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Summary:

Based on a growing number of data points, Android’s sales dominance may be nearing its apex while iOS is on the rise. Even as a daily user of both an Android smartphone and tablet, I can’t deny the facts that Android’s future won’t rival Android’s past.

iOS vs Android

Based on a growing number of data points, Android’s sales dominance may be nearing its apex while iOS is on the rise. Even as a daily user of both an Android smartphone and tablet, I can’t deny the facts that Android’s partners are not doing as well as they used to. The conclusion that Android’s best days are behind is surely arguable, but I am starting to think that Android is on the decline for several reasons.

  1. The early Android handset makers are free-falling. In April of last year I noted that Android was a boost to hardware makers that embraced the platform early. Specifically, I saw that an Android strategy helped Motorola trim losses while HTC was growing faster than a field of bamboo. Fast-forward to today and Google is attempting to snap up Motorola Mobility even as Moto has faltered. And HTC? Monday confirmed what we reported late last year: The rising star has fallen and isn’t meeting expectations.
  2. Apple is grabbing a huge share of mobile revenues and profits. We often talk about smartphone sales market share, which is important to a point, but money keeps a business afloat. And Apple is sucking most of it out of the mobile market. According to the excellent Asymco blog, Apple has been the top handset maker in terms of operating profits for the past 13 quarters running. It has 75 percent of the market’s profit share and 39 percent of its revenue. With the exception of Samsung, Android competitors are beginning to fade away; you can’t grow a business when your product sales are in decline and you are earning less money on such products.
  3. The top three smartphones are all iPhones. This data point comes from NPD on Monday: Of the top five smartphones sold in the U.S. in the last quarter of 2011, the top three are all iPhones. Samsung’s Galaxy S II and Galaxy S 4G took the fourth and fifth spots. Why is this a problem for Android handset makers? Because consumers are more willing to buy the reduced-priced iPhone 4 or 3GS — handsets that are more than a year or two old — than some of the newer Android handsets. There are plenty of low-cost Android models that compete well on price, but consumers don’t think they compete well on the experience. If they did, they would bypass Apple’s older phones.
  4. First-time buyers are picking Android, but . . . NPD did note that first-time smartphone buyers favor Android over iOS (54 percent versus 34 percent), and I suspect that is mainly due to price. But these folks will be second-time smartphone buyers in the future and may be willing to spend more for an iPhone unless Android handset makers can give them a reason to stick with the platform. And now that the U.S. has over 50 percent smartphone penetration, the pool of first-time buyers will be shrinking, not growing.
  5. Even now, there are still few apps hitting Android before iOS. One of the reasons I pay attention to smartphone sales by platform is because of developers. Not every software shop can support every operating system, so common sense dictates that most devs will aim their apps at the largest audience possible. But even with Android sales growing fast over the past two years, very few developers bypass iOS as the first platform to develop for. They are simply making more money with iOS, so that is where the top-tier apps start out, which in turn helps boost handset sales. I don’t see any signs of this changing either. Even for apps on both platforms, it often takes time for the Android version to see parity with its iOS counterpart. Monday’s Android update of Rdio is a perfect example; until Monday, I have used the app on my iPhone instead of my Galaxy Nexus because it was simply better.
  6. Android no longer has a killer app. Originally Android offered the best support for Gmail services by far, but over time Google has brought the iOS version to near parity. I still think the best Gmail experience is on an Android phone and the free, exclusive Google Navigation is great on Android, but it is not a killer app. Even worse: Google can’t cease development on iOS at this point, else users will leave its services altogether. Google can’t afford for that to happen, because it gets data from these users, which feeds its primary revenue stream: personalized advertising. Even as an Android user, I can easily make do using Gmail, Google Voice, Google+ and other Google services on iOS. I suspect many mainstream consumers can too.
  7. There is less of a lock-in cost to keep people on Android. I looked into lock-in costs back in 2010 as I saw how these could sway consumers to stick with a platform. I still believe there is a smartphone lock-in cost: Moving to another platform could cost $100, $200 or more to replace apps. But I am starting to believe there is less of a lock-in to keep people on Android. Why? Most of the heavily downloaded apps are free. Not all of them, of course, but far more of the top Android apps are free versus those in the iTunes App Store. Without this financial barrier, it is easier to switch from Android to iOS. Likewise, it is more of a deterrent to move in the opposite direction.

