Apple's iPhone loses U.S. market share in Q1

RIM and Palm's smartphones gained ground on Apple's iPhone in the first quarter, according to IDC.

(Credit: CNET Networks)

Apple experienced a bit of a setback in the U.S. smartphone market during the first quarter after coming out of nowhere last year to rank among the top companies.

According to data compiled by IDC, Apple's still the second-leading smartphone maker in the U.S. behind Research in Motion and the BlackBerry franchise. But it lost market share going from the fourth quarter to the first at the expense of RIM and Palm, according to the figures provided by IDC analyst Ramon Llamas.

RIM's market share went from 35.1 percent in the fourth quarter to 44.5 percent in the first, while Apple's dropped from 26.7 percent in the fourth quarter to 19.2 percent in the first. Palm's Centro lifted that company's market share to 13.4 percent in the first quarter, up from 7.9 percent in the fourth. Samsung and HTC ranked fourth and fifth in the U.S. market with 8.6 percent and 4.1 percent of the market, respectively.

During its most recent earnings call, Apple revealed that it sold 1.7 million iPhones, which was down from the 2.3 million units it sold during the fourth-quarter holiday shopping season. Both RIM and Palm grew their shipments on a quarter-by-quarter basis over roughly the same time period, although the dates don't match up precisely with Apple because RIM and Palm are on slightly different fiscal calendars.

It's not exactly clear what might have led to the decline. Both RIM and Palm have intensified their pursuit of consumer smartphone users, RIM from the high end with devices like the Curve and Pearl and Palm from the low end with the $99 Centro.

Given the iPhone shortages that have been going on for several weeks ahead of iPhone 2.0's expected debut next Monday, Apple might have also lost share this quarter. But the company has consistently reiterated its intention to ship 10 million units in 2008, the first full calendar year the iPhone has been on sale. RIM sold 14 million BlackBerrys during its 2008 fiscal year, which ended on March 1.

[gsmiller88]

Because their phone is only available on the crappiest wireless network in the country!

[technewsjunkie]

I'm waiting for the new one.
Looking forward to all the new apps in development I've read about. Possibly GPS chip too, though I tested the current iteration and it worked fine. I won't even have to buy a GPS for my car after I get the iPhone.
BTW I hope they speech enable it for autos!

[amandachuck]

and because Blackberry finally got serious and dropped prices as well as marketed to everyone, not just business. apple will drop iPhone prices soon. the 3G will be priced a bit lower than the current model, and the current 2.5G will then drop much further.

as for ATT being the crappiest, in my experience they all stink. TMobile was a nightmare when i tried them, and the further you can run from Sprint, the better. Verizon may be okay, but they are a closed system. I like my phones unlocked?

[darkridedp]

Well, that's certainly why I don't have one, but it's not surprising since there has been zero stock online and in the stores for weeks, and I've heard anecdotal stories from friends about some non-ATT owned locations being unable to get them since winter.

[delta772er]

I agree that a lot of the problem is that it is only available thourgh AT&T, and furthermore, its not because the iPhone does currently not have 3G service. While I do not have a problem with AT&T, they, for example, do not offer service in my hometown. Unlike Sprint, Nextel, Verizon, Alltel, and Centennial, who all do.

There are many (particularly more rural, I will admit) areas that AT&T does not have service in, so which will those people go for instead? The RIM or Palm device. Although I do have an iPhone, I cannot use it because if I use it too much I will roam on Centennial too much, and AT&T will terminate my service. I'll stick to my Sprint BlackBerry Curve for the vast majority of my cell needs.

[Berg17]

Every single iPhone that was made was purchased. If Apple would have made more they would have sold more. I am sure RIM wishes they could say that. Sold Out signs hurt there market share nothing more.

[jeremyblaze]

And then resold all those defective ones. But just because you made 50 and sold 50 you can say it was a huge sucess when you competitor sold 340. (ex numbers) I think Apple's oppressive terms are causing normal people to think twice. "not for resale" If I want to sell my property I can. Not only are they locked, they have bricked peoples phones who unlocked them. Apple is becoming much more dangerous than MS ever really was.

[Jamie_Foster]

If Apple could use a WVGA screen on this forthcoming HSPDA Phone it will totally blow every other Smartphone out of the Water. Browsing would be so much better on a 800 x 480 Screen like on the Nokia Internet Tablets. This Iphone OS is really shaking things up.

[byundt]

Sales of Smart phones should be regarded as quite seasonal. Since both Palm and RIM included December in their latest quarter (and Apple doesn't), their Q1"market share" will be artificially higher than Apple's. To make the comparison fair, you need to shift Apple's fiscal year one month back to match Palm and RIM. Assuming Apple's sales are the same for each month in the quarter, then Apple's market share was 24% in this time-shifted Q4 and 21% in Q1--nowhere near as dramatic a decline as analysts have made out.

