These data spell significant trouble for Microsoft in the smartphone market. Despite launching Windows Phone 7 (WP7) with great fanfare in November 2010, Microsoft's market share in smartphones has in fact declined 1.7% from October 2010 through January 2011.
They weren't many phones supporting WP7 until recently. I think you will see that number grow slowly. They're a bit late to the party. I think it's a better OS than Android in my view. That said, the only people I know with WP7 are .NET developers ;)
That's not what the term means, though, and using the real definition of market share it is impossible to have a negative market share, for the exact same reason that you can't have a negative number of people using a product. "Small market share and spectacularly unsuccessful products" is not, even in the loosest possible sense, the same as "negative market share."
The market is growing, so it's not as simple as that. It's more like RIM is capturing below market rate from the new smartphone users, Apple is almost exactly at market rate and Android's scooping up the rest.
How people move between platforms would be interesting, and become more important as smartphones reach saturation, but you can't really speculate from this data.
I'm guessing Apple is trying to grab hard onto the market segment that brings in the most profit, while Google is going for the commodity, high volume, low margin option.
The good news is that both models can coexist in the same market. After all, Nintendo's strategy is a bit like Google's, while Microsoft and Sony's are more like Google's. Nintendo has been quite profitable for a very long time even when they didn't own the entire market.
> Apple is trying to grab hard onto the market segment that brings in the most profit, while Google is going for the commodity, high volume, low margin option.
Exactly. Google has supplanted Microsoft in the OS business. If you remember, Microsoft's business model was to commoditize PCs. Microsoft won when Dell and HP raced each other to the bottom on margins.
Now I see history repeating itself, only this time the handset makers have two people trying to squeeze them into commodity providers competing on price: (1) Google and (2) The Carriers.
Has anyone ever taken the time to explain why the apparently scary prospect of people "racing to the bottom" is bad for me as a consumer or member of society?
The original usage was about states competing by offering better terms to corporations. These "better terms" were worse for the people living in the state because they got less tax income and less worker protection. But they are the vendors in that analogy, the customer/corporation was very happy with how things worked out.
Am I really supposed to shed tears over a corporation's business model being a bit more like operating in a free market?
Your point is entirely orthogonal to my point, so I am quite comfortable that following your digression does not undermine my comment in any way.
What I will say about Android handset makers racing each other to the bottom is that what is good for you as a consumer is when entire products compete against each other. The trouble with looking at handsets is that they aren't really whole and complete products. They need an OS/Ecosystem/Theme Park and they need a carrier's service to complete them.
What is best for consumers is when there is competition for all the elements of the stack from top to bottom, either in packages (iOS on iPhone on AT&T vs. Android on Nokia on Sprint) or individually. I don't know how things will play out in the Android "space," but from what I've seen so far, the big nut to crack for consumers is the carriers, not the hardware and not the OS.
When text messages are less than a penny each, I will know that the entire stack is competing in a way that is good for consumers.
From that comment, I'll assume you're not in Europe. We've had the telecoms regulated somewhat sensibly and "racing to the bottom" for a while. And while it's not perfect I will note that during my last foray into purchasing phone contracts it seemed fairly difficult to avoid getting infinite text messages thrown into the deal (though I did manage it since I got a very cheap, effectively data-only plan which is all I needed).
'fraid not. Here in Canada, the Oligopolistic situation seems worse (if that can be imagined) than in the US. It is possible to buy bundles with effectively unlimited text messaging, but overall the situation for Internet and wireless telephony is anything but an efficient, competitive market.
Just to clarify on the texts: The very cheapest monthly (as in a single month long contract) deal I could find came with, by default, infinite texts (and these are cross-network texts, which a quick Google suggests seems to be a restriction on Verizon in the U.S. even when you pay an additional surcharge for texts each month, the price of which alone is higher than my entire monthly bill).
I'm sure you've been able to pay extra for a ridiculous numbers of texts for a good while, but now they seem to have dropped to be very roughly in line with their actual cost, which I believe is indistinguishable from zero to the networks.
If they did, though, it would make sense. Apple's business model is to make money by selling hardware; Google's is to make money by selling advertising.