None of my points here are intended to suggest that one platform is better or worse than the other. As long as I have been covering mobile technology online — it will be 10 years in 2013 — I have always stood by one mantra: Use the best mobile device for your own needs. And I will continue to practice what I preach. Although I have an iPhone 4S, on 9 days out of 10, I carry my Galaxy Nexus handset. I have an iPad 2, but that’s relegated for specific use cases; my Galaxy Tab 7.7 is the tablet I take everywhere.

Independent of my own Android use, there are many reasons to suspect that Android’s growth will continue along the upward path it has seen for the past few years. But Apple’s iOS platform simply has strong momentum that is going to slow Android down as it forces some handset makers to scramble. These will likely gravitate toward the alternative of Windows Phone. Companies are likely to see growth there, but given the history of Android, as well as what I expect from its future, will the story remain the same?

  1. Gag me, please. Another Apple fanboy post. Haven’t we had enough of these? Slow news day so we have to fill whitespace with more Apple lust? Please spare us.

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    1. No, doubt. The article’s tone is desperate at best. IOS is junk, and here’s the proof: http://is.gd/fRkBOZ

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      1. Junk is a wild exaggeration and the only desperate thing here is your “proof”, which btw was debunked a few minutes after it was released. For details, you may want to read this: http://junkcharts.typepad.com/junk_charts/2012/02/a-data-mess-outduels-the-pie-chart-disaster-for-our-attention.html

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      2. We’ll see what happens when ICS come out for you. Did you read your own link?

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    2. Joe Riconosciuto Monday, February 6, 2012

      So the guys says at least three times that he owns both but prefers Android, and your takeaway is that he’s a fanboy for Apple. Very observant.

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    3. “Although I have an iPhone 4S, on 9 days out of 10, I carry my Galaxy Nexus handset. I have an iPad 2, but that’s relegated for specific use cases; my Galaxy Tab 7.7 is the tablet I take everywhere.”

      That’s an “Apple fanboy”? Sounds like he’s just being realistic about the way the real world works.

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      1. In the “real world” people carry neither Android nor iOS. In the “real world,” I guarantee, people don’t carry both.

        This is tech blog myopia. It’s creating arguments and battles where none truly exist.

        Apple (iOS) is about 11% of the US mobile market. That’s “total” mobile market, which includes a lot of the “real world” often overlooked by the likes of GigaOM.

        Both Android and iOS will decline as Microsoft/Nokia pull their sh*t together, with MS/Nokia taking a larger bite out of those who could be first time iOS users.

        We haven’t even seen where Motorola is going to fit into the long term Android equation, so making any RUSH TO JUDGEMENT B.S. HEADLINE, LINK BAITING, POST about the future of mobile is, well, a sign of pre-mature…everything.

        Once tech blogs became bloated with too many writers with a need to post something “new” every :15 minutes, they lost their value.

        Yes, I was hooked by the headline and a Tweet and had to come running to check out this “story,” but I regret the :15 minutes of my life it sucked away from me.

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      2. @Dale: How about, “Both Android and iOS will decline as if Microsoft/Nokia pull their sh*t together…” ?

        Microsoft has a great track record of selling to the Enterprise and independent developers who serve the Big E. Its success with consumers — think PlaysForSure, Zune, Kinect, XBox, Bing, Bob, Hotmail and your choice of many others — is overall pretty miserable. Some great products, but enough dogs that they can’t predictably reinvest the Windows/Office profits as well as shareholders could do with a dartboard. So they under-invest, which is a recipe for being late and half-hearted.

