iPhone Continues Losing Market Share to Android

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, RIM, and Microsoft 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 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?

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