Apple Loses Ground to Android, but the App Store Still Dominates

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New information from comScore shows Android extending its lead over Apple’s iPhone during the three month period ending in December 2010. Google’s mobile OS is now within close striking distance of Research In Motion (RIM), the U.S. smartphone market leader. Yet despite its growing presence, Android is still having a much tougher time selling apps to consumers than Apple.

Android now accounts for 28.7 percent of the U.S. smartphone market, up 7.3 points from the previous three month period, which ended in September of 2010. Apple saw only a 0.7 point gain, jumping from 24.3 to 25.0 percent during the same period. Both companies edged closer to BlackBerry maker RIM, which dropped 5.7 percentage points from 37.3 to 31.6 percent.

Google’s OS also recently overtook Nokia to become the top smartphone platform worldwide, according to research firm Canalys. But Android’s global reach only tells half the story. The other half is revealed in another new study, detailing global mobile broadband traffic. Network firm Allot Communications released its report on smartphone internet usage Tuesday, collecting information from upwards of 210 million subscribers. The report revealed that Apple’s App Store accounted for 89 percent of mobile software marketplace traffic during 2010, while the Android Market only accounted for 9 percent. The Android Market’s growth over the course of the year was 177 percent, compared to the App Store’s 54 percent, but that’s still a very wide margin.

Apple’s App Store success is a better measure of how iOS is doing than simple market share alone. Market share is important to companies insofar as it represents a way to attract developers to create applications for their platform, which in turn will attract customers who’ll then buy those applications and feel invested (or locked) in to that OS (for more on this, check out the excellent and more detailed explanation at DiogeneX). Google, despite its mobile market share victories, knows it has a problem when it comes to attracting developers, and when it comes to selling paid apps, which is the key to generating lock-in (and by extension, platform loyalty). That’s why the Android-maker recently unveiled a number of significant changes to the Android Market.

Because the App Store has done so well, so quickly, iOS is far less likely to succumb to an erosion of its user base down the road. People have hundreds of dollars invested in the platform already, and if Allot’s figures are accurate, that’s much more than the average Android user, since iOS users are already more likely to spend on apps than Android ones, and they also spend more time browsing the store. That could be why so many Android (and BlackBerry) users seemed ready and willing to switch to iOS when the iPhone 4 came to Verizon.

Android is cheap, and available on a myriad of devices and carriers. Apple’s iOS device pricing is more or less fixed,  fairly expensive and it really comes on only two distinct models of smartphone. And depending on your location, it might not be available on your preferred network. So yes, Android’s growth was bound to explode, but that doesn’t erase or run counter to Apple’s steady progress. Once again, Apple is making the long-term play, and the App Store is the key to that gambit, not worldwide platform adoption.

Related research from GigaOM Pro (subscription req’d):

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