchases are made in Apple stores rather than carrier stores, where most handsets are generally bought, said Ross Rubin, director of industry analysis for The NPD Group.

"The iPhone 3G's user interface and its solid design really drive sales. The (US)$199 price is what largely drove the sales increase from the original iPhone to the 3G model," Rubin told MacNewsWorld.

The Old Switcheroo

The report found that 30 percent of people who purchased the iPhone 3G between June and August had switched to AT&T, the handset's exclusive U.S. carrier, from another mobile operator. On average, just 23 percent of consumers changed from one carrier to another during the same time period.

Among the carriers who lost subscribers to AT&T and the iPhone 3G, 47 percent came from Verizon Wireless; 24 percent left T-Mobile and 19 percent waved good-bye to Sprint.

Other carriers and handset makers may not look at the iPhone 3Gs sales as anything more than a quick blip on their radar, but as the market moves away from traditional handsets and toward smartphones, any challenge should be taken seriously.

"Apple's volume is a rounding error in what Nokia sells in the course of a year. [Smartphones] are a strategic segment and one that is growing," Rubin explained. "Some manufacturers are interested in it. They've seen what Apple has been able to achieve in the market. And we've already seen LG and Samsung bring large touchscreen phones to the market. We've seen HTC bring large touchscreen phone, the G1 and there will be others. The major smartphone makers at this point, RIM and Microsoft, will be able to address the challenge that the iPhone poses."

G1 Pre-Orders More Than Expected

The launch of the lower-priced iPhone 3G was a boon to overall consumer smartphone sales, according to Rubin.

Indeed, it may have contributed to stronger-than-expected pre-sales of HTC's G1, a T-Mobile phone that will be the first handset running Google's new Android operating system.

T-Mobile said Monday that heavy demand for the G1 had prompted the network operator to triple the number of phones scheduled for initial deliver on its Oct. 22 launch date. Even with that, according to T-Mobile, consumers have pre-purchased nearly all available G1s.

To accommodate additional T-Mobile customers who wish to pre-order the handset, the company is allowing pre-orders through Oct. 21 and scheduling some for a later delivery.

T-Mobile was hit fairly pretty hard when the original iPhone was launched last year. It was the carrier that lost the highest percentage of subscribers, and it lost the second highest percentage of consumers to the 3G, Rubin noted.

T-Mobile has certainly felt the iPhone's sting, and it was the last major carrier to respond with a large touchscreen handset, he said. There's clearly a lot of excitement about Google getting behind a touchscreen phone experience, and the G1 announcement came after Apple experienced some bad publicity around connectivity issues. Finally, the release of the G1 serves as the carrier's launch of its 3G network.

"It's a very important device for T-Mobile on multiple fronts and is likely addressing some pent-up demand from their customer base. And over the course of a two-year plan, it is less expensive because T-Mobile's data rates are cheaper," Rubin pointed out.

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