NPD: Motorola’s Market Share Is Down. How Will Google Help?


Credit: Tricia Duryee

Much has been made of Google’s main interest in buying Motorola (NYSE: MMI) being patents, patents, patents, which could help save Google (NSDQ: GOOG) from years of legal hot water in the years ahead. But when it comes to devices, it might be Motorola Mobility that needs all the help it can get: Q2 figures out today from NPD show that the device maker only accounted for 12 percent of smartphone sales, and nine percent of all mobile sales in the U.S., technically Motorola’s strongest market.

That represents a three percent decline in each category (smartphone and mobile overall) over the same quarter a year ago.

While declines in feature phone sales are to be expected as the market shifts to smartphones, Motorola’s decline in smartphone share is particularly galling when you compare it to the overall growth of the Android platform in the U.S. NPD says in its research note that Google’s Android OS accounted for 52 percent of all smartphone sales, an increase of 19 percent over a year ago.

Android’s gain was nearly entirely at the expense of RIM (NSDQ: RIMM), which lost 17 percentage points and accounted for 11 percent of all sales — in other words, just behind Motorola when considering manufacturers rather than platforms.

Apple’s iOS is still growing, too, but not as fast: it was up seven points to account for 29 percent of all sales.

Windows Phone 7, Microsoft’s older Windows Mobile and WebOS — whose future is not fully clear after last week’s HP (NYSE: HPQ) news — each all had less than five percent of the market.

NPD appears to fall into the camp of those who feel that the Motorola acquisition will not impact how many device makers opt for the Android platform at this point. “Android’s momentum has made for a large pie that is attractive to Motorola’s Android rivals, even if they must compete with their operating system developer,” he notes in the release.

Within the Android camp, NPD says a lot of Motorola’s loss of momentum has resulted in gains from its competitors — namely Samsung and LG (SEO: 066570). In Q2, Motorola accounted for only 22 percent of Android sales, half of its 44 percent share in Q2 2010.

That could mean that in terms of devices, Google has either made a very bad call, or perhaps the best call of all — since an OEM in decline might be more open to changes than a powerhouse on the rise.

Pre-paid smartphones. This is the one area NPD names where it thinks Motorola could carve out a niche for itself in the quarters ahead. NPD says that one in every five devices bought in Q2 was on a prepay plan: a big jump on just eight percent of devices sold in Q2 2010. If economic trends continue as they have done, there’s no reason to think that won’t also extend to smartphones, too.

But given that prepay tends to mean lower ARPUs and more price-conscious consumers, if Google follows NPD’s suggestion we might start to see a lot more cheap Android devices, not just in developing countries but in Google’s own backyard.

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