        Take WP7 as an example. Please.

        I don’t doubt that Win8 and its phone/tablet counterparts will be competent and well-liked in businesses around the country. What I can’t understand is how people expect that will lead Microsoft to succeed in a game that they only lackadaisically suit up for.

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      3. @Dale but what’s more important to these companies..profits or market share? That’s what this article’s about.

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    4. But HTC _is_ faltering. Motorola Mobility _is_ in the tank. And Apple is not only getting a larger share of experienced smartphone buyers, they’re making more money than God.

      Is this what makes a “fanboy post”? If so, reality seems to be an Apple fanboy.

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      1. So, does Samsung just not exist in the context of this article because it doesn’t fit in with the conclusions?

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    5. Peter: did you read the *whole* post or just the parts that justify your comment? ;)

      I’ve personally bought twice as many Android devices than iOS devices since 2007. I paid a premium to import a GSM Galaxy Nexus from the UK and did the same for Samsung’s Galaxy Tab 7.7, which you can’t get in the U.S. As an “Apple fanboi”, why would I be spending an average of $500 or more for Android devices?

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      1. Uhm now let me think Maybe because you have far too much money and little sense to use it discerningly. Maybe! .

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      2. To your point Kevin, I respond with a big BFD on what you bought or own. The gist is basically Apple is winning some kind of phantom war that you cooked up to justify a pointless post. Nice try but I’m not buying it.

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        1. Profits and revenues of companies aren’t a phantom war, Peter. I’d rather have more competitors in the market than fewer, but I’m afraid some are starting to stagger and fall. Appreciate your thoughts, even if you don’t agree. Thx!

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      3. Still very early in the game and room for many to falter including Apple. They are on top for now. Let’s see if their closed system and one product strategy (smartphone segment) can sustain itself over time. Long term, I’m a skeptic. However, Thanks for the open dialogue. Still love GigaOM.

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  2. Steve Litchfield Monday, February 6, 2012

    Nice observations, Kevin, but very US-centric…. What about the huge, vast, rest of the world? Where people can’t afford iPhone 3GS or 4, let alone 4S? 8-)

    Those markets are still very open to Nokia/Symbian and all the Android manufacturers.

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    1. Tobias Kemper Monday, February 6, 2012

      I would argue that Android will get first time smartphone buyers, but the iPhone is the mass market phone with the lasting “Wow” effect. A 3GS is still superior in user experience to many Android devices. http://tekcrunch.posterous.com/iphone-vs-android-final

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      1. That article has lots of vague statements but little if anything to back it up. 3GS is slow, has a lower resolution than most Android devices and is actually not nearly as smooth as Ice Cream Sandwich. I think too many people have their experience soured by 1.6-2.1. 2.3 and 4.0 are pretty impressive.

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  3. Steve Litchfield Monday, February 6, 2012

    Nice observations, Kevin, but very US-centric…. What about the rest of the world? Where people can’t always afford iPhones… 8-)

    Those markets are still very open to Nokia/Symbian and all the Android manufacturers.

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    1. Just spent some time with my wife’s family in Kunming, the seat of China’s second-poorest province. She has a relative who tends goats for his living.

      But the others include a CPA, a Dell sales rep, a publisher, a futures trader… There are already a couple of iProducts in their hands. Apple’s “marimba” ringtone was the second most-heard tone on the street (after Nokia’s mosquito). People in China are proud of making Apple products in ways that Samsung or Nokia will never generate.

      All this is before Apple has built out its business infrastructure. Listen to the latest podcast of the Asymco analyst this post mentions, and you’ll understand that Apple is not ceding any opportunity to Symbian, WPX or Android. My guess, which Horace sorta echoes, is that in a year or two, Apple is about to intro a new product variant that will continue its track record of “disruptive innovation.”

