It Would Be Kind of Stunning if Android Phones Weren’t Outselling iPhones

By  |  Monday, May 10, 2010 at 12:54 pm

Retail research kingpin the NPD Group is reporting that Android-based phones are now outselling iPhones. Or at least they did last quarter in terms of unit sales in the U.S. according to NPD’s study, which found that RIM’s BlackBerries held 36 percent of the market, phones running Google’s Android had 28 percent, and the iPhone was at 21 percent.

Something like this was inevitable, given that:

  1. Two models of the iPhone (the 3GS and 3G) are doing battle with scads of Android handsets in an array of shapes and sizes;
  2. You can buy an Android phone for a lot less than an iPhone (the original Droid launched in November at the same contract price as an iPhone 3GS–now Amazon has ‘em for twenty bucks);
  3. Three out of four major U.S. wireless carriers still don’t have the iPhone.

It’ll be fascinating to see whether Android’s unit sales edge persists–and grows. (There are new Android models every month, but some iPhone admirers are presumably waiting for the next-gen iPhone which will likely be available in June or July.)

Will Apple feel forced to respond to the Android explosion with price cuts, the introduction of budget-minded new models, or other moves that could steal back marketshare? It’s not a given. Between the iPhone’s healthy pricetag and the walled-garden megamall known as the iTunes Store, Apple is perfectly capable of being the most profitable smartphone company even if it doesn’t sell the most phones.

Here’s what would cause Apple to shift its strategy: Any sign that Android was managing to convert marketshare dominance into Windows-like ecosystem dominance. If a booming market for Android phones resulted in popular apps being available first on Android, or content owners striking Android-only deals, or makers of popular accessories not bothering to support the iPhone, Apple would react but quick.

In 2010, the Android Marketplace’s offerings have improved noticeably in terms of both quantity and quality. So far, though, it’s still near the start of a very long game of catch-up with the iPhone. And if there are any signs that the iPhone ecosystem is suffering, I can’t see them.

Any predictions on where things will be, say, one year from now?

(UPDATE: You can buy 9900 AT&T Backflips for the price of one iPhone 3G–here’s a helpful infographic.)

 
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16 Comments For This Post

  1. heulenwolf Says:

    I agