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

29 Comments

New information from comScore shows Android (s goog) extending its lead over Apple’s iPhone (s aapl) during the three month period ending in December 2010. Google’s mobile OS is now within close striking distance of Research In Motion (RIM) (s rimm), 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 (s nok) 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(s vz).

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):

29 Comments

mrrtmrrt

Darrell,
You’re comparing iOS and Android’s App marketshare and yet only comparing smartphone hardware.

Your graph only shows half of the iOS app platform size vs almost all of Android.

Almost all of the mobile Android platform is represented in the graph above (most Android tablets sold have cell phone hardware built in so are classed as smartphones like the Dell Streak and Samsung galaxy tab).

However, only half of Apple’s iOS is represented in this chart as last quarter Apple sold around 10 million iPod touches and 7 million iPads in addition to their 16 million iPhones. That makes 33 million iOS devices sold, on par with the total number of Android devices sold (we won’t go into how many of Samsung’s 2 million Galaxy Tabs were actually sold on to customers).

This is the real story that virtually every commentator ignores. The iPod touch is an iPhone without the phone and it completely owns the category, a category that is a third the size of the entire Android platform and nobody ever talks about it just because Android has almost zero presence there. The same concern applies to the tablet market.

You need to compare *total* iOS platform numbers vs total Android platform numbers which helps to explain why iOS still has so much more App-share (and web-browsing share) than Android. Mind you, the difference is so vast that it is not the whole story of course.

The vast amount of spamware (45,000 out of the 100,000 apps in the Android Marketplace are spam apps) and the low number of top-tier games titles (20 for Android vs 306 for iOS) and other App categories all play their part in making the Android App market a cottage industry compared to the profit-engione of the iOS App Store.

-Mart

Take To Task

Exactly. Sure, there may be some Android players on the way, but nobody has addressed this market, so iPhones, iPod touches, and iPads combined really own the market in a big way that developers would be stupid to ignore. I have no doubt that Android is here to stay (assuming Google and others don’t lose to Oracle/Apple infringement suits) and, quite honestly, as long as this next decade doesn’t belong to Microsoft, we’re headed down the right path, finally.

DaveMTL

We are just starting to see the effect of the iPhone 4 on Android due to the Verizon version. This effect is seen at place like Gazelle, which purchases used equipment. The resale price of top Android machines is quite low while iPhones are selling at a decent price. If we see significant defections, expect to see T-Mobile and Sprint come on board soon. BTW, notice how one of them now gives away top Android sets for free if you sign for 2 years!

lrd

I think Motorola for one is doomed starting this Thursday.

And the $800 forked OS XOOM is going to help.

PXLated

Would be interesting to know what the breakdown is between android sets that include Google apps/search and those that don’t. Betting all those sets sold in China don’t at all.
As a side to this – does one even consider the Chinese version of android “android” or is in reality a totally different “forked” version? If “forked, it probably shouldn’t even be included in share figures for android. And when talking Google/android, those sets not benefiting Google should probably not be included either.

FreeBee

Android being free doesn’t always mean better, look at Linux. Marketshare doesn’t always correlate to profits, look at Porsche, Mercedes, Ferrari with low marketshare etc. One of the problems with Android is that by being free, users expect to get everything for free, including their android apps, so very little incentive for developers to convert to android and give their apps away when there are 100M+ user base on iOS willing to spend on good quality apps. The 2nd biggest issue with Android is the myriad of devices it can run on, as such, an app that works well with one device on android, may run very poorly on another android device, there is no performance consistency.

lrd

OK. Let me summarize it:

Apple 25% market share in the US- 50% of the mobile industry profit.

Google’s Android 29% market share in the US- 0% of profits to Google.

I’d rather be Apple- and that’s without the Verizon iPhone.

PXLated

To be fair, we don’t know how much Google is making from the mobile ads on android but, we do know that not all manufacturers/carriers are even putting Google search on their handsets so ad revs aren’t in any way guaranteed to Google.

DaveMTL

Actually Google makes money… on the ads. It’s the manufacturer that is making little. I am anxious to see how much Android market share goes to Apple at Verizon. I suspect it will be significant and that it will be the preferred clients that actually buy apps and use internet. I have met more than I expected to meet of Android users who don’t have a data package! In fact, most chose Android because it was nearly free or free (49$ or less). The race has just begun.

lrd

Ok let’s talk about making $:

Apple made $6 Billion in profits last quarter- more than Google did in revenues after you take out the $2.4 Billion it had to give back to its partners.

PXLated

Google say they make money (or are covering costs) from ad/android but they don’t give numbers or break anything out. And we all know how accounting can say pretty much anything you want.

filecat13

As usual, the chart and stats are virtually meaningless except to compare unlike things in a way that simplifies a complex situation. It helps to foster a fantasy that some kind of “war” is going on in terms of “share” whatever that might be.

Well, Google’s share is somewhere around 0%. Its slice of the pie is divided among HTC, Samsung, Motorola, LG, etc. RIM pretty much owns its whole piece of the pie, and Apple certainly owns its whole slice. How about, MS? Oops! it doesn’t own its slice either.

So what’s the point? Some pieces are whole and some are severely fragmented, yet merged for argument’s sake? At least MS gets some $$ for its OS. Google? $0.00 So even those two pieces are measuring something different.

