Apple's iPhone passes Motorola's Razr to become top consumer phone

Apple's iPhone 3G became the most popular handset among U.S. consumers last quarter, passing Motorola's Razr after less than three months on the market.

The iPhone 3G, which started selling July 11, ended the Razr's three-year reign as the No. 1 U.S. consumer handset, research firm NPD Group said Monday. NPD's numbers exclude purchases by companies.

Apple increased sales of the touch-screen device even as total handset purchases by U.S. consumers dropped 15 percent to 32 million units, NPD said. The faster iPhone 3G, an update to the model Apple started selling last year, accounted for more than a third of the company's revenue last quarter.

"It's one of the first devices to provide a desktop-like browsing experience that we've seen consumers flock to," Ross Rubin, an analyst at NPD, said in an interview. "The device represents a fusion of design and an advanced operating system."

The latest iPhone model has benefited from the reduced price of as little as $199 and new applications, Rubin said. The first iPhone sold for as much as $599.

Apple stock declined $2.36, or 2.4 percent, to $95.88 Monday. Motorola shares fell 29 cents, or 6.1 percent, to $4.50.

Apple posted a 26 percent rise in fourth-quarter profit last month as sales of 6.89 million iPhones beat analysts' estimates. The iPhone accounted for 39 percent of total sales of $11.7 billion, when setting aside an accounting standard in which revenue from the iPhone and the Apple TV set-top box is spread out over two years.

The Razr took second place last quarter and was followed by Research In Motion's BlackBerry Curve and two LG Electronics models. Motorola's phone sales have slid for seven straight quarters as the handset maker has struggled to compete with touch-screen devices such as the iPhone.

Motorola has been slow to adapt to the demand by consumers for phones with larger screens, e-mail and Web capabilities, Rubin said. He said Motorola can't depend on the Razr as the handset continues to lose users.

"Consumers are beginning to tap into the idea of Internet access on-the-go and richer media features that are becoming more difficult to navigate on a small screen," Rubin said.