iPhone suffering Razr burn as consumers chose alternatives

iPhone sales may be nearly doubled Christmas 2008 to 2009, but the smartphone is facing increasing competition, and has suffered a significant loss of market share in Q4 2009.

Apple sold 8.7 million iPhones in Q4 2009, which was below analyst expectations.  According to ABI Research this represents a drop in market share form 18% in Q3 to 16.6 % in Q4.

The stumble can be attributed to increasing competition from high end handsets like the Motorola Droid and devices such as the HTC HD2 and a rather stale device line-up.

Michael Morgan, an analyst at ABI Research, says Apple could be running into a case of “Razr burn”, referring to the meteoric rise and as precipitous fall of the iconic handset which remained essentially unchanged for two years.

Analyst Rob Endele noted "Even in the pain, Apple is realizing a much higher level of profit than any of the other handset vendors. Clearly, Apple is favouring profit over market share,"  "That is consistent with Apple’s strategy. The company may very well continue to drop market share, but you will see them hold viciously on the profits."

With Apple insisting on a high profit margin and carriers increasingly having alternatives to spur consumer data usage demand, it is likely the iPhone will dwindle into a niche market just like Apple computers

Read more at Newsfactor here.

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