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iPhone Flat in U.S. as Android Takes Market Share Lead

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This week, the latest U.S. smartphone market share report from comScore (s scor) has little good news for Apple (s aapl), except possibly that things could be worse. For the three-month period ending in January, the iPhone was flat at 24.7 percent, up just 0.01 percent from October. In sharp contrast, Android (s goog) surged 7.7 percent during the same period, ending at 31.5 percent, and taking the number-one spot previously held by RIM (s rimm). The Canadian smartphone maker tumbled 5.4 percent, down to 30.4 percent share, and will almost certainly be passed by Apple during the first half of this year. Windows Phone 7 (s msft) was unable to halt Microsoft’s slide, down from 9.7 to 8.0 percent, while HP’s webOS (s hpq) fell from 3.9 to 3.2 percent.

Last week, Nielsen released market share data for smartphones that saw Google edge out Apple and RIM in the U.S. From December to January, Android was up from 27 to 29 percent, while iOS on the iPhone dipped from 28 to 27 percent, and RIM was flat at 27 percent. While that wasn’t great news for Apple, it at least showed iOS keeping pace with Android, which the comScore report seems not to indicate.

Looking back at 2010, the rise of Google’s smartphone OS is simply amazing. Last January, Android was at just 7.1 percent according to comScore. The question now becomes whether Apple can stop Google from achieving a majority, if not a super-majority, of smartphones sold in the highly lucrative U.S. market in 2011, and avoid becoming a niche player. To do so, Apple needs to address to address two major issues with the iPhone business model: distribution and price.

In 2009, the Motorola Droid (s mmi) was launched on the Verizon (s vz) network, beginning Android’s rapid growth. One can only imagine what might have happened had there been a Verizon iPhone available at the time. In 2011, Apple has finally rectified that mistake. Expect the next report from comScore to show the impact of Verizon’s 90 million potential iPhone buyers.

As for price, the LG Optimus V running Android is now available in the U.S. on Virgin Mobile (s vmed) for $149 without a contract, and that’s just the beginning for low-priced Android smartphones, but Apple may be prepared this time. An article from Forbes highlights a meeting between Bernstein Research analyst Toni Sacconaghi and Apple COO Tim Cook that offers some hope. According to Sacconaghi, Cook “appeared to reaffirm the notion that Apple is likely to develop lower priced offerings,” that Apple is “not ceding any market,” and that company does not want its products to be “just for the rich.”

Aggressive pricing on the iPad is evidence of that, and were the iPad, and the iPod touch, counted in mobile platform totals, the market share numbers would look very different. If Apple transitions the iPhone to a similar business model of wider distribution and lower price points, Android’s world conquest might yet be halted.

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23 Responses to “iPhone Flat in U.S. as Android Takes Market Share Lead”

  1. It doesn’t matter if the market is getting RIMmed less or is getting populated with hemroids, iPhone will always dominate the hearts and minds. Let the others fight over the nether regions. The numbers from 2011 will prove this. Buy shares.

  2. The point that many are missing is regardless of a position, android is becoming increasingly popular. It simply gives device array and software power to the user. Sure apple offers a great product but if you looked at stats throughout last year, its popularity didn’t change much, most the iphone 4 users were upgrades. Android on the other hand had a major growth spurt, and now its finally taken over the rim market. Perhaps it didn’t deter any apple users, but then those new users decided to change to a platform with more options. Between the two out there, they made a conscious choice for the more attractive one.
    (I use apple and windows products, but prefer android for phone. Don’t slander what you havn’t experienced)

    • Joseph Futral

      That still ignores the carrier effect. A lot of people who wanted a iPhone but were loyal to Verizon or had a bad experience on ATT did not bother. So, again, the only real comparison one can make between iPhone and Android is on ATT. That is not the WHOLE story, but it is the most important story. Head to head, Apple wins. Carrier to carrier it TBD.


