Based on a growing number of data points, Android’s (s goog) sales dominance may be nearing its apex while iOS (s aapl) is on the rise. Even as a daily user of both an Android smartphone and tablet, I can’t deny the facts that Android’s partners are not doing as well as they used to. The conclusion that Android’s best days are behind is surely arguable, but I am starting to think that Android is on the decline for several reasons.
- The early Android handset makers are free-falling. In April of last year I noted that Android was a boost to hardware makers that embraced the platform early. Specifically, I saw that an Android strategy helped Motorola (s mmi) trim losses while HTC was growing faster than a field of bamboo. Fast-forward to today and Google is attempting to snap up Motorola Mobility even as Moto has faltered. And HTC? Monday confirmed what we reported late last year: The rising star has fallen and isn’t meeting expectations.
Apple is grabbing a huge share of mobile revenues and profits. We often talk about smartphone sales market share, which is important to a point, but money keeps a business afloat. And Apple is sucking most of it out of the mobile market. According to the excellent Asymco blog, Apple has been the top handset maker in terms of operating profits for the past 13 quarters running. It has 75 percent of the market’s profit share and 39 percent of its revenue. With the exception of Samsung, Android competitors are beginning to fade away; you can’t grow a business when your product sales are in decline and you are earning less money on such products.
- The top three smartphones are all iPhones. This data point comes from NPD on Monday: Of the top five smartphones sold in the U.S. in the last quarter of 2011, the top three are all iPhones. Samsung’s Galaxy S II and Galaxy S 4G took the fourth and fifth spots. Why is this a problem for Android handset makers? Because consumers are more willing to buy the reduced-priced iPhone 4 or 3GS — handsets that are more than a year or two old — than some of the newer Android handsets. There are plenty of low-cost Android models that compete well on price, but consumers don’t think they compete well on the experience. If they did, they would bypass Apple’s older phones.
- First-time buyers are picking Android, but . . . NPD did note that first-time smartphone buyers favor Android over iOS (54 percent versus 34 percent), and I suspect that is mainly due to price. But these folks will be second-time smartphone buyers in the future and may be willing to spend more for an iPhone unless Android handset makers can give them a reason to stick with the platform. And now that the U.S. has over 50 percent smartphone penetration, the pool of first-time buyers will be shrinking, not growing.
- Even now, there are still few apps hitting Android before iOS. One of the reasons I pay attention to smartphone sales by platform is because of developers. Not every software shop can support every operating system, so common sense dictates that most devs will aim their apps at the largest audience possible. But even with Android sales growing fast over the past two years, very few developers bypass iOS as the first platform to develop for. They are simply making more money with iOS, so that is where the top-tier apps start out, which in turn helps boost handset sales. I don’t see any signs of this changing either. Even for apps on both platforms, it often takes time for the Android version to see parity with its iOS counterpart. Monday’s Android update of Rdio is a perfect example; until Monday, I have used the app on my iPhone instead of my Galaxy Nexus because it was simply better.
- Android no longer has a killer app. Originally Android offered the best support for Gmail services by far, but over time Google has brought the iOS version to near parity. I still think the best Gmail experience is on an Android phone and the free, exclusive Google Navigation is great on Android, but it is not a killer app. Even worse: Google can’t cease development on iOS at this point, else users will leave its services altogether. Google can’t afford for that to happen, because it gets data from these users, which feeds its primary revenue stream: personalized advertising. Even as an Android user, I can easily make do using Gmail, Google Voice, Google+ and other Google services on iOS. I suspect many mainstream consumers can too.
- There is less of a lock-in cost to keep people on Android. I looked into lock-in costs back in 2010 as I saw how these could sway consumers to stick with a platform. I still believe there is a smartphone lock-in cost: Moving to another platform could cost $100, $200 or more to replace apps. But I am starting to believe there is less of a lock-in to keep people on Android. Why? Most of the heavily downloaded apps are free. Not all of them, of course, but far more of the top Android apps are free versus those in the iTunes App Store. Without this financial barrier, it is easier to switch from Android to iOS. Likewise, it is more of a deterrent to move in the opposite direction.
None of my points here are intended to suggest that one platform is better or worse than the other. As long as I have been covering mobile technology online — it will be 10 years in 2013 — I have always stood by one mantra: Use the best mobile device for your own needs. And I will continue to practice what I preach. Although I have an iPhone 4S, on 9 days out of 10, I carry my Galaxy Nexus handset. I have an iPad 2, but that’s relegated for specific use cases; my Galaxy Tab 7.7 is the tablet I take everywhere.
Independent of my own Android use, there are many reasons to suspect that Android’s growth will continue along the upward path it has seen for the past few years. But Apple’s iOS platform simply has strong momentum that is going to slow Android down as it forces some handset makers to scramble. These will likely gravitate toward the alternative of Windows Phone(s MSFT). Companies are likely to see growth there, but given the history of Android, as well as what I expect from its future, will the story remain the same?