Why U.S. Android Handset Sales Are Outpacing the iPhone

More handsets sold in the U.S. during the first quarter of 2010 were running atop Google’s Android than Apple’s iPhone operating system, according to the latest findings of The NPD Group. Android smartphones accounted for 28 percent of sales; the iPhone, just 21 percent (both still lagged behind Research In Motion’s BlackBerry platform, which was the market leader at 36 percent). So what’s propelling Android past the iPhone?

There’s the obvious explanation: Exclusivity on AT&T’s network limits the potential sales for Apple. As Verizon announced on its most recent quarterly earnings call, it has more than 92.8 million subscribers, none of which can buy an iPhone for use on the network — although a recent poll found that a majority of them want one. Enter Google Android phones, whose user interfaces are similar to the iPhone and have access to a growing software store, now estimated at 50,000 applications. Verizon is helping the Android cause, too — it devoted $100 million in advertising muscle to back the Android-powered Motorola Droid.

An additional factor is the number of handset choices. By providing its Android operating system to any hardware manufacturer that wants it, Google allows for a near limitless number of handset variances for consumers to choose from. iPhone selection, on the other hand, is akin to choosing the paint color of the old Ford Model T’s that only came in black — you can have any iPhone model you like right now, so long as it’s an iPhone 3G or 3GS.

Finally, the many permutations of Android devices offers another advantage — pricing flexibility based on the hardware used and the features offered. The NPD Group cites an average smartphone price of $151 in the first quarter of 2010, roughly half of the $299 price tag for a top-shelf iPhone. Apple offers subsidized models at $99 and $199, but most subsidized Android phone prices top out at $199 and go down from there. The Samsung Behold 2 running Android is currently free with a service plan at T-Mobile, for example. With so many choices, consumers can find Android units for well under $99 these days and can shop around in a greater range of price points.

Related research on GigaOM Pro (sub req’d):

Google’s Mobile Strategy: Understanding the Nexus One

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