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Summary:

The big news early this week about Apple isn’t the commencement of pre-order sales in nine international markets that happened Monday, it’s a report by the NPD group that sees Android smartphones outselling Apple’s iPhone. The question is, why?

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The big news early this week about Apple isn’t the commencement of pre-order sales in nine international markets that happened Monday, it’s a report by the NPD group (via AllThingsD) that sees Android smartphones outselling Apple’s iPhone. The question is, why?

Sure, it’s a major milestone for the Android OS. According to NPD, which specializes in researching consumer data trends, Google grabbed 28 percent of the market in the first three months of this year, compared to only 21 percent for Apple. Both still fell behind BlackBerry, by the way, with RIM’s phones taking 36 percent.

So Android’s selling well, which is good for Google. But is this a sign of trouble for the future of Apple’s iPhone? I think not, and I’ll give you a few good reasons why.

Android is Promiscuous

Oh Android OS, what device won’t you appear on? Google’s operating system has the definitive advantage of being a product any hardware manufacturer can license for use on its smartphone devices. That means that Motorola, HTC, and Samsung are all making Android-powered devices. Google’s made licensing the Android OS so attractive to handset makers that it was pretty much bound to become the OS of choice, with users soured on Windows Mobile and Palm’s failed attempt at a comeback.

If Android is powering, let’s say, 15 devices currently available from all of the major U.S. carriers, and Apple’s iPhone OS is only powering one (or two if you count the 3G and the 3GS as distinct products), then it stands to reason that Google’s operating system would have the advantage in terms of market coverage. In fact, it’s a surprise that it isn’t doing better when you consider how far it’s extended its device offerings.

Apple is at the End of a Product Cycle

What has 2010 brought for Apple so far? Only one of the most successful product launches in history, for a device that basically created its own niche. Of course I’m talking about the iPad. The iPad was bound to steal some focus away from the iPhone, and may even have nabbed some dollars previously earmarked for Apple’s smartphone.

And even if the iPad isn’t significantly affecting iPhone sales, people by now are probably becoming more familiar with Apple’s yearly product cycle, which means that many more would likely be aware that a new version of the iPhone is almost certainly in the works and on track for a June/July release date. I know I’ve advised anyone who will listen to consider waiting until after WWDC before making an iPhone purchase, if they were considering one to begin with.

Where it Wants to Be

Apple’s smartphone OS market share dropped in the first quarter of 2010, that’s true. So did the market share of every other OS except for Android. Which means that as Android catches on with manufacturers, the market is adjusting and making room. Apple’s drop still hasn’t been nearly as steep as RIM’s, Palm’s or Windows Mobile’s.

The bottom line is that Apple is still very much where it wants to be. It doesn’t need to absolutely dominate the market to be successful, and its design, sales strategy and product lifecycle all emphasize consistent growth and stability over the kind of meteoric rise and resulting volatility Android leans toward with its licensed software approach.

Related GigaOM Pro Research: Who Owns Android’s Future? Google — Or Apple?

  1. I’d have an iPhone now if I had ATT coverage where I live…..

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  2. I would say that “Android” isn’t a monolithic thing – there are 3 or 4 versions out there and not every hardware handset will necessarily run Android 2 (or 2.1). Add to that the custom UIs that Samsung and Moto and HTC have whipped up, and what you end up with is a product that is fragmented to the point where it’s difficult to write an app that’s guaranteed to work across the board.

    As much as I like the ideas behind Android, I fully expect it to run into the same issues as Windows in the early 1990s, where the proliferation of hardware and UI shells made cross-compatibility a nightmare…

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  3. Another reason not covered in the article is that there has been several price discounts on Droid. Buy one get one free making it a hundred dollar phone. The iPhone is still selling strong at $199, the original price.

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    1. Selling lower priced phones is a great strategy. Get everyone using your OS with cheap phones so they gobble up market share and then if someone wants a phone for more than just the basic smart phone usage they go and buy a high-end model instead of an iPhone since they already know how to use it. 300,000 activations per day. However the battle between the two is just getting started and WP7 isn’t like the old Windows Phone we’re used to. In the end the consumer will win thanks to the added competition to build the best smart-phone.

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  4. @Brian – yeah, but if there are 5 million cheap Android phones and 2 million expensive iPhones, as a developer, I’d still target the 5 million cheap Android phones as the first target for my app. If Google likes my app and promotes it and it remains an exclusive on Android, more people will buy that. Same thing happened with the iPhone – witness the vast number of iPhone-exclusive apps that make for a good argument to buy an iPhone.

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    1. Yes, except that up to now, Google hasn’t done a good job of promoting apps in their store. Secondly the fragmentation is becoming more of a problem for developers as we have to maintain multiple version of our android apps.

      Most importantly, developing for Android still isn’t nearly as profitable as developing for the iPhone. The iPhone customer base is more willing to purchase apps and Apple does a superior job at promoting apps in the App Store.

      iAd also looks very intriguing and I for one am looking forward to see how that can affect my bottom line.

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  5. “meteoric rise and resulting volatility Android leans toward”

    Really? You’re positive there will be a ‘resulting volatility’ just because Android happens to be expanding at an awesome pace? Clearly you know nothing of Google. If there’s one thing they know how to do, it’s scale. The smartphone OS race is only Google’s to be won since they benefit from more people being connected to the Internet and using Google search no matter what the device is. Apple’s got quite a bit of catching up to do if they want to compete with Google in the Cloud services arena.

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  6. As others have pointed out, more Android phones = more Android apps.

    I know Apple tried to claim that apps didn’t matter, but this is really their only selling point if you’ve seen their commercials any time in the past year. The OS arguably stands on its own, but the iPhone has no hardware advantage, and apps are slipping away… so, uh, what’s left?

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  7. haters approved!

    why don’t people just use the device and forget about its manufacturer or OS maker. It is good – you use it, it is not good – you trash it and move on. Why you have to rant about it all the time.

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  8. “Android Outselling iPhone? No Surprise There”

    Couldn’t have said it better myself.

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  9. I actually chose to get an android,then chose which phone to get, it’s acutally a more expensive phone than the Iphone 4 and has a 3x more powerful graphics card.

    I love the flexibilty that android gives me, and there are pleanty of sites that say what the best apps are to download for it, even if their store isn’t perfectly polished yet, it’s very functional.

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