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7 signs that Android is faltering as iOS strengthens

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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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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?

96 Responses to “7 signs that Android is faltering as iOS strengthens”

  1. Excuse me I did not get the 7th point at alll…. It looks to me as a stupid argument. With more to spend on iOS for downloading basic apps – it clearly means that it is easier to switch from iOS to android rather than from android to iOS

  2. Jeremy Bee

    Great analysis Kevin. I imagine you will get a lot of haters even with your clear statements of support for Android, but I think this is a fine, balanced analysis overall.

    Personally, I’m hoping a *real* open-source alternative like webOS comes up to replace Android. That would be the best of both worlds as WebOS apps could easily run on iPhones as well.

  3. First of all assuming that Kevin is not sharing his bank account with Bill Gates, after dumping in my opinion about 1k+ on his recent Android devices (I think Nexus and tab7.7), I at least will not even consider calling him an Apple fan boy. Just saying. It sounds so silly … maybe since you don’t following him much. I do and for a guy who covers Android weekly here, he seems to be very positive.

    Now to the point. I do think that Android is loosing some momentum. But I am not sure that Apple will benefit. Maybe its going to be MS with the windows 8 platform instead.

    Call me crazy but I am looking forward for a watch that is the center of my mobile devices. It should have 3G and allow me to have calls without anything else on me. Then I will probably pick a 7″ tablet to accompany it. And a 3D 7″ would be even better.

    The only company who can make it true is Apple. I hear rumors about 7″ and 3D. Who knows. Meanwhile I am probably going to pass on the Note opportunity here in Canada due to having to choose between 199$ with a 3 years contract (forget about it!), or 750$ (they must be crazy).

    • You’re spot-on Tal. In addition to writing a weekly Android column here since 2010, I’ve dropped a little over $1,100 to have a Galaxy Tab 7.7 and GSM GNex imported into the U.S. That’s why this article was difficult for me to write; however, I can’t argue with certain facts.

      As I said in the article, however, my conclusions ARE arguable and clearly many folks took me up on that. ;) I’m not yet counting WP out of the mix here. My prediction for 2012 was that WP outsells BB by the end of the year. I like my WP handset and I’m watching the platform slowly build momentum; you could be right. Thx!

    • Apparently, you didn’t read the article. ;)

      “Although I have an iPhone 4S, on 9 days out of 10, I carry my Galaxy Nexus handset”

      I’ve been using an unlocked GSM GNex since the end of November, which I bought out of pocket.

  4. “There is less of a lock-in cost to keep people on Android.”

    I think this works the other way. If i have to switch to android device, i don’t need to bother much about cost of apps, since most of them are free.
    since i know that cost of apps on iOS is high, why wouldn’t i want to buy a iphone ?, unless it is providing something which is not in android.

  5. I think american people should realise that america is not world.definately android is cheaper and world i choosing different manufactures at affordable prices.
    Android will suck the market of iphone outside america.
    Android will only grow. I am not sure for apple. WHAT WORK IN US IS NOT GUARANTEED FOR REST OF WIRLD.

    • One_LoLo

      I think you are underestimating the power of the open platform. The war is not between android and oIS. The war is between Apple and Google, Samsung, LG, Sony, and everyone else. Apple is making a ton of money but they are already loosing the war. Remember, IBM had a better product with Microchannel but lost to ISA. Sony had a better product in Betamax but VHS won. Apple came out with the first GUI but still lost to Microsoft windows. Over time open standards always win.

  6. Nicholas

    Kevin is definitely not an Apple apologist…

    From an enterprise perspective, it is not easy to develop open technologies that are accessible and usable on various Android platforms, whereas iOS remains consistent. In past comments I stated, that this will be the year that the iPad in particular becomes the enterprise tablet. We can’t wait any longer for enterprise level sophistication and APIs. Sorry.

    I am surprised that Android has taken so long to refine, and is still missing so much in terms of UX/UI and APIs. But, people want mobile, and we need to respond now.

    So, you may very well love you Android. I like the devices when I have one. But, I have a work iPhone and a personal iPhone. Ditto on iPads. I have a WIMM sitting on the table next to me, and would love to see connected devices sooner. Apple will not enable these things easily.

    If you do not believe the trends, you are not paying attention.

  7. I love Apple products, but my Android out performs any iPhone device. I just switched from Apple to Android a couple of months ago, and I have no plans of ever getting an iPhone again, unless some major development like the first iPhone happens. The iPhone sucks in comparsion to my Android device. This writer is grasping for straws.

