Droid Does…Not Help Motorola Offset Market Share Loss

Worldwide handset shipments rose 13.8 percent in the first quarter of 2010 over the same period a year ago, but the rising tide isn’t lifting all boats, according to the most recent iSuppli report, titled “Mobile Handset Industry Foresees End of the Recession.” Motorola (s mot) continues to leak market share, dropping to the eighth spot from sixth in the span of 12 months — the handset maker sold 8.5 million phones during the first quarter of 2010 vs. 14.7 million in the comparable three months of 2009, a decline of 42.2 percent. Research In Motion (s rimm), Apple (s aapl) and ZTE all leapt past Motorola in terms of sales in the most recent quarter.

Sales in thousands. Source: iSuppli

The data reflects all types of handsets, but the numbers show the growing importance of the smartphone, sales of which is expected to surpass feature phones in the U.S. by the end of 2011. And that trend is both hurting and helping Motorola. On the one hand, the company hit a home run with its Motorola Droid handset that debuted on Verizon’s network in October of last year, with nearly a million units sold, or 8.33 percent of all Motorola sales, according to iSuppli’s fourth-quarter 2009 data. But other recent at-bats have been singles at best. The Cliq, Backflip, and Devour aren’t selling like the Droid has, perhaps because they lack the advertising push it received.

It has to be tough for the Devour (see our video review here) to compete with the Droid on the same network — Verizon customers can purchase the Droid right now for $199 and get a second one free. Priced at $149, the Devour only saves customers $50, uses the older Google Android 1.6 software and doesn’t net you a second, free Devour, though Verizon (s vz) will throw in up to three free feature phones. The Backflip faces similar challenges on AT&T’s (s t) network: it runs the much older Android 1.5 software and is priced at $99, for which a customer could grab an 8GB iPhone 3G. For Motorola to reverse momentum, it needs to find another Droid.

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