Blog Post

It’s no fluke – iPhone closes the gap on Android in U.S.

IOS’ (s aapl) year end surge has helped close the gap on Android (s goog) in the U.S., with December sales hitting 44.5 percent of all smartphones, just behind Android at 46.9 percent, according to new data from Nielsen. The numbers bolster a similar report from NPD, which announced last week that the iPhone had pulled within four percentage points of Android in October and November.

Among all smartphone users, Android still reigns supreme, with 46.3 percent of the market, compared to 30 percent for iOS.  Among recent acquirers over the last three months, Android commands an even bigger share with 51.7 percent of the market, compared to 37 percent for iOS. But iOS took a big leap in the final quarter of 2011, with its share moving from 25.1 percent in October to 44.5 percent by December, eating into Android’s, which fell from 61.6 percent to 46.9 percent over the same period.

As any iOS fan will tell, Apple is more concerned with profits over marketshare. But the new data shows that Apple’s mobile operating system has made up some serious ground on Android in the smartphone market, particularly in December. Spurred on by the big release of the iPhone 4S on the three biggest carriers in the U.S., Apple showed it’s capable of competing even more closely with Android when it has wider distribution.

Android will likely regain some momentum in the U.S. as the iPhone line-up ages and more Android 4.0 devices hit the market. Demand for Android device might have slowed in anticipation of the next generation Ice Cream Sandwich devices, the first of which, the Galaxy Nexus on Verizon, didn’t appear until mid-December. We’ll have to see if this is just a temporary surge.

But this again confirms that for now, the smartphone race is still very much a two-horse competition. Research in Motion (s rimm) continues to give up more ground and only has 14.9 percent of the entire smartphone market, with just 6 percent of purchases within the last three months. That has to be concerning for RIM, which put out a new line-up of BlackBerry 7 devices in the fall. It has to hope those phones can keep sales moving until new BlackBerry 10 devices arrive in the second half of this year.

Overall, smartphone penetration hit 46 percent in the fourth quarter with 60 percent of recent acquirers buying smartphones. It won’t be long before more than half of all phones in the U.S. are smartphones.

Going back to the iOS vs. Android data, it’s still pretty amazing that Apple is competing so well with a limited line-up of devices against an army of Android devices. Now that Apple is cranking on Verizon (s vz)(s vod) and has Sprint (s s) in the fold, it’s available to the vast majority of consumers. Getting a T-Mobile iPhone, which is actually harder than it sounds, could level the playing field even more, though the effect would be more modest.

Apple is obviously selling a lot of iPhone 4Ses, but Nielsen said that those devices consisted of 57 percent of purchases by new iPhone users. So 43 percent of sales are going to older devices, which is still really impressive. People are willing to buy a phone a year or two old at a discount rather than a new device from a competitor. As NPD pointed out, the iPhone 4S, 4 and 3GS were the top-selling devices in October and November, beating out the Galaxy S II and other Android devices. This is another good sign for Apple as it prepares to report quarterly earnings next week. This battle is far from over, but as the numbers show, Apple may not just have to chase profits. It can take a bigger share of the smartphone market when it puts all the pieces together.

30 Responses to “It’s no fluke – iPhone closes the gap on Android in U.S.”

  1. All the first chart shows is that ignorant parents bought their ignorant children Iphones during the holiday season, because in the past 5 years, wanting and buying “I” products is the new means of showing affection.

  2. “Demand for Android device might have slowed in anticipation of the next generation Ice Cream Sandwich devices”

    I seriously doubt consumers know what ICS or even care. The Galaxy Nexus is the Android phone I see marketed the most to consumers lately and I don’t think having the ability to circle your friends or have a hangout is something consumers are looking for.

    • Bee Ryan

      There is iPhone market share and there is iOS market share – which are two different things – and its often never said or hinted at. Of course Android is on tablets to, but they have yet to make a “good” tablet … and of course even a two year old iPhone can be upgraded to Apple’s latest, where as many one year old Android based phones can not be upgraded at all (or maybe they need a hack or maybe they will EVENTUALLY get it, some day).

      I think in every real metric, Apple’s iOS beats Google’s Android OS … in Apps, quality of apps, types of apps, numbers of apps (prob least important), apps geared at the tablets (specifically) and integrated OS/hardware (Apple’s system on a chip tends to beat anything Android has in performance), battery life (yep, it is generally better on iOS devices, though its not perfect) and just about everything else, except – MAYBE -market share.

  3. I have no comprehensive research on this other than people I know. Full Disclosure: I own an Android phone and not an iPhone.

    Many people I know buy Android because of the lower cost and the huge amount of free applications.
    After awhile, these same people realize that the apps they use the most are also available on Apple.
    They begin to realize that they want their phone to do a number of things very well and Apple seems to do what they need.
    They are willing to spend more for a more elegant and reliable solution for THEIR NEEDS and then decide to jump to the iPhone.

    • Yeah I was about to write what you said. I think it mostly happens this way, when an Android user’s friend pulls out an iPhone, they are impressed with the iPhone’s design and speed and what it can do compared to their phone.

      Disclosure: I own an Android phone.

    • Meoyskie

      Only problem is that the marketshare and growth numbers didn’t reflect your observations at all, outside of this one quarter. Even with a new iPhone, price drops on other device and expansions to new carriers, Android still beat iPhone.

