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 has little good news for Apple, 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 surged 7.7 percent during the same period, ending at 31.5 percent, and taking the number-one spot previously held by RIM. 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 was unable to halt Microsoft’s slide, down from 9.7 to 8.0 percent, while HP’s webOS 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 was launched on the Verizon 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 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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