Motorola's U.S cell phone dominance wanes

Motorola is still the leading supplier of mobile handsets in the U.S., but the company is expected to lose its No.1 spot next year as it struggles to get back on track.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
2 min read

Motorola will hold onto its market dominance in the U.S. handset market in 2008, but the company's market share is rapidly declining, according to a report from market research firm MultiMedia Intelligence.

Motorola is expected to provide 21 percent of all handsets bought in the consumer market in the U.S. in 2008. But without any new hit products coming on the market, Samsung and LG are poised to surpass Motorola in terms of market share in 2009.

BlackBerry maker Research In Motion and Apple's iPhone are also expected to gain market share in 2009. Rick Sizemore, chief strategy officer with Multimedia Intelligence, predicted that Blackberry sales will more than double in 2008. BlackBerry smartphones, which offer Web browsing and access to personal and corporate email, are particularly popular among 35- to 44-year-olds.

"The market share changes among the top mobile handset providers is noteworthy; however, it is not the story of the market," Sizemore said in a stement. "The market share gains made by RIM and Apple are coming at the expense of the market incumbents and are affecting the way the entire market competes."

Other notable data from the report suggests that Samsung is the No. 1 choice of phones among younger consumers aged 12 to 17 years old. And it's also popular among African American and Hispanic consumers, according to the report. LG is the most popular brand among those aged 25 to 34, and Nokia sells best among those older than 65.

Motorola's fall from glory should come as little surprise. The company's mobile handset business has been in serious trouble for more than two years.

In late October, Motorola co-CEO Sanjay Jha told investors he doesn't expect the handset business to get back on its feet until at least early 2010. The company reported huge losses in the third quarter, and it delayed plans to spin off of the handset division and restructure the entire business.

Motorola's main problem has been its lack of cool, new handsets. In fact, the last hit phone it came out with was the Razr in 2004. Meanwhile, companies like Apple and RIM have come on the scene and changed the entire market. Consumers are moving away from traditional feature-based cell phones, such as the Razr, and moving toward more sophisticated smartphones, like Apple's iPhone and RIM's BlackBerry. In fact, the iPhone surpassed the Razr as the most popular phone in the U.S. for the third quarter, according to NPD Group.

Exacerbating Motorola's troubles is the weakening economy, which threatens to hurt sales even more. The outlook for sales of all mobile handsets is expected to be down for the fourth quarter of 2008 and into 2009. Nokia has twice in the past month, citing the rising value of the dollar and reduced demand in developing markets for its products. RIM also recently announced that it's fiscal third-quarter sales will be lower than expected in part due to the economy.