      Net-net, while these points may look US-centric, if you look a bit deeper into the cultures of Apple and Google, you can make some educated guesses about how well they’ll perform around the world. We’ll see!

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    2. I agree with Steve. Android is still rapidly growing outside of the U.S. and if you track ZTE’s and Huawei’s rapid growth in the low end markets they are eating into Nokia’s dominance there. What’s also missing in your analysis are Sprint’s recent financial statements on losing money on iPhone. Some overseas wireless carriers who experienced the same things and sell iPhones have recently started to push on Android since they are making more money on them and tired of subsidizing Apple products and give them all the profits.

      Apple dominates the high-end and probably will continue to do so along with the profits. The other handset makers just want the middle or low-end markets, especially since most of them are diversified electronics manufacturers. For Google, as everyone knows, they don’t care about profit on their Android platform and just want market share. So I believe the Android train will still continue to roll. Even look at the latest tablet figures with Android because of Kindle hitting 40% market share (not shipped but sold).

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  4. Apple will always rule profitability, Thats the advantage of few models.

    I dont think Android is slowing down, rather it is consolidating behind Samsung. Most of your data is US only .. where the Sprint “factor” played a big role. To recall Sprint bought a huge order of iPhones which it had to get rid of .. Also iPhones have won in the US for most of the quarters and Android has won internationally .

    We are close to MWC where more Android devices with Ice cream Sandwich are about to be displayed. Remember barring the Nexus S .. There has been no major Android devices for what seems like an eternity.

    Also barring the Nexus S.. There are no devices with Ice cream sandwich. To put that into perspective – The Razr runs a mobile OS which is 18 months old !

    Android needs to fix these problems sooner rather than later… But till then I wouldnt be surprised if the worldwide data will show the continuing rise of the robot.

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  5. SalahAldin O. Ghanim Monday, February 6, 2012

    I beleive it is not fair to compair sailes of 4Gs to galaxy SII wait for nexus galaxy and then do that comparison again, I agree that android market isn’t as profitable as iOS because of the free apps, can’t this alone bring more end-users?

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  6. I’m an Android user by preference, and I agree with Tofel. I think it’s still too early to tell if the current trend will hold when the next batch of smartphones are in the market, though.

    I have one question for Tofel – is there any data on users that have had a smart phone with a big screen (4 inch +)? Are those people inclined to switch to IPhone?

    I know that every time I’ve gotten a larger screen it has been next to impossible to go back to the smaller on I had before.

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    1. I had a Samsung Galaxy S for quite some time, and loved both Android and the 4″ screen. I was curious to see what iOS was like, so bought an iPhone 3GS, certain that I would hate going back to a 3.5″ screen. Turns out I was wrong!

      Early doors I did notice it a lot, especially as the text reflow wasn’t nearly as good as on the SGS when zooming in on web pages. However, the Reader functionality in iOS5 sorted that. This, plus the quality of the apps available mean that I am happy with the 3.5″ screen, but it’s only fair to point out I don’t watch many videos on it. Tho since NetFlix arrived in the UK I have watched some episodes of Arrested Development on it :-)

      Yes, I was mildly disappointed when the 4S came out with the same screen size, but that wasn’t enough to stop me buying one!

      So, I’m converted, but agree with Kevin that there’s no single right answer, it’s all about the personal use-case.

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  7. One Android phone (stock) and two Android tablets (one stock, one rooted) in my household. All are subject to the same stability issues: frequent hanging, occasional lockups requiring a reboot. This kind of experience is acceptable for a laptop and even a tablet, but not a phone. I’m on my third iPhone and can’t see myself switching to Android in the foreseeable future.

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  8. Great article Kevin. As an android user (who also owns iOS devices) I think the iOS ‘fit and finish’ trumps anything Google has brought out thus far. They might be closer with ICS (can’t say as I haven’t used one for an extended length of time) but it seems they are just bringing Android up to iOS’s level, but not surpassing it, which won’t be enough for regular users to stay.