They also collect licensing fees when phone makers use the Android name, Google trademarks and Google's software in the phones.
Is that accurate? Everything I've seen has indicated that if anything money moves the other way - Google sharing revenue on platform ads (and possibly other services) with oems and carriers. I haven't seen anyone claim that oems pay licensing fees to google for google apps and trademarks - I believe they are use granted based on platform spec compliance.
I assume their foray into mobile phones is to fragment the market and prevent any other player from gaining a dominant market share.
While undoubtedly google doesn't want another player to dominate the market, I believe the primary goals for android were to increase global pageviews, drive mobile adoption, and to avoid large upfront costs of paying for placement as the default search engine.
"With a high-quality open platform in hand, we then returned to our goal of making our services available on users’ phones. That’s why we developed Android apps for many of our services like YouTube, Gmail, Google Voice, and so on. These apps are Google’s way of benefiting from Android in the same way that any other developer can, but the apps are not part of the Android platform itself. We make some of these apps available to users of any Android-powered device via Android Market, and others are pre-installed on some phones through business deals."
The phrase "pre-installed on some phones through business deals" is at least suggestive that Google is being paid for the inclusion of their apps on phones.
I think rather the opposite: OEMs sell desktop real estate. You think Dell pays for antivirus? I think they get a fat fee upfront for even thinking of you, and then a per-conversion affiliate payout.
This is similar to many mobile softwRe arrangements in the pre-iPhone world.
To qualify for Google branding and to use the Android trademark and ship with the android marketplace a manufacturer has to comply with the "Compatibility Definition Document" - a platform spec document that includes some software behavior and a number of hardware features. including high speed wireless data, an X MP camera, a compass, acelerometer, touch, a standard screen res, etc.
The nook if memory serves lacks a camera at least so they didn't qualify.
Note that this doesn't say you get access to all google apps like navigation - it does appear another agreement is needed for those - I just don't know if that is a pay for access by the oem or some other arrangement.
> As a developer #1 in market share is a very significant milestone.
Unless you're Android, which has significantly less apps than iOS and is getting bad press for its malware problems. Additionally, iOS runs on the iPad, so iPhone developers can universally target the #1 tablet in the world.
Google makes very little off of Android. They've been following Apple's lead design-wise (look at images of what Android was going to look like before the iPhone came out). As a free operating system that carriers can exert full control over, it's no surprise that it's #1 in marketshare compared to a single phone on two carriers, but if that doesn't actually translate into profits for Google, developers for the platform, or innovation for the industry, does it really matter? The iPhone is still directing the smartphone industry and getting the positive press, and the iPad practically has no competitors to this day.
Interesting becuase it is becoming increasingly obvious that Android is aiming wide, yet their userbase are not as automatically app savvy or interested as Apple users.
Interesting sidebar in the comscore report:
In the continuously contentious debate as to whether the future of mobile apps are downloaded or browser-based, we see a gain in both, but native apps seems to have had a marginal edge in gain.
Would be cool to see this data over a longer window.
Used browser; 36.2%; 37.0%; 0.8
Used downloaded apps; 33.7%; 35.3%; 1.6
I wonder how much of the gain in app usage can be attributed to the new version of the Android market, which I think shipped during this time period. We'd have to see app usage by platform stats for that though I guess.
I hope this serves as a wakeup call to Apple, that their position is not so unassailable that they can continue looking for new ways to drive away partners and developers without consequences.
>that their position is not so unassailable that they can continue looking for new ways to drive away partners and developers without consequences
I think most everyone wants more competition to keep any single company from being abusive, but your response to this is essentially "Apple is still #1!" I don't understand what you are saying here. Is it that you think Apple isn't really under any pressure? That you don't want them to make their developer/partner deals more generous?
How is Android a wakeup call? Apple's profits have been rising in that market segment, independent of who currently sells more phones and what OS phones run.
Apple now has Verizon support and is available in a lot of international markets.
Next the could diversify to different models, if that would help.
Apple lives from the focus of integrated hardware and software. But the real strength is the attention to the user.