  3. According to these charts, Apple was never number 1 in market share. So who cares if they take second to RIM or second to Android? The fact is, Apple has the lion’s share of mind share and respect of consumers, the most app developers with the most app customers and the most and best quality apps. I think Apple will be just fine in second as RIM is sure to drop to third with their continued lack of innovation and relevance and Apple’s next iPhone release draws even more customers at lower prices offering superior experience. .

  4. FalKirk

    How can you possibly be looking at those charts and write that “comScore has little good news for Apple”. There are two things you should be gleaning from those charts and two more things that went totally unaddressed.

    First, congratulations to Android. Your growth was unprecedented, unexpected and without equal.

    Second, condolences to RIM, Microsoft and HP (Palm). Every bit of Androids’ growth came out of your hide.

    Now the two things that were not stated, but should have been.

    Third, we’re talking about relative growth in a rapidly expanding market. Despite sustaining or losing market share, Apple, RIM and Microsoft each sold far more phones than they’d ever sold before.

    Fourth, Remember, that up until February 2011, Apple was only able to address one-third of potential U.S. buyers. And as of the end of last quarter, Apple has been unable to manufacture enough phones to meet the demand. With expanding markets and expanding supply Apple has good reason to believe that tomorrow’s growth will be better than todays’.

    Congratulations to Android. Super job. But cry no tears for Apple. Android’s growth is not coming at Apple’s expense, Apple’s sales and profits are rapidly growing in real terms if not in total market percentage and Apple is on the verge of expanding both their addressable market and their product supply. If you’re going to weep, weep for RIM, Microsoft and HP. They all have a very long road to hoe.

    • While it’s correct the US is an expanding market, how expansive is an open question. There are about 300 million mobile phones in the US, of which about 65 million are smartphones. The question then becomes how many of those remaining feature phones will be upgraded to high-end smartphones like the iPhone. I think that number is far fewer than the number that will be converted into low-cost smartphones running Android. That’s why a low-cost iPhone is needed, but will it come soon enough and be priced low enough?

      While it’s both true and good that the iPhone is finally available on Verizon, it’s unfortunately not available on Sprint, T-Mobile, MetroPCS, and US Cellular, whose combined subscriber total is greater than either AT&T or Verizon, but Android is.

      I have no doubt Apple will continue to be profitable with the iPhone, but is it better to be profitable like the Mac with a small market share or the iPod and iPad with large market share?

      • Joseph Futral

        The problem with market share for cell phones is that it doesn’t exist in a vacuum. It is directly affected by carrier and less by country (although country affects carrier more so than the cell phones themselves.)

        In one regard, the only cell phone maker one can truly compare Apple to is RIM, since they are the only other maker that sells the whole package. And the only market in general one can honestly compare Apple in, until this year, was ATT, since that is the only place Apple truly goes head to head with any maker without the carrier affect. In those two instances Apple is handily, unarguably winning.

        That is not the realities of how either the analysts, the consumer, or even Apple themselves, couch Apple’s products. Even though Apple has no real say as to how ATT served their customers, Apple’s competitors are the larger market, even where they don’t directly compete. That one phone on one carrier was holding as well as Apple shows the strength of their position. That Android doesn’t really do anything different than Apple does (just more of the same) shows who the real leader is and who is the follower.

        Now that the iPhone is available on more than one carrier in the US, we’ll see how things go from here. Android is enjoying the same growth spurt Apple did when they first introduced the iPhone. No doubt that will level off, too. But really, Falkirk is right. Android is less a threat to Apple than it is to Blackberry, Microsoft, HP, and Nokia.

        The interesting part is Google doesn’t care. They just want to insure they are anywhere they can be, regardless of whether it is an iPhone or a Droid. Android exists for two reasons—1) Google saw the smartphone potential beyond iPhone/ATT, and 2) they wanted to get there before MS/Bing and Blackberry (remember, the first Android prototypes were more Blackberry-like than iPhone-like, thus solidifying their position as a follower).


