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Oct 7, 2008

iPhone grabs top smart phone spot

Apple grows market share 55% since iPhone 3G launch

Apple Inc. boosted its share of the U.S. consumer smart phone market by 55% after cutting the price of its iPhone and rolling out a 3G model this summer, a research firm said today.

According to data from NPD Group Inc., the iPhone's share of the market grew from 11% before the July launch of the iPhone 3G to 17% as of the end of August. Apple's device is currently the best-selling consumer smart handset in the U.S. and was often in short supply during the first few weeks after its release.

"The last three months, we have it ranked No. 1," said Ross Rubin, an analyst at NPD. The research firm bases its findings on online surveys it conducts with more than 150,000 American consumers each month.

Rubin credited the second-generation iPhone's lower price and access to the faster 3G network for the increase in share, with the latter particularly important to the iPhone's gains. "The iPhone 3G was more efficient in pulling buyers from other carriers than the first generation," Rubin said, citing statistics gleaned from NPD's surveys.

In the three months surrounding the iPhone 3G's launch, 23% of American consumers switched mobile carriers; during the same June-August time period, 30% of iPhone buyers switched from another carrier to join AT&T Inc., Apple's exclusive network partner in the U.S.

The bulk of new iPhone owners who switched -- 47% -- left Verizon Wireless, while another 24% dumped T-Mobile and 19% switched from Sprint.

"Carriers withstood the pull of the first-generation iPhone, but Apple's taking advantage of AT&T's 3G network," Rubin said. Verizon has been especially susceptible to defections because, unlike rivals such as Sprint, it has not had a handset competitive with the iPhone. "It's proven more vulnerable to the iPhone because of that, and also because of its size," he said.

Apple and AT&T, however, will face increasing competition, predicted Rubin, who called out the new G1 from T-Mobile -- the first smart phone powered by Google Inc.'s Android operating system -- as a prime example. "Now we're seeing other manufacturers launching full-fledged smart phones," said Rubin, who also cited the still-unofficial BlackBerry Storm from Research In Motion Ltd. as another potential iPhone rival.

Apple has scheduled a conference call with Wall Street analysts and reporters for Oct. 21, when it will announce its fiscal fourth-quarter earnings and reveal iPhone sales figures for July through September.
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