With Android you got Google as the software sponsor, Google as the service provider, Google as the ad platform through which they drive their revenue and you got a multitude of hardware companies using their software.
We have seen similar models in the past, where the hardware companies had to pay the software provider their share for the software license. The Google model is indirect.
Apple has shown in recent years that they have no problem competing against these business models, even with a tiny market share. Apple does not sell by features or price.
My main problem with Apple is not about how their deals with developers or partners work, but that they don't allow me as a user to take full (or 'more') control of the device software. That for me as the user, I have no other choice as to get software from their store is limiting me.
Because content is more important to selling phones than better hardware and software. Right now, with the App Store and iTunes, Apple has the most and best content for their phones.
But what if they lose Netflix, Kindle and others by demanding too much, but those applications are still available on Android? At that point, how much better does iPhone hardware and software have to be for consumers to buy an iPhone over an Android phone?
With iPod, Apple had high profit margins, the most and best content, and dominant market share. They should want to repeat that model with iPhone, not the 1990s Mac model.
> But with declining market share puts those profits in
> severe danger in the future.
Can someone explain, how this got upvoted? 50% of profits with just 4% of market share, the article we ar discussing there sates that Apple's market share grew (6,4 to 7 percent in OEM, 24.6 to 24.7 in total smartphones market. Even more—Apple was the only growing besides Google), and somehow "declining market share" gets upvoted?
Add 20x revenues of App Store vs. Android market and 9,5 billions made by iPad in just nine months — all that is somehow "severe danger" to Apple's profits?
It is an outsized threat to their profits vs. what you might expect based on linear extrapolation. Up until quite recently they've basically been able to collect monopoly rent. It is quite likely they will not be able to do so by this time next year. It is entirely possible that they will lose this ability this year, with the speed this market has been moving with.
Especially if iPhone users start to migrate to Android. While Apple partisans will swear up and down this is simply Not Possible (TM), it in fact is completely possible. Broadly speaking, most Americans will choose to save money and get something "good enough" over something perfect. Even if I stipulate that Android will never be more than "good enough", a statement I would not necessarily agree with but let's go with it, you will still find a lot of not-Apple-partisans getting peeled off proportionally to the price delta between the iPhone and the Android. In which case Apple will either have to drop prices and profits or firmly entrench itself as the high-margin, low-sales player... and drop profits. There really isn't a scenario in which Apple gets to be the high-margin, high-sales player that some people seem almost desperate to believe will be the outcome, but even mighty Apple with its Steve-Jobs-powered RDF can't actually flout economic realities, only harness them.
"Even if I stipulate that Android will never be more than "good enough", a statement I would not necessarily agree with but let's go with it, you will still find a lot of not-Apple-partisans getting peeled off proportionally to the price delta between the iPhone and the Android. In which case Apple will either have to drop prices and profits or firmly entrench itself as the high-margin, low-sales player... and drop profits."
With iPod, Apple played this almost perfectly, driving down their component prices by always being the single biggest customer of their suppliers, then deciding how long they could charge a premium versus lowering prices to keep the delta with competitors prices from getting too large. They kept the prices close enough that most consumers were willing to pay the premium for the Apple brand.
I actually think they will do the same thing with iPhone. They are getting close to having the previous iPhone version a "free" throw in with new contract, and there are rumors of Apple developing an even lower version for pay-as-you-go contracts.
I think angering content providers is a much bigger risk for Apple right now.
That report you linked also says that the number of smartphone users is up 60% vs. a year ago. So the negligible decrease of 0.3% is pretty meaningless when that ~25% is now 60% larger than it was a year ago.
That report is talking about the "phone" market, as in the billions of commodity phones used to text and talk in developing nations. Apple's market share and profit share of the smartphone market is far less impressive (something like 20%/40% the last time I saw figures), and is mostly inflated by Nokia phones that most here wouldn't consider as a smartphone and have correspondingly low margins.
It's because all Android has done is blurred the line between smart phone and feature phone. It's Android phones now that are the free and BOGO phones and that's exactly what Google wants--a base out there that they cannot be excluded from for their primary business, advertising.