    I do think that one of Android’s strengths is the variety of device form factors that it is available in, and I think it’s great that we now have devices like the Galaxy Nexus and the EEE transformer prime, but they really need the OS (and the apps) to get people to stay once they’ve bought in.

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    1. What google has to realize is that they can easily create a following like Apple crowd. Every single Apple owner I know buys Apple mostly because devices are of a very high quality and look exceptionally good. You simply can’t argue with this.
      What google needs and can easily do with Moto is create a direct rival to iPhone… pure google phone, clean sheet of paper approach. Make it a very hight quality device (sorry but all Samsung devices have horrid enclosure)… either machined metal or sone sort of composite.
      And after that keep up the updates like Apple does with iPhones.
      Obviously this has to be the best Android phone where google showcases it’s latest and greatest.
      I will be the first one in line and will pay up. I love Android but its so hard to find a high quality phone.

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  9. what a pile of rubbish. can’t understand how these facts demonstrate that android is faltering while ios strengthens. in best case it means that android is still lagging behind ios

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    1. The clearest fact that one can point to is that the iPhone and iPad were runaway hits in Q4. Apple sold nearly half of all smartphones sold in the quarter, and took 3/4 of the profits. That’s selling 3 models of phone, vs no less than 5 major competitors flooding the market with every shape and size of handset imaginable.

      So while Android is definitely selling a boatload of devices, there’s only one company that’s making any real money doing it. That’s an equation that’s unsustainable if you’re on the losing end of it.

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      1. How easy it is to view Q4 in isolation and ignore the millions of iPhone purchases postponed in Q3 because an iOS product had not launched in the prior 15 months.

        Other companies are making real money. In fact, Samsung’s smart phone business is very profitable. The only equation that’s unsustainable is 75% of profits on 39% of revenue. Competition and maturation of markets crush those kind of numbers.

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      2. @none

        How easily you ignore the fact that 37 million people were willing to wait as long as 15 months to buy a new iPhone than a host of Android devices.

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      3. @Lava

        How easy it is to claim I ignored something I didn’t.

        How easy it is to further distort the numbers by claiming all 37 million Q4 iPhone purchases were the new device.

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  10. With the exception of points 2 and 5, this is a pretty poor interpretation of data.

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    1. Appreciate your opinion, of course. How do you interpret the data?

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      1. Most readers cannot read the data, much less adroitly analyzing data.

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      2. Meoyskie Porter Monday, February 6, 2012

        1. Simply using Android does not equate to a successful business model.android can’t be blamed for poor vision, quality and execution. Plus why try to judge HTC on one quarter if data and used that to make a sweeping conclusion.

        3. The top selling phones have always been iPhones, even when Android was skyrocketing past iOS in overall sales/market share.

        4. You offer no proof that this will happen though, nor signs that it is.

        5. Kind of goes along with number 3 in that this hasn’t slowed Android growth up until this point, why would it now? Seeing that the Android market has seen vast improvements, this is less of of a reason than before.

        6. Having used all of this these Google products on ios, I know, as you do too, these apps arent that good on IOS. On the flip side, many apps that used to be only on IOS are now on both platforms. Again, Google has gained the advantage here, not lost it.

        7. See latter part of 6.

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      3. Part 1) Samsung IS an early Android handset manufacturer. Just because the Galaxy i7500 wasn’t in the USA doesn’t mean they weren’t a player, the entire world isn’t just in the USA. But mentioning Samsung would contradict part 1.

        Part 2) Android has been consistently rising except the last quarter from iPhone 4S sales. This is hardly signs that Android if faltering. Profit wise it’s been hurting certain companies like HTC because HTC has way too many models and Apple has their premiums. In Taiwan retailers are complaining that it seems HTC is releasing a new phone every month, completely diluting their brand. Meanwhile Samsung is still making a healthy profit. ZTE and Huawei are rising with their budget phones which are popular elsewhere and are making inroads in the USA in the prepaid market.

