The Only Thing Better Than the iPhone

The world just keeps getting smarter. Even as overall mobile phone sales fell 8.6% from last year's first quarter, smartphone sales surged 12.7%, researcher Gartner reports.

Data shows that while Apple (Nasdaq: AAPL  ) was the fastest smartphone grower, Research In Motion (Nasdaq: RIMM  ) devoured the most market share, expanding to 19.9% from 13.3%. The iPhone, meanwhile, accounted for 10.8% of the global smartphone market, up from 5.3% last year.

Among the losers, Motorola (NYSE: MOT  ) bled four percentage points to end at 6.2% of the worldwide mobile phone market. Nokia (NYSE: NOK  ) didn't fare much better, down 2.9 percentage points year over year. In smartphones, the Finnish phenom still holds a big lead, with 41.2% of the market -- but that was down from 45.1% a year ago.

Should Nokia be worried? I'm honestly a little more concerned about Apple. The iPhone continues to grow massively, but with new competition from Palm's (Nasdaq: PALM  ) Pre and the BlackBerry's extremely impressive showing, further gains by Apple are anything but assured. Not without further innovation, anyway.

But innovation is on the way. Apple's annual Worldwide Developer Conference runs from June 8-12, and the new iPhone operating system -- version 3.0 -- should ship shortly thereafter. Promised improvements include cut-and-paste manipulation of text, and universal search. Both features should entice iFans who've been waiting for the upgrade.

Just don't expect the improvements to be enough to lure in CrackBerry addicts. History says they won't switch. Apple introduced a 3G version of the iPhone last July, yet RIM still managed to sell more than 23 million handsets during 2008, increasing its revenue by a whopping 84%.

A smarter world offers a huge opportunity to the best-positioned smartphone vendors. Apple is gaining from the shift more than most, but so far, Research In Motion is gaining most of all.

Brrrrring! It's related Foolishness calling:

Apple is a Stock Advisor selection. Nokia is an Inside Value recommendation. Try any of our Foolish services free for 30 days.

Fool contributor Tim Beyers had stock and positions in Apple and a stock position in Nokia at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has officially run out of disclosure-y witticisms.


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  • Report this Comment On May 21, 2009, at 12:34 PM, madcowmonkey wrote:

    The business world is RIMM's and blackberry's bread and butter. I am sure that if the corporate world had the option to use a blackberry or iphone, these numbers would change drastically. If Apple could break the barrier, then your title would have to be changed to, "The only thing better than an iPhone is a new iPhone."

    Of course I still use the original iPhone, because it comes with a cigarette lighter. But I would be willing to change if I could get 3G where I live.

  • Report this Comment On May 21, 2009, at 12:36 PM, madcowmonkey wrote:

    hey look! Etrade is giving away a free blackberry if you open an account with them. Wow! those things are so cool companies just give them away:)

  • Report this Comment On May 21, 2009, at 3:03 PM, babushnik wrote:

    Apple has just 1 smartphone. That 1 smartphone has captured almost 11% market share in under 2 years. And you are worried? The only ones that need to worry are Rimm and Nokia.

  • Report this Comment On May 21, 2009, at 3:24 PM, largesse wrote:

    Do you care about profit? RIMM spent the last quarter giving away Blackberries 2 for 1. What a surprise that their market share increased!

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