ComScore puts out amateur junk and would be ridiculed if it tried to pass this lame “research” off in any professional organization.

PXLated

Is Android really – even as a composite – “new” market share?…It’s just replacing other JavaVMs that those same manufactures were using before.
As far as android being free – It doesn’t really matter to consumers, they’re paying the same retail price as iPhones. iOS is free also, Apple charges for the hardware, not the OS. And look at how much “free” helps the Motorola Xoom in it’s pricing against the iPad – None, Zip, Nada

Cold Water

This isn’t like PS3/360 where one console has Halo (or some other game) and the other doesn’t. I Am T-Pain and the like are not some killer exclusive.

There’s a Facebook, Twitter, Foursquare, email, a web browser, et al on almost every platform. That’s 95% of the apps people use. Most people really don’t care about the rest.

john

I think, its partially the checkout process that looks more like a traditional sale online, as someone who used ios and bought a lot of apps it was easier to forget that your spending real money, also the fact that their are more apps that simply don’t work on particular phones, their are options for returns but the time frame is too short 15 mins for a marketplace that has apps that simply don’t work on some phones. I love androids openness and I wouldn’t want them to move to a process like apple of rejecting apps but I do think they need basic quality control to make sure the apps function, or have a device database that will show if an app has been tested and verified to work on your device

PaulTT

In another 3 months the iPhone will be way past RIM and Android in the US with Verizon on board and the iPhone 5 coming.

Ken Berger

If Android’s share is so big how come it only shows as 20-30% share of iOS’s internet traffic? According to Net Applications iOS is 2.05% and Android is 0.49% for January or less than 25% the size of iOS?
The analytics from all the sites I monitor are even worse making Android look like it is not significant platform?

Take To Task

Android is becoming ubiquitous, so from a pure numbers standpoint, it looks great. That doesn’t mean that people are going to use (or know how to use) its features. Many are probably free or very cheap and now some users can be like the “young, hip generation” with a touch screen phone.

Lucian Armasu

It’s true that Google’s lack of focus on developers and the Market has slowed down developer interest, but as Android keeps growing, and Google reaches parity or more with Apple’s AppStore in terms of opportunities for making good revenue on apps, it’s still only a matter of time before they catchup in apps, too. Apple still grows steadily, if not in marketshare, at least in number of units sold, but Android is growing faster.

Developer interest will be a lot higher for Android in 2011, and just wait until Nokia and RIM announce that they will use Android apps within Meego and QNX.

Mike

Android’s sales numbers are impressive, but as the article notes RIM is still the market leader in US. Android failed to become the most popular mobile platform worldwide yet even though it is free. Its usage share is definitely increasing but there is a time lag between sales leadership and usage leadership. Android is leading only in South Korea and few other countries. For a comparison, the world map of most popular mobile platforms for each country is available at http://www.browserrank.com

Take To Task

Agreed. I point out that Android is the new Nokia (OS). Before smartphones were everywhere, I bought all Nokia phones. Did it have (crappy) access to the internet and the ability to buy (crappy) games? It sure did. It wasn’t cheap and it was far less easy. So, it never got used, but Nokia could argue that their internet-ready phone dominated the market.

Here we are again. Android is gaining to become that position. Sure, it will be almost everywhere. People might ask their children how to download Facebook and one or two games and be done. The geeks will continue to love it in the way they love Linux, but I don’t necessarily see it becoming the dominant place where developers can really cash in, unless Google fixes that.

@MacOrThePC

Very well put. I would like to add one thought regarding Apple’s marketing strategy. I find there to be a lot of naive and ignorant thinking that you have to have an Apple computer in order to have an iPhone or other Apple device. Apple’s marketing should reinforce 3 things; their devices work easily and very well for their intended use (ie; the iPhone works easily and very well as a phone), their devices offer a lot of extra features (ie; apps for the iPhone), and their devices are cross-platform compatable (ie; their iPhone will work with their Windows-PC seamlessly). Market your products this way and I’m certain you’ll see a growth in new users.

DemiGuru

Android’s popularity is not surprising given the fact that It – is – Free! therefore manufacturers would be inclined to use that for their platform.
Android user retention would not be as simple.

Frank Castle

I do not agree with this statement:

“People have hundreds of dollars invested in the platform already”

The bulk of Apps are free and the major ones are across every platform. Apple has zero exclusive Apps so like cell phones it will come down to price and carrier coverage. If a similar device is cheaper and provides the same functions of an iPhone most people will go cheaper – thus the rise on Android.

iPhone 5 better be amazing or Apple will lose further market share faster then RIMM has.

Steve

@Frank:

Just doing the math, Apple would seem to have MANY apps that are exclusive to the platform and not available on say…Android. Certainly, none of the big name game companies have embraced Android. The Android market is for those who either hate Apple or are willing to settle for something less because the iPhone is not available on their carrier. Seeing as though just the first 2 hours of sale on Verizon it managed to break sales records, etc. I think the writing is on the wall for sales of Android on that carrier. Yes, Android can pick up the scraps left over on Sprint and T-Mobile. Android’s only saving grace right now is component shortages for the iPhone.

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