Chicago (IL) - Apple's iPhone has displaced Motorola Razr as America's top-selling consumer handset in the third quarter of the year, according to market research firm NPD. Despite Motorola’s financial problems and declining unit sales, RAZR phones remained unchallenged for three straight years in the U.S. consumer market. The unseating the Razr reflects a shift in consumers' preference, highlighted by  NPD findings that indicate that Internet and music player capabilities are the most important trends in the mobile phone space.

One week after Canalysis released smartphone market research that ranked Apple as the new number 2 globally, behind Nokia and ahead of RIM, new market estimates released by NPD show that Apple's iPhone 3G has  surpassed Motorola’s RAZR family as most popular cellphone purchased by the U.S. adults in the third quarter of the year. The research is based on sales data from 150,000 online consumer surveys conducted each month and focuses on adult consumer segments in the U.S.

NPD director of industry analysis Ross Rubin called Apple’s achievement a "watershed shift in handset design from fashion to fashionable functionality." Motorola's RAZR has been ranked as the most popular consumer U.S. cellphone for 12 straight quarters, or three years. Apple's iPhone 3G now leads the list of the top five best-selling handsets in the US, while Motorola's RAZR V3 dropped to second place, followed by RIM's Blackberry Curve and LG's Rumor and enV2 models.

NPD believes that the iPhone’s success – and that of similar smartphones – comes as a result of their Internet functionality. "Four of the five best-selling handsets in the third quarter were optimized for messaging and other advanced Internet features," Ross said.

The research said that 36% of buyers were expressing interest in a phone's SMS texting abilities, while 43% were most interested in the camera. NPD recorded an increase in the number of smartphones with Bluetooth, a QWERTY keyboard and a music player capabilities compared to the last year, which may be interpreted as a direct influence of the iPhone.

Advanced features like Internet and media capabilities actually separated the market into two segments. "A growing data divide continues in cellular handsets," Rubin said. "Those who see the value in wireless Internet access are justifying the investment, whereas voice-centric users have little incentive to upgrade," he said, warning the pattern is "obviously detrimental" to operators who seek to sell data plans and media access services to their subscribers.

The research also showed that the touchscreen-based cellphones have still some way to go. According to NPD, handsets with a physical keyboard saw the biggest annual increase in sales. Nearly one third of all devices sold in the quarter had a physical keyboard, which represents an 11% annual increase. Bluetooth was found in 83% of all phones sold in the third quarter (72% one year ago), while 68% of phones had music player functions (49%).

The overall smartphone market in the third quarter of the year slipped significantly. Handset sells fell 15% compared to the year ago quarter to 32 million units, failing to see the usual seasonal jump following the close of the second quarter. Revenues from consumer handset sales fell by 10% to $2.9 billion, despite a 6% increase in average selling prices which currently stand at $88.