      • FalKirk

        When last I looked, the overall mobile phone market was expanding at about a 35% clip while the Smart Phone market within the overall mobile market was expanding at a greater than 90% rate. That’s serious growth.

        “The question then becomes how many of those remaining feature phones will be upgraded to high-end smartphones like the iPhone.”

        I never understood this line of reasoning. The difference between a subsidized iPhone and even a hypothetically free phone is, at most, $199. Many people have monthly phone bills that are larger than that. The key to reaching the low income consumer is lowering phone and data costs, not lowering the initial cost of the phone. And I believe that Apple is working on this problem from exactly that perspective.

        With regard to market share, remember that the iPhone is supply constrained. It makes no sense to start selling a $200 phone when the $600 phones are flying off your shelves. With the addition of new carriers distributing the iPhone and new manufacturing supply coming on line, I believe we’ll soon see the shares of BOTH Android and iOS start to rise within the next six months.

    • Joseph Futral

      Really, Google is the biggest evangelist the iPhone has. Since it is just a copy, it shows the superiority of the iPhone form over any other smartphone out there, carrier not being an issue.


    • Exactly – In the U.S. the competition just started – right after these numbers when the largest cell network finally got the iPhone. Next years numbers will tell a story, these don’t.

  5. Dollar market share would provide a more helpful comparison. The term ‘smartphone market share’ is misleading as ‘market’ would suggest there is a competition between similar products. Android OS is sold in association with partner hardware brands as iPhone stands alone. Perhaps ‘smartphone operating system usage’ would be less misleading?

    • Though you can argue the relevance of the metric, share of the market refers to units sold in this instance. In terms of share of profit, Apple is by far the leader in smartphones, same as with Macs and PCs. The iPod and iPad lead in both categories for media players and tablets, which I’d think is where Apple would like to be with all its products.

  6. And why does anybody care about androids market share? While it’s the second best OS, it’s still buggy, fragmented and prone to any and every nasty little bug out there. I even read where goolge pays manufacturers to put android on their phones. Yeh, they make ad money but not from me. I personally hate ads, any and all of them and I don’t like my personal info being stolen. Apple has the right idea, great hardware and software with a great ecosystem that’s safe and affordable.

    • NO, they DON’T! iOS is on ONE model phone, Android is on almost all the other phones that aren’t Blackberries by a multitude of vendors…get your facts straight..

    • Android is crap in my experience. I decided to give it a try (HTC Hero) to hold me until the iPhone/AT&T came to SD, I can’t stand how buggy the software is, it’s slow, it’s a HUGE battery drain. I can go from a full charge to needing to recharge by around noon, and that’s with wifi/gps off…Pure crap…doubt it’s the phone, HTC makes pretty good stuff…Thankfully AT&T is set to activate in the coming weeks and my iPhone is on it’s way here…

      • Kelly

        I also had the HTC Hero (Android) and you’re right its crap. My friend said he’s had no issues with the Motorola Milestone (Android) so I switched to it (same carrier). I’ve had no problems since. My wife got the HTC Touch Pro II (Windows) and she also had lots of problems – switched phones and no more problems. Conclusion: HTC was the problem not Android.

  7. anonisanon

    Comparing an OS to hardware again, are we? What is with people & doing that? Of course Android is going to outnumber the iPhone. Why? It’s a free OS that is on over 100 phones & tablets. That’s comparing 100+ phones/tablets to 4 generations of iPhones. Big whoop.

    • @anonisanon Yes, big whoop — it’s a fair comparison because it’s openly making the comparison. Google chose to make it free and open, and Apple chose to tie it to special hardware, and the result is the colossal difference in market share. That is precisely the statistic and you’ve added nothing by re-stating that it’s the statistic.

      • ChrisM

        Colossal difference in market share? Looks pretty close to me. Will be interesting to see what impact, if any, the Verizon iPhone has on all of this.