Research firm NPD Group has announced that the Apple iPhone has surpassed the Motorola Razr as the leading handset purchased by consumers for Q3 2008. The Razr had been the top selling handset for the last 12 quarters according to NPD.

Despite strong iPhone sales NPD says that the mobile phone market saw declining purchases in the quarter with a drop in sales of 15% year over year to 32 million units sold. Consumer handset revenue fell 10% to $2.9 billion despite the fact that the average selling price rose to $88. The top five handsets are the iPhone 3G, Razr V3, Blackberry Curve, LG Rumor, and LG enV2.

“The displacement of the RAZR by the iPhone 3G represents a watershed shift in handset design from fashion to fashionable functionality,” said Ross Rubin, director of industry analysis for NPD. “Four of the five best-selling handsets in the third quarter were optimized for messaging and other advanced Internet features.”

Via NPD Group