[pjk0]

Verizon may be "closed" at the moment, but they announced months ago that they will be allowing people to bring whatever devices they want to the service very soon, and the latest FCC spectrum auction saw Verizon the winning bidder on a piece of spectrum that had specific open-access requirements - making them the only major US carrier to own spectrum with that sort of FCC pre-condition.

And if you appreciate customer service, Verizon treats customers like royalty these days. The iPhone also certainly lit a fire under their butt, and pushed them to become more aggressive on the pricing front. When the new HTC smartphones ("Diamond", "Raphael", etc) hit the market, the iPhone will undoubtedly feel a lot of heat from competitors on both the GSM and CDMA side..

[rcrusoe]

If the trend continues after the new iPhone is released, then these statistics mean something. Otherwise, it's probably a case of people waiting for the new model. IMO, if iPhone's new business features (push, Exchange sync, etc) actually work, it will be moving into the enterprise pretty quickly.

[purcell429]

I never understood all this AT&T bashing that goes on in every iPhone thread. Look, sure, there are places where Verizon has better service, but the opposite is also true. My hometown, where I went to college, AT&T is vastly superior both in the cities and in rural areas, at least where I live. They both have national networks (and I won't even acknowledge sprint's existence, since, lets be honest, they suck), and both have areas where once works and the other doesn't. Hell, I have both cell and data service in an island in Lake Huron with no cell phone towers where no one else gets service. I have cell and data in rural west virginia (well, parts of it anyway). And I am sure you can name me places where my phone won't work. But hell, I would be inclined to say the same thing you say about AT&T, except about verizon, but I don't. Because its not true, Verizon doesn't suck. But neither does AT&T. Sure, I feel bad that you can't get the iPhone in your area, but if Verizon would get with the rest of the world and go with a GSM network, who knows, things might change.

[Seaspray0]

I deal with both blackberry and windows mobile in our corporate environment. The iphone will be welcome in it's next revision which is to include active sync. As a comparison between active sync and blackberry's proprietary servers, I favor active sync by far.

[purcell429]

I never understood all this AT&T bashing that goes on in every iPhone thread. Look, sure, there are places where Verizon has better service, but the opposite is also true. My hometown, where I went to college, AT&T is vastly superior both in the cities and in rural areas, at least where I live. They both have national networks (and I won't even acknowledge sprint's existence, since, lets be honest, they suck), and both have areas where once works and the other doesn't. Hell, I have both cell and data service in an island in Lake Huron with no cell phone towers where no one else gets service. I have cell and data in rural west virginia (well, parts of it anyway). And I am sure you can name me places where my phone won't work. But hell, I would be inclined to say the same thing you say about AT&T, except about verizon, but I don't. Because its not true, Verizon doesn't suck. But neither does AT&T. Sure, I feel bad that you can't get the iPhone in your area, but if Verizon would get with the rest of the world and go with a GSM network, who knows, things might change.

[amandachuck]

very true about ATT coverage. works great here in Los Angeles, works well in Florida, but visiting New Mexico, Verizon was king and ATT had issues. But I don't go to NM much, just California and Florida.

[Nodack]

I think the reason Apple lost some of it's share of the market the last quarter was because.

1. Blackeberry came out with their new lineup of phones.

2. Everybody knows the new iPhone is coming out in June so anybody with a half a brain will wait for the new and improved iPhone.

Apple knows this and they have stopped making the old iPhone and supplies have been running out intentionally all according to plan.

Let's check the market share after the new iPhone has been available for a whole quarter. I'm willing to bet market share increases substantially.

[SteenMachine]

I agree with some of the posts here. RIM brought out some new(ish) phones that could increase market share. Since these data are for Q1, which Jan - March (roughly), no one was waiting for iPhone 2.0, at least not that early. But what's missing from the relative percentages is the overall Q1 smartphone market in absolute sales. We need both to make a clear inference about impact. But as others have pointed out, this is really meaningless as 2.0 is just around the corner.

[pjk0]

Re: cellular carriers, read the service quality reports by Consumer Reports, by J.D. Powers, and others. I am not making this up.

My dad travels all over the country in his RV, including lots of out of the way places. (was just in the Grand Canyon the other day, and is now on his way to New Mexico).

He's had an ATT phone for years, but complains about how often he has no service out in his travels around the country. He still has that ATT phone, but he now has a Verizon EVDO card for his laptop too. Despite the fact that voice service is always easier to come by in general than 3G data service when out in the boonies, he tells me that there hasn't been a single day he's not been able to hookup with Verizon, while there have been many where from the same exact location, he can't make a phone call on his ATT phone.

ATT has the 2nd-best coverage for a US cellular carrier. Which wouldn't be so bad if it weren't for the fact that their customer service stinks (they were just fined again by regulators - http://news.cnet.com/8301-10784_3-9958223-7.html ), and their telecom and regulatory history is about as consumer-adversarial as it gets. No thanks.