Apple Jumps to 17% of Smartphone Market

The introduction of the iPhone 3G last July did wonders to pop Apple’s place in the smartphone market, with users dumping their phones to switch to Apple’s device.

But Apple will be hard-pressed to maintain its growth curve as new challengers enter the market.

That’s according to research from the NPD Group, which found that Apple’s (NASDAQ: AAPL) slice of the smartphone market went from 11 percent in June to 17 percent of the market overall by the end of August. Apple had quite a run of sales during that three-month period at 24 percent of smartphone sales.

Don’t expect that hot streak to last. Ross Rubin, director of industry analysis for NPD, tells that Apple will face growing challenges in the coming months.

“We’re poised to see some new touchscreen smart phones from T-Mobile and others, which may reduce the number of consumers who are switching to AT&T to have access to an iPhone,” he said.

The other factors for Apple are whether it can stem the tide of bad news that accompanied the 3G launch, such as poor 3G performance and connectivity issues.

Because the iPhone is only available through AT&T, whereas Research In Motion’s (NASDAQ: RIMM) is available with multiple carriers, people wanting an iPhone had to switch carriers. Rubin said some AT&T customers converted their phones, but by and large, there was a big switch.

Half of all iPhone buyers this past summer came from other carriers. Verizon Wireless (NYSE: VZ), the second-largest carrier, took the biggest hit. Of the people who left a carrier for AT&T, specifically for an iPhone, 47 percent left Verizon Wireless, while 24 percent left T-Mobile and 19 percent abandoned Sprint.

Sprint was able to hang in there, Rubin explained, because it had the Instinct, a new smartphone that it positioned against the iPhone.

RIM, already so dominant in the business market, is also making a concerted effort to crack the consumer market. So will teenagers in malls across America be sporting CrackBerries? It’s already happening, said Rubin.

“They already have made a big push into consumer, they are already a really strong force in the consumer smartphone market, and I believe are still number one from a company share of the smartphone market in the U.S.,” he said.

Overall, he said, smart phones are beginning to supplant regular cell phones, which aren’t good for much beyond making phone calls. “The momentum in the marketplace is definitely moving toward smart phones,” said Rubin. “The smartphones are just becoming much more consumer friendly and the form factors are sleeker. Social networking on smart phones is increasing and consumers are more amenable to having access to those capabilities on the go.”

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