iPhone 3G beats RAZR in sales & BlackBerry in failure rates

More champagne corks likely popping in Cupertino this week, as Apple's iPhone 3G is again heaped with praise.  After the news last Thursday that J.D. Power's smartphone survey had tipped the iPhone 3G as most satisfying handset among business users, now comes word that the other business mainstay, the BlackBerry, is in fact less reliable than Apple's upstart.  That said, and with the continuing success of the handset, it comes as little surprise that the iPhone 3G has now overtaken the Motorola RAZR as the device most purchased by adult customers in Q3 2008.

Despite not having a QWERTY keyboard – devices with one saw the greatest rise in sales year-on-year in Q3, going from 11-percent in 2007 to 30-percent in 2008 – the iPhone 3G still managed to beat the BlackBerry Curve, LG Rumor and LG enV2, which took third, fourth and fifth places respectively.  The RAZR has held the top-spot for the past twelve quarters; researchers The NPD Group are calling it "a watershed shift in handset design from fashion to fashionable functionality".

Meanwhile analysts SquareTrade looked at failure rates for in excess of 15,000 new phones, and found that in the average first year of ownership the iPhone 3G suffered a mere 5.6-percent failures; that's half that of the BlackBerry and a third of the Palm Treo. The most common failure in iPhones is the display, but users are to blame too: 33-percent more failures in the first year are due to accidental damage.

Press Release:

The NPD Group: iPhone 3G Leads U.S. Consumer Mobile Phone Purchases in the Third Quarter of 2008

Overall consumer mobile phone purchases declined 15 percent year-over-year

PORT WASHINGTON, NEW YORK, NOVEMBER 10, 2008 – According to The NPD Group, the leader in market research for the wireless industry, Apple's iPhone 3G surpassed the Motorola RAZR as the leading handset purchased by adult consumers* in the U.S. in the third quarter (Q3) of 2008. 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 Q2, 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 (ASP) rose 6 percent to $88.

Top-selling handsets and mobile phone brands

"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 Q3, were as follows:

1. Apple iPhone 3G

2. Motorola RAZR V3 (all models)

3. RIM Blackberry Curve (all models)

4. LG Rumor

5. LG enV2

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 Q3 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 (versus 49 percent 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."

Methodology: NPD compiles and analyzes mobile device sales data based on more than 150,000 completed online consumer research surveys each month. Surveys are based on a nationally balanced and demographically representative sample of U.S. adults. Results are projected to represent the entire population of U.S. consumers age 18 and older.

About The NPD Group, Inc.

The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, visit http://www.npd.com/.

Press Release:

SquareTrade Research: iPhone More Reliable than BlackBerry, One Year In

An Analysis of Reported Malfunctions in iPhone, BlackBerry and Treo Handsets.

Synopsis: SquareTrade analyzed cell phone failure rates for more than 15,000 new phones

covered by SquareTrade Care Plans and found iPhone handsets had substantially fewer failures

than BlackBerry and Treo handsets within the first year of ownership.

Highlights of the study include:

- In the first year of ownership, the iPhone had a 5.6% malfunction rate, half the rate of the

Blackberry and one-third the rate of the Treo.

- The iPhone is projected to have a 9-11% malfunction rate in the first 2 years of

ownership, compared to 14.3% for BlackBerry and 21% for Treo handsets.

- Touch-screen issues were the most frequently reported iPhone problem, accounting for

nearly one-third of all reported malfunctions.

- The iPhone is prone to failure due to accidental damage, with 33% more failures reported

in the first year. Nearly one quarter of iPhone handsets are projected to fail due to an

accident in the first two years of ownership.

Citations and quotations of this paper's contents require proper attribution to the source at

paper's contents are prohibited without prior written consent from SquareTrade, Inc. For media

inquiries, write or call Jill Reedy at press@squaretrade.com or 415-541-1000 x1054.