More affordable 3G iPhones are starting have a dramatic effect on the smartphone market according to the latest findings of US research firm NPD Group.

The iPhone has grown its market share from 11 per cent after the first year of 2G connectivity to 17 per cent now only a few months after the 3G version was launched in June. The iPhone is rapidly catching up with Motorola’s RAZR2 in terms of overall unit sales.

According to the NPD survey 30 per cent of all smartphone buyers in the US churned to AT&T in order to acquire the terminal. Verizon Wireless was the biggest loser, at 47 per cent of that figure, followed by 24 per cent from T-Mobile and 19 per cent from Sprint.

The news that cut-price deals in conjunction with improved connectivity helped improve uptake of the iPhone will surprise few. But the fact that Apple’s terminal is now outselling the Blackberry Curve, Blackberry Pearl and Palm Centro might raise a few eyebrows.

One online source claims that the iPhone has already breached the 10 million unit sales target that Apple front man Steve Jobs set at the terminal’s launch. The target is a little disingenuous since it is, strictly speaking, the combined total sales of two devices.

Last week RIM CEO Mike Lazaridis told the Associated Press that the Blackberry Bold’s delayed entry into the North American Market is due to the fact that AT&T wants to be sure it does not see a repeat of the coverage problems experienced by some customers with the iPhone 3G.