To reinforce this point: advertisement's like the linked ones would be illegal in Australia, and the vendor would be heavily fined and/or forced to deliver the phones for free.
Ads here have to display the minimum cost over the terms of the contract, which makes it slightly easier to compare them.
Of course, this means that telcos do stuff like making plans that include "$300 of value for $30/month", which is an absurd claim when they set the calling costs too, and vary them depending on the plan.
The only sense I can make of people who continuously write this point, is that they will always be making some monthly payment for their phone. Therefore, they do not count that monthly payment, and only look at the upfront fee.
The monthly bills are different depending on the phone. Finding out the real price of the phone is not as easy as just looking at the subsidized price.
0$ phones are also not magically “free” in the US. You pay it with your monthly bills down the line. The subsidized price is never a meaningful metric for comparison, it is in itself not a reasonable metric for comparisons.
I have always been puzzled by this attitude which seems to be rampant with Americans. Don’t you notice something’s up when somebody offers you something for “free”?
> 0$ phones are also not magically “free” in the US.
Yes, they are -- the only benefit will be contract/no-contract. Pay full price and come back two years later and tell me it's not free.
> The subsidized price is never a meaningful metric for comparison
It's not subsidized when you pay the same monthly rate regardless (T-Mobile being the exception)
> I have always been puzzled by this attitude which seems to be rampant with Americans
It's not an attitude; it's an acceptance of reality. I'd like a discount with Verizon if I bring my own phone but I'm not counting on it anytime soon. Not sure what's puzzling about that.
Wow. You pay the same price even if you bring your own phone?! That’s just crazy. How is that even possible? You should get pitchforks!
The phones are obviously still subsidized, you just don’t get a phone for free. It’s just that they presumably also overcharge you if you bring your own phone. Wow! That wouldn’t fly in Europe.
I think it stems from incompatible networks (GSM vs CMDA).
Since you can't take an out-of-contract phone anywhere else (with some exceptions), signing a new contract for a free or reduced-priced phone is your best option. Other companies can't use reduced rates as an incentive to bring in newly-out-of-contract customers with a perfectly working phone.
It's created a consumer mentality where getting your phone from the carrier is just the way it's done and signing a contract is the best value.
> It’s just that they presumably also overcharge you if you bring your own phone.
Sure, you can look at it that way but the average consumer here has accepted that you get your phone from the carrier so the idea of being overcharged doesn't even cross their mind. They look at it as getting something in return for signing a contract and making a commitment.
Dear YooLi: That comment specifically addressed the misleading, US only, practice of advertising phones as free when they are no such thing.
That goes to the heart of this discussion. In the US, the iPhone is marketed as a premium product apparently because it isn't available "FREE". In fact, the total-cost-of-contact is pretty close between say an iPhone and an Android phone with similar specs.
Again, another BULLSHIT post. The dominant Android phones are overwhelmingly the high-end phones that retail in the $600-$700 range. They all come with thousand-dollar plus contracts. There may come a time where such a blurring occurs, but it won't be until the cost of data contracts significantly drops. And you can bet that Apple will be fighting for that market as well.
What does dominant mean? Because I can tell you that from the folks that I know here who work at our phone company (including one who was privy to their negotiations with Apple over the iPhone), it isn't sales. The lion's share of android phones being sold here are the less expensive feature phone replacements.
Sure thing, CountSessine. We all have that inside person who validates our bullshit opinion
I do. My wife works at a telco with a couple million handsets on its network. The 'negotiations' they had with Apple are well known among the company's managers. But thank you for playing.
Again, Android's dominance has been on the backs of Motorola Droids and Galaxy S' and HTC Evo 3Gs, and the like. All high-end phones.
And again, I'm telling you that that's not what's happening now in 2011. When the Droid/Milestone was king of the hill in the Android world, Android's marketshare was a fraction of what it is now. What's changed is that Android has set the low-end of the market on fire. There's no reason to buy a feature phone anymore. This is also the reason the software attachment rate on Android is so low - cheap people don't buy software.
But you keep trying to make yourself feel better as you clutch, desperately, only your iPhone.
