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iPhone Continues Losing Market Share to Android

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Not even the iPhone 4 could stem the tide of Android, at least according to the latest rolling average for U.S. smartphone market share from analytics firm comScore.

, from 12 to 17 percent. In contrast, Apple (s aapl), RIM (s rimm), and Microsoft (s msft) all saw decreases, 1.3, 1.8, and 2.2 points respectively, while beleaguered Palm somehow managed to remain flat.

So why didn’t the iPhone 4 provide at least a temporary increase in market share for Apple? The comScore report is a rolling average, April through July, while the iPhone 4 was launched on June 24. Further, the iPhone 4 is still supply constrained, still showing three weeks to ship at the online U.S. Apple Store.

It could be that there have been problems with manufacturing, still no white iPhones, or perhaps Apple executives underestimated demand, or chose not meet it. The latter isn’t crazy, if you look at it from the tight-fisted perspective of Apple.

Every year we see a new iPhone, and every year initial demand is always much greater than the rest of the year, and yet sales numbers never reflect that spike. One reason for this might be the extra cost to ramp up production for a short period of time, compared to the cost of keeping people waiting until demand flattens out. After all, you don’t get $40 billion in the bank by wasting money on excess manufacturing capacity.

However, the more likely reason is the simplest one. The exclusivity deal with AT&T (s att) is just killing the iPhone in terms of U.S. market share. There are more than 300 million mobile phone subscribers in the U.S., and AT&T has around 90 million of them. That means Google has more than double the number of possible customers than Apple, and they have been making the most of that. In the last six months, Android jumped from 7 to 17 percent, and shows no sign of slowing down.

The only good news here for Apple’s market share is that only about one out of six mobile subscribers in the U.S. is using a smartphone. That leaves a lot of possible customers to reach, but is Apple interested in doing so?

19 Responses to “iPhone Continues Losing Market Share to Android”

  1. “People settle for Android and lust for the iPhone.”
    – Lie

    “Android is a decent knock-off of iOS.”
    – Wrong

    This article is about as informative as the iFan commenters. I’ll take my Droid over your iPhone 8 when it comes out, both because of functionality and because of the way Steve Jobs owns you like a dictator.

  2. I phone have lots of problem that’s why it is going to wrong way. When I phone came in market, many person were exiting about it because it was a new product in market but write now there is no too demand htt://

  3. Apple was not prepared for the launch of the Iphone 4. It was rushed as a result of the Gizmodo disclosure. Therefore, the stores weren’t stocked with accessories, and production was not prepared for the demand. Ignoring the damage done to apple by the early disclosure seems to be the norm among tech blogs.

  4. Hamranhansenhansen

    Apple has the biggest mobile platform in the world, by far. Much of it is not even shown here, even though RIM is made to look artificially large by including their phones that don’t run apps, and Google is made to look artificially large by pretending they are a handset maker like Apple, RIM, and Palm.

    In addition to having the biggest mobile platform, Apple also takes the biggest share of the profits in mobile, and have the best technology in mobile. These are facts.

    There is a big market for charts like this that hide those facts, so as to paint a rosier picture of today’s mobile market for the not-Apple companies who divide up 48% of the profit while Apple takes 52%. The ones who are firing their CEO’s, or selling smartphones 2-for-1 or 1 cents each.

    People are asking “doesn’t Apple care about US smartphone market share?” Answer: they have the biggest mobile platform in the world. That is a real thing, not an artificial made-up thing for making charts. Looking at US only is an artificial limit, looking at smartphones only is an artificial limit. What comes out of that is artificial. Apple did iPod touch and iPad to grow their actual mobile platform instead of a CDMA iPhone to grow their artificial US smartphone market share as defined by tech analysts. These are people who say a BlackBerry Flip is a smartphone and an iPod touch is not. Meaningless. Providing over 120 million devices that all run the same apps and make up the biggest mobile platform in the world is not meaningless. A Verizon iPhone is just a different cell chip away … an iPad or iPod touch competitor is a unicorn. A MacBook Pro competitor also.

    So, it doesn’t matter if that artificially large Google pie piece in this chart grows larger than the artificially small Apple pie piece. RIM’s artificially large pie piece is not doing them any good. The chart that matters is not US smartphones but rather worldwide mobile.

