RAZR Burned

The Motorola (MOT) Razr’s 12-quarter streak as the No. 1-ranked handset in the United States has finally been broken–by Apple, of all companies. According to a survey by NPD, the Razr V3 slipped to second place behind Apple’s (AAPL) iPhone 3G in the third quarter, apparently a victim of its own outdated design.

“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.”

An interesting trend. Especially, since smartphones tend to be quite a bit pricier than their dumbphone counterparts. Indeed, AT&T (T), the iPhone’s exclusive carrier in the U.S., offers the device for $200 with a two-year contract, while it offers Motorola’s RAZR V3xx Platinum for $0.01.

Seems $200 beats free, or essentially free, even in the ugliest of economic times–as long as it’s emblazoned with an Apple logo.

News of Apple’s latest achievement comes just weeks after the company announced it had become the world’s third largest mobile phone supplier in terms of revenue.