Blog Post

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 (s goog) than Apple’s (s aapl) 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 (s rimm) platform, which was the market leader at 36 percent). So what’s propelling Android past the iPhone?

[digg=http://digg.com/tech_news/Why_U_S_Android_Handset_Sales_Are_Outpacing_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 (s mot) 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

107 Responses to “Why U.S. Android Handset Sales Are Outpacing the iPhone”

  1. Derek

    I keep hearing how one of Android’s biggest advantages is that it is vendor neutral – any hardware maker can create a Android device. Didn’t Microsoft go down this route with Windows Mobile? Where is that in the picture?

    Exactly, no where. Their slow release cycle caused the HW makers to have to fill the gaps with their own apps, which usually were really bad (see: MMS on the Samsung Blackjack). Plus, MSFT didn’t really invest in the platform. The WIndows dev team was measured in the 1000’s, the Window mobile team measured in the dozens.

    I’d love to think that Google is different, but the earlier comparison to the PC market does have some validity. The open platform is definitely going to encourage more device sales. More devices, means larger market for application developers. As the amount of developers increase the opportunity for shoddy work to enter the marketplace goes up. Sure there will be gems in there, but your stuck having to find them amongst the turds.

    My guess Apple is more than happy to let Google have that market. They have always been about controlling the user experience and creating a premium product that commands premium prices. I don’t see them changing that. Not while Jobs is around. The only thing I can’t figure out is why Apple re-up’d the agreement with AT&T in the US. With their horrible network performance, I can’t believe Apple hasn’t taken that into consideration when looking at overall user experience.

    Talk device numbers all you want, but know that Apple probably isn’t paying that much attention to them.

  2. This is my EXACT explanation to people when they ask me about why the Android based phones are doing better then the iPhone. Most try to argue about my explanation but now I will just send them to this article and maybe they will shut up! lol

  3. pgopalan

    right on! this exclusivity is what will shrink/prevent the iPhone’s large scale adoption. why Windows has had 95% PC OS share and Mac 5% for decades is the same reason the mobile OS market share will also turn out to be. check out http://bit.ly/bGx2fh
    Feel free to comment, Kevin.

  4. stephen
    1. Apple advertising $ focused on iPad, not iphone for the last two months, hence the slow down.

    2. I am not a Mac fan but I have owned two iphones, 1st Gen and 3GS. I am pretty sure that I am not an unusual case. How many Droid fans will be buying the same phone again?

    3. What do you think a baby-boomer or someone over 40 is likely to buy? An Iphone or a Droid based phone?

    4.How did a company with no mobile phone marketing experience utterly dominated all other well experienced competitor for 2 years? I don’t know either, but they did not accomplished that by being stupid.

    1. I don’t understand all the malice feelings toward Apple. People hated MS the same way before Apple climbed to the top. Does it make sense to hate someone for being good at what they do? Did Apple hate you at a personal level, if so, how? Unfound hate is ignorant.