  5. When the iPhone goes to other carriers the battle will be won by Apple. People settle for Android and lust for the iPhone.

    That aside, I love my iPhone and I’m happy to be in a niche market of the Apple ecosystem.

    Sent from my iMac

  6. Ho-hum. We’re still talking Apples and oranges. Haven’t any of y’all ever worked in corporate sales and marketing?

    The only thing that counts is profit! First, last and always. It’s why Apple’s stock is expensive and rising – and Google’s stock is expensive and becoming less so. They have a competitor in their own field who is costing them money – Baidu.

    Android is a decent knock-off of iOS. It’s free. Every handset manufacturer on the planet will use it. It will achieve terrific market share, of course.

    The profit it makes for Google is of the order made by Google searchbars on browsers. That fits the Google business model. They make no profit from hardware or software.

    OTOH, that’s the business Apple is in.

  7. Mark Hernandez

    I agree with Victor. The mobile marketplace is EXTREMELY COMPLEX and most blog writers mischaracterize it when they have too simplistic of a view of it. If you are going to write about the mobile marketplace you must have and firmly under your belt in understanding that complexity.

    Apple does not need to have the most market share (and it never has) in order to be supremely successful because it’s not like the others. There really ARE Apples vs. oranges comparisons here and that must be reflected in any discussion.

    Yet Apple still plays the marketing game because it knows people have too simplistic a view of the mobile marketplace. As long as they can claim the number one spot in any particular way, they will claim it, but when things change, they will change the conversation accordingly.

    Furthermore, every discussion of market share has to be careful to take expansion into account and make mention of it. Apple can be losing market share relative to the others yet still be growing.

    If you are going to write about the mobile marketplace accurately, you have to be a little more complete. You offer possibilities in parts of this article, assumptions in others, but why don’t you do the research and find out and help clarify things for your readers? This article feels like it was written too quickly.

  8. While I’m at it I’ll comment on the actual article. Apple isn’t interested in marketshare with the iPhone. It’s interested in high margins, efficient production and a market place where THEY make money (iTunes, App Store, iBooks).

    The iPhone will never be as ubiquitous as the iPod and it doesn’t have to be. As long as smartphone usage is growing, so will iPhone usage and I assure you Apple is plenty fine with that, because they’re making a boatload of money, marketshare be damned.

    • Because there are so many oems pumping out first android phones and soon wp7 phones by the hundreds of models, the razor thin profits left to these competing companies will leave them weakly prepared for market shifts. Apple’s war chest and absence of debt gives it an edge for future developments…

    • I’m having a hard time imagining Steve Jobs ambivalent about the kind of market share the iPod has garnered, then there’s little things like Jobs going out of his way to challenge Google on the number of Android activations.

      I agree that Apple concentrates on profit to the exclusion of all else, but there was an opportunity, now lost, to have profit and a plurality of market share. A Verizon iPhone in 2007 or 2008 would have blunted Android’s initial success, and everything that has come from that since.

  9. There might be more “innovation” in the Android market. I’ll give it that. But innovation breeds problems and every single Android phone has some stupid problem. I have yet to talk to any Android user who has absolutely ZERO issues with their phone. That’s because when standards break down, so does quality.

    Apple doesn’t have any problem with the iPhone because they’re able to focus all of their effort on a cohesive amazing user experience. It might not do everything that an Android phone does, but it does 99% of the things an Android phone does, and it does them better.

      • There may be minor issues with the iPhone but most of it is fixable with a firmware update or some other quick remedy. Not to mention Apple updates software quite regularly compared to other companies.

        Talk to a Droid incredible user and see how much they love their 2.2 update. It sucks and there’s virtually no way to fix their issues because HTC won’t release a software update for another 6 months if ever.

  10. This article conveniently ignores what many other Apple-centric writers ignore. There is far more variety in the Android market, and far more innovation right now because of multiple manufacturers competing for a specific growth area. A really simple case – my wife finally decided she wanted a smartphone, and decided the iPhone was too big. She bought the HTC Aria, which is smaller and fits her hand better. Apple is always going to have this problem as long as they stick to a single model business.

    The other thing I observed when helping her set things up is that the widgets are terrific and make for much simpler operation for traditional phone applications (voice and texting) than the iPhone.

    I have also noticed people getting excited about their new Android phones in a way that only iPhone users were excited until fairly recently.