That link basically says that Jan-Jun 2010 Apple sold just under 3% of all smart phones in the world, but they took in 39% of all profit made in that sector in the same time period. It's really astounding what they've been able to do this relatively established market in just 3 or 4 years. No wonder everyone else was so blindsided.
Apple isn't after market share or any metric in particular, they never have been. They're after making great products they want to use.
I mentioned this above in relation to a different article about the same numbers, but that's not smartphone share, it's phone share. Since the phone market is mostly cheap, commodity items it shouldn't be a surprise that smartphone vendors have bigger profits than their phone share would indicate. Mostly people are impressed by it, because they think it's smartphone share. Perhaps they're mislead because some of Apple's competitors compete in both markets?
To create an android phone, means writing an OS, giving it away, and trying to get hardware developers, app developers, and advertisers on board. That is not going to be easy,
Microsoft might have a chance, if they started to give away their OS, but probably not.
I'd say it's because there are different milestones that people - fanboys, media, companies - set. There's so many ways to measure. Daily activations, current total market penetration... then there are variables like location (US or global?), range (smartphones or all mobile devices?)... Android is just winning them one by one, and this specific one happens to be one of the most important metrics, IMO.
Yes, but that does not invalidate the data presented here. It is worth comparing smartphones, to see how others are fairing in this market segment, and it is worth comparing entire OS marketshare, to see what everyone is using.
Apple is doing well, and Android is doing amazingly well.
I don't know about amazingly. It seems entirely predictable: phone makers desperate for something to rival iOS, and Google provide it for free. Why would they turn it down? Android's popularity, in a funny sort of way, is actually indicative of the iPhone's lack of serious competition. What would be amazing is if one of the Android handsets outsold the iPhone.
That's begging the question; since Android is not a serious competitor to the iPhone, the fact that Android is doing so well is therefore proof that Android is not a serious competitor to the iPhone. You neglected to spell out that first clause but your statement is clearly based on that.
I'd suggest the much more plausible line of logic, along with being logically sound, is that as Android is now outselling the iPhone, the Android is a serious competitor to the iPhone. Pretty much by definition of "serious competitor". Will you still be dismissing it as "not a serious competitor" when Android outsells the iPhone by a factor of two? Because I rather expect it to only be a matter of time.
The Android phones are currently outselling the iPhone by a factor of between 3 and 4 in the US. This current stat is marketshare, so includes the last year or so when Android was selling much less than Apple, they were equally matched in sales last August. It's probably selling twice as many globally, it was 150% at the end of last year but growing rapidly compared with Apple being just above flat.
Several single phones are already outselling iPhone 3GS in the U.S., and single company smartphone lines by Samsung and HTC are roughly on par with the total sales of Apple phones and look set to overtake them soon. Whether the Samsung Galaxy family will overtake the iPhone family mostly comes down to whether you feel that a Verizon iPhone, or an AT&T 3GS, or Tim Cook's rumoured cheap/small iPhone nano is still an "iPhone" and how far you'll extend the same logic for the various Galaxy S phones. (Though more directly, in some European countries a single Galaxy S model outsold the iPhone 4)
Eh, that's not really what I said/meant. The fact that Apple's only serious competitor is something open-source and freely distributed, shows how other proprietary operating systems have been blown away by iOS (and Android).
First off, like many Android fans, you insist on comparing an operating system to a single phone. It would be a shock if a free OS on multiple phones didn't outsell a single phone. However, the word "outsell" is a weird one, because Android doesn't cost anything, so it's not Android that's outselling anything--it's the total sum of the multiple phones that just happen to run Android compared to the one phone that runs iOS. Almost all of Android's market share gains came at RIM's expense, not Apple's.
Android is not a serious competitor for Apple because it's not making Google money. It has a negligible app presence and a fragmentation problem. iOS is still what guides the industry, it's what people talk about, it's what Android is copying (Android was going to look totally different before the iPhone came out in 2007), and it's where the developers are.
It took an operating system with no price tag and the promise of total control for the carriers to outsell a single phone. That's a big deal. Even then, not one single Android handset outsells the iPhone on its own, and the iPad still has no legitimate competitors.