      • Martin Hill

        Actually marketshare and growth does support Nielsen, ComScore and NPD’s numbers.

        Android’s growth has been plateauing all of this year. In 2010, Android’s smartphone marketshare grew 367%. However this year, Android’s growth plummeted to only 28% growth.

        Now some of this is due to a maturing market, but that does not explain the iPhone’s marketshare growtH which went from negative 14% in 2010 to 38% in 2011 (up till October) according to NPD.

      • Martin Hill

        The rest of the world Is shooing similar gains. For example, the 700,000 Android activations per day Google has been crowing about are matched by 600,000 to 710,000 iOS device sales per day (36 million iPhones, 11-19 million iPads and 7-10 million iPod touches) in Q4 2011.

      • Martin Hill

        The rest of the world Is showing similar gains.

        For example, the 700,000 Android activations per day Google has been crowing about recently are matched by 600,000 to 710,000 iOS device sales per day (36 million iPhones, 11-19 million iPads and 7-10 million iPod touches) in Q4 2011.

  4. Mosaic Technology

    I imagine that this is going to be a very competitive year for Android and the iPhone. I also think we are going to see the rise of a new competitor though – the Windows Phone. It will probably not threaten the Android and iPhone market share this year, but perhaps in 2013.

  5. Nick Sitterly

    This article starts with the same fallacy that so many of these mobile articles do, comparing Apple to its competitors just by comparing sales of the operating systems. Apple sells an operating system ON 3 PHONES by a single company. Google is an operating system which exists ON DOZENS OF PHONES from several companies. All this comparison does is dress up a “mobile phone sales” market share comparison to make it look like someone other than Apple is winning. It looks like Google is winning on the surface, but Google doesn’t make any of these phones, so they don’t get most of those profits. The companies that sell phones with Google’s Android get most of the profits, but there are so many of those companies! When you divide up the profits among all of the companies, which those charts should do, Apple stays the same at 44.5% and Android gets split a dozen ways. A fair comparison is to look at which single company is selling the most phones, followed by the next biggest selling company, etc.

    • Lol @Nick captain obvious. As the author stated, Apple is concerned with profits only. But the real and telling story for the smartphone industry is marketshare and will always be about marketshare.

    • Michael Linehan

      I agree with you Nick. But I’d take it further. I propose there is no such thing as “Android”. When you say “Google is an operating system which exists ON DOZENS OF PHONES from several companies”, let’s not forget the fact that there are large numbers of iterations here that are COMPLETELY INCOMPATIBLE. To count them as one thing, as people usually do, is just not valid.

      Mosaic, below, says, “I imagine that this is going to be a very competitive year for Android and the iPhone.” Very telling. In fact, people walk into a store and say, “I’d like an iPhone, please.” But people aren’t buying “an Android”. They’re buying a Samsung whatever or a HTC Model XYZ.

      I think it’s a bit like comparing the all-electric Tesla sports care to ALL internal combustion engine cars. It’s a metric that just doesn’t matter. What matters is Tesla’s market share compared to EACH of the other sports cars.

      The summed up marketshare of a pile of different, free, incompatible sub-Androids is a fantasy number that has no relevance in any way that actually matters.

  6. Marc Telesha

    The real reason for the big jump for Apple during the holiday season is children begging their parents for iPhone. Once these children get their holiday phone things will once again fall back to Android gobbling up the market.

    Only interesting story in all of this coming year will be how many Windows 7 Mobile phones sell and how much is Android market. To me iOS and business are more chummy and I am not sure if M$ phones take majority of Android sales or just eats RIM and 50% iOS and 50% Android. This story is a side bar

    • Alan Finn

      the real reason for the big jump is october/november marks the ends of 2 year contracts everywhere on droids. people only bought android because iPhone was exclusive and it was stated to be an iPhone killer. well, it’s not. it’s a flat out mess. ps… the “holiday season” bullshit isn’t an apple exclusive. if people wanted it, android sales would have skyrocketed over christmas too, or iOS would have slowly fallen like blackberry.

      basically, android only had anything when iOS was an AT&T exclusive. now that it’s available on 3 of the 4 major us carriers and people are switching (including myself) from android to iPhone the second their contract ends, the android fad is over. sorry

  7. Wayne Smallman

    “People are willing to buy a phone a year or two old at a discount rather than a new device from a competitor.”

    Now, the Android crowd will probably dismiss this as fanboyism and nothing more, but I think this is the most telling observation in the whole article.

    I’d wager a guess and say that the reasoning here is that people are simply unimpressed with Android, which matches my own observations of people (personally and via what I’ve seen in various comments and articles), who having bought into Android, were either dissatisfied with it, the phone, or both.

    • I don’t think it is fanboyism, I think it is telling of the person who buys an iPhone – they are not people who are pushing the boundary of technology, they want something with some bells and whistles, but that ultimately is not smarter than they are i.e. an iphone.
      Now I presently have an iPhone 4s (I sold out to the other side in December), but before this I had a DInc (Droid Incredible). For me, the biggest sale point to the iPhone was the fact that everybody caters to it, not the phone itself. I will say that the iPhone is very reliable with Exchange (something I ran into trouble w/the DInc), but can’t stand the limits in personalization, the poor battery life (even by smartphone standards), and the dropped calls (I use Big RED so it’s not the network).
      All in all, I welcome the existence of both operating systems as they push one another to provide consumers with better and better technology.