iPhone 3G crowned most popular phone in U.S.

NPD report shows Apple's iPhone 3G overtook Motorola's Razr as the most popular handset sold to consumers in U.S. during the third quarter.

Apple's iPhone 3G topped the sales charts in the third quarter, according to market research group NPD.

Apple

The hot, new phone, which went on sale in July, displaced Motorola's Razr as the most purchased handset among consumers, NPD added.

Motorola's Razr, first introduced in 2004, has been the No. 1 ranked handset for 12 straight quarters. According to NPD, the Razr V3 fell to second place behind the iPhone 3G. RIM BlackBerry Curve was third; LG Rumor was fourth; and the LG enV2 came in fifth.

Since the original iPhone was launched over a year ago, the industry has been buzzing about its sleek button-less design and advanced Web surfing capabilities. Many industry experts have gone so far as to say that the phone has revolutionized the cell phone market. It certainly has lit a fire under many of its competitors, which have been scrambling to come out with cool, touch-screen smartphones of their own.

Even though the first iPhone proved popular, it appears that the new version of the phone, which supports 3G network speeds, is even more popular. For its fiscal fourth quarter, Apple reported it had sold 6.9 million iPhones , more than it sold during all previous quarters combined. As a result, the company easily met its goal of selling more than 10 million during calendar year 2008.

One of the biggest drivers for the new iPhone is likely the price tag. AT&T, the exclusive carrier in the U.S. for the iPhone, is offering it for $200 with a two-year contract. This price tag seems to be hitting a sweet spot for customers.

Of course, the increased speed on the 3G network and Apple's App Store have also likely helped boost the phone's popularity.

But as the economy weakens , it will be interesting to see if this trend continues. NPD also noted in its report that overall U.S. handset sales dipped 15 percent compared with a year ago. And revenue on handsets fell about 10 percent.

While the $200 cost of the actual iPhone may not deter consumers even in economic hard times, the cost of the service plan might. Currently, AT&T customers pay at least $70 a month for a plan that offers voice and data service. Text messaging plans can be purchased extra. The unlimited texting plan is $20 extra a month. Meanwhile, AT&T's cheapest voice plan is about $40 a month with a two-year contract. And it will likely come with a free phone.

It's difficult to predict how consumers will react as the economy worsens. Executives for the major U.S. wireless operators say that consumers are unlikely to cancel cell service as they cut back on their monthly household budgets. But they could downgrade service or at the very least wait to upgrade to a more expensive plan, such as the iPhone plan offered by AT&T. And that might prove to be the iPhone's Achilles' heel.

 

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