More importantly, Apple make huge profits on iOS devices. It has the developers, and it gets the press attention. Android makes no money for Google, barely has developers, and is known as the geeky platform for cross-armed OSS evangelists who hate Apple. It's also experiencing a non-trivial rise in malware--two negative articles came out today in major news outlets. Sorry, but Android is not a serious competitor for Apple.
The post above is exactly why I left Hacker News. The level of discourse here has descending to the prattle that you read in the Engadget comments. Yes, everyone here has read all of the talking points (boring, boring, really old talking points). Many phones versus a few. Many makers. Profit margin.
I don't think it was that predictable a year ago for most people. There were still many people thinking Android would have no chance against iPhone, and the last argument I heard about this was that iPhone would kill Android once it goes to Verizon, too. And this was only a couple of months ago when Android was already surging. A year ago when Android had 4% market share, ideas like that were a lot more popular.
I know some people thought otherwise but short of Apple open sourcing iOS, this was the only realistic outcome. There are quite a lot of phone makers out there who would need years to develop there own iOS, meanwhile phones have been improving year on year for as far as I remember. Therefore, the 'smartphone' would become ubiquitous, basically just the next step up for feature phones (fist they got smaller, then they got screens, then they got mp3 players, then they got WAP, then they got touch screens and proper internet etc.). Android was the clear option for all these companies to start producing smart phones. I think a better measure of what's going on would be consider how iPhone's share of the total mobile phone market has grown.
We've seen this coming for quite some time. Both Google and Apple have very apparent opposing strategies in how they're going to attract customers to their respective platforms. It's almost like watching Mac vs Windows all over again. Apple is shooting for higher quality and high-end customers, while Google is aiming for a higher scale and much wider user base. In the end, both should co-exist and serve their niche just like Mac and Windows.
The first chart is all phones, not just smartphones and HTC only sell smartphones. You either have to sell lots of dumbphones too (like Samsung and LG) or sell a whole bunch of smartphones (RIM and Apple).
I'm not sure whether Motorola is there mostly on the strengths of smartphone sales alone or combined with dumbphones.
Somewhat off-topic: is there any reason not to get Virgin Mobile's $150 LG Optimus V for the purpose of exploring Android development? Aside from smaller memory and lower-res camera, it looks like I don't miss out on anything from top of the line models.
The only reasons not to get one are (1) Not-great hardware, if you love top-of-the-line stuff, it'll fall short, (2) Sprint's network is pretty sucky, and you can't roam onto Verizon like I believe you can with regular Sprint, (3) Virgin Mobile doesn't allow VM forwarding so you can't easily use Google Voice for Voicemail.
On the other hand, it's a nearly-pure Froyo experience, the battery life and performance is great, the plans are dead cheap, it has awesome hardware buttons not crappy haptic capacitive ones, a Market install of "Quick Settings" opens up the Wifi Hotspot feature. Seriously, $25/mo?!
Anyway, I bought one, and coming off an old iPhone (and AT&T), I think it's great so far. Might have to reevaluate after I spend some time out of the metro area and away from Interstates.
Thats exactly what I got it for and it turns out that its a good little phone. The resistive touch works more accurately for me than other phones of the same size and the battery lasts me 3 days most of the time.
More or less. Virgin Mobile is a no contract provider, you pre-pay for each month of service as you go. All the plans are unlimited (~5gigs) data/ unlimited texts - $60 gets you unlimited voice, $25 gets you 300 minutes, and there is something in the middle at $40/mo. The $25/mo is the best US deal for a capable android phone that I know of. You do need to pick from these plans though, you can't use their x cents a minute pay as you use it plan afaik.
EDIT: Link to the thread (thanks georgie) about it being $129 w/ $20 gift card at target. Damn good deal, note the one I played with worked fine over wifi before it was activated with VM. Sale started yesterday: http://slickdeals.net/forums/showthread.php?sduid=0&t=27...
The main problem, at least for me, is that it is on Sprint's CDMA network so it doesn't work if you travel out of the country. Another issue for some people is it doesn't have flash.