        Part 3) Take this for instance, Samsung has a couple dozen Galaxy S and Galaxy SII variants catered for specific markets. Of course with so many models they can’t compete with individual iPhone models. I’m sure the numbers would look differently if you compared the Galaxy S series with the iPhone 4 and Galaxy SII series with iPhone4s.

        Part 4) This depends I think largely on what people brought earlier for an Android phone. For instance if it was the SonyEricsson Xperia S, I’m not exactly surprised because the phone is terrible and the rom is buggy.

        Part 5) Price and choice. Want to still be stuck on a tiny 3.5″ screen? Choose iPhone. Want a nice 5.3″ screen with over 10 hours of constant use? Choose the Samsung Galaxy Note.

        Part 6) This is mostly true.

        Part 7) Price is still a factor. Here in Taiwan the cost of a Samsung Galaxy SII is $30 with 2 year contract – much bigger screen and faster specs. The Samsung Galaxy Note is now just $200. Android is still very price competitive.

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      4. I want to add, HTC had released 30+ models internationally in the last year or so. That’s a new phone every two weeks. OF COURSE they’re diluted and losing profits. That’s not an Android problem, that’s an HTC problem.

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      5. Meoyskie Porter Monday, February 6, 2012

        It’s amazing how if any company uses Android and happens to have a weak quarter, well all blames goes back to Android and not the company failing to do good business. Well let some of these tech bloggers tell it.

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      6. My interpretation is that Google AND Apple are both succeeding wildly on their respective goals.

        Google bought Android to prevent Microsoft from locking them out of mobile, and Microsoft is now a weak #4 (#5?). Bingo. Google’s ads — the source of approximately 120% of its profits — will continue to be as much in front of our eyeballs as possible.

        And Apple wanted to reinvent the personal computer in ways that allows it to command huge sales and profits. Double-bingo.

        Apple’s model requires it to step on others’ toes, which is why Verizon told them in 2006 to get lost. Google’s model requires them to be friendly with everybody, especially so when VZ realized it needed an entrant in the Smartphone game.

        Apple’s culture of disruptive innovation will take it into new areas such as developing-world phones, education and the like. I have a bit more trouble seeing where Google takes its success and keeps from turning into a low-growth, low-excitement Microsoft, but will watch with interest. The model that I see emerging from its various initiatives is as a portal, AOL for the 21st century, with easy buttons for shopping (NFC, Google Wallet, Google Travel…), a consolidation of crowd sourced opinions on commerce (Zagat, etc) and other tools that emphasize their real customers’ interests — the advertisers’ needs — to grab a fraction of your eyeballs.

        All the data seems consistent with that hypothesis. I, personally, favor products that I can love even if I have to pay up, versus being stuck in advertising hell on bargain equipment. But that doesn’t mean that others won’t prefer the Google route. It’s obviously working.

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      7. Excellent points Mr. French.

        Until the the last two paragraphs, that is.

        “…turning into a low-growth, low-excitement Microsoft.” Don’t forget Microsoft and its open hardware model experienced phenomenal growth during the middle stage of the development of personal computing, while Apple only avoided being wiped out completely by finding success with products in new categories (i.e. iPod, iTunes, etc.).

        “The model that I see emerging from its various initiatives is as a portal, AOL for the 21st century….” To my mind, it’s iOS’s closed system that’s more akin to AOL’s failed bid to wall-off the outside world of the internet and force-feed content over which it had exclusive control.

        “I, personally, favor products that I can love even if I have to pay up, versus being stuck in advertising hell on bargain equipment.” There’s plenty of high end equipment in the open hardware model world – that’s the beauty of it, you can pay for as much or little “love” as you want. And, I hardly see how one is liberated from advertising by using iOS. Even if it were the case, there’s lots of evidence advertising as a business model is thriving and not something most people consider “hell.” Just look at TV, the internet and Facebook, for example.

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