  8. 4. and 7. Reside on your dogma that more people will you switch from Android to IOS. 4. Who are these second time buyers choosing Iphone? If I have to speculate as you do, I would say people coming from Nokia or BB where they had a closed environment like Apple offers. I think this number will shrink. 7. You find more logical to dump free apps on Android for paid apps on IOS? How come?

  9. CharlieTheCat

    Apple is winning b/c people are not smart enough to look around. Two of my friends up graded their phones to iphone 4. They did it online and knew nothing about a samsung galaxy s2 or similar phone. Go to At&t wireless – when you select “upgrade” you are shown huge pictures of iphones. The vast majority of the public is in the dark, and the only light shining is the iphone. The look at my S2 with a sort of naivety and nonchalance. To them, Apple was and is the only choice they had.

    • Great point! I have known people like this too. It is so frustrating to explain to first-time smartphone buyers about all the benefits of Android (often, that is the first time they are even hearing about the OS Android) and show the very real (and substantial) financial savings they would have by choosing an Android phone, and after listening to me with glazed eyes, they say, “But I want an iPhone.” They can’t give any logical reasons why they want an iPhone, just that they want it. I’d at least feel better if they could give a definite reason why they want it…

      • CharlieTheCat

        Yes, the glazed eye look. Chalk it up to great advertising and indoctrination. I have a refurb Galaxy S2 that blows away any Apple phone and I only paid $10 for it. People like my friends have no clue what “Android” is or means and don’t bother to even begin to “shop” for a phone. They just go with what they are told by mass media. Apple has brilliant advertising.

    • Jeremy Bee

      There is a reverse argument to this however. Most people buy their phones at a carrier store and when you go in to one of those, the iPhones are in the back and the rest of the store is filled with dozens and dozens of Android phones. The salespeople push the Android phones almost exclusively and there is sometimes not even a single poster or display in the store for the iPhone.

      I know quite a few people who “went to go get an iPhone” (because they heard that name), and came back with an Android phone thinking they were successful! They don’t know the difference and buy whatever the salesperson pushes at them.

  10. Travis Henning

    Bottom line is as Kevin says, use what you like. This isn’t a religious battle.

    In my opinion, Android is not going to save the smaller phone players. HTC, LG, Sony and Motorola don’t really have any way to differentiate their devices. Their hardware is becoming a commodity. They try skinning the OS to make it stand out, but that causes slowdowns in receiving the latest Android updates, if they ever do. And many users don’t consider it a value add.

    Samsung is able to differentiate in some aspects of the hardware design because they own the ability to research, develop and manufacture most of their components. Motorola is fortunate to have many desirable patents, being bought out by Google will save them. And a “newer” player, ZTE is able to compete on price. I really see the Android environment coming down to three players:
    – Samsung, can differentiate on hardware/design. This will be the top-tier manufacturer.
    – ZTE, can differentiate on price. This will be the low-mid range manufacturer.
    – Motorola because Google has a vested interest. This will be the dev friendly, “cleanest” Android experience.
    The other players will either stop making Android devices or become irrelevant.

    Android will survive and even thrive, but I’m not sure it will be in the way Google imagined. The hardware manufacturers are only one aspect of the Android ecosystem. The carriers can also throw Google a big curve. For example if Verizon or Vodafone make a deal with Microsoft to be the primary search engine, a customized Android can allow it to happen, impacting Google’s search revenue. In the tablet space Amazon is going to be a huge player, again, bypassing Google’s apps. So Google certainly has some challenges ahead, but Android isn’t going anywhere anytime soon.

  11. Laughing_Boy48

    What difference does it make if Android OS dies in the next couple of years? The dinosaurs disappeared and hardly anyone noticed. It’ll be survival of the fittest. A platform that doesn’t return profits to businesses is not worth surviving. Eventually Apple will suck nearly all the profits from Android handset vendors and then it’ll be all over. Money makes the world go ’round and Android is just a money loser for nearly every company except Samsung.

    Google’s greed built a platform that was supposed to make money for itself and even that part has backfired. Offering an OS for free is one of the worst financial strategies ever devised. Google is going to gag on its own vomit when companies give up on using Android and go to Windows Phone OS in a year or so. Android is such a poorly maintained OS for users stuck at various Android versions. It’s a horribly fragmented mess with the ecosystem filled with malware, trojans and non-vetted apps. I almost feel sorry for some of my Android-using friends. Corporations would be well advised to avoid Android like a plague.