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2/3/2010
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Apple iPhone Market Share Slips In 4Q

Nokia edged up and Motorola gained on sales of its first devices on Google's Android platform.

The Apple iPhone lost market share in the fourth quarter of 2009, as some rivals gained share.

The iPhone accounted for 16.6% of global smartphone shipments in the fourth quarter, compared to 18.1% in the third quarter, ABI Research said. The last time Apple slipped in market share quarter-over-quarter was in 2008, when iPhone shipments fell to 10.7% from 12.9% during the same time frame.

The fourth quarter is typically strong for smartphone makers, but the growth rate of iPhone shipments fell below the market as a whole. While the market grew 26% quarter-over-quarter, Apple sold 18% more iPhones, or a total of 8.7 million, which the company said was the most it has over sold.

"Even though you hit your best home run ever, it isn't always enough to win the game," ABI analyst Michael Morgan told InformationWeek Tuesday.

Apple rivals that gained market share in the quarter included Motorola and Nokia. Motorola was not in the game in the third quarter, but grabbed a 4% share with the introduction of its first devices on Google's Android platform.

Nokia, on the other hand, boosted smartphone sales by 4.6 million units to grab a 40% market share, according to ABI. Most other players remained roughly flat, with Apple losing the most market share in terms of percentage.

Going forward, Apple will have to drop the single-carrier strategy it uses in most regions, such as its exclusive deal with AT&T in the U.S., in order to bring in new customers, Morgan said. Such a strategy depends on repeat buyers in countries where the company has reached most of the people interested in buying an iPhone.

Morgan suggests Apple should adopt at least a two-carrier approach. "Unless they make that kind of switch in a year or two, their growth will be dependent on replacement cycles and not on new business," he said.

Even if Apple widens its use of carriers, the company is unlikely to ever become the market leader. That's because the company prefers to trade market share for the higher profit margins it gets from targeting the high-end of the smartphone market. This strategy of not competing on price is the same Apple uses in selling computers.

Also, while Apple has lost market share quarter-over-quarter in the second half of 2008 and 2009, the company has managed to increase share year over year the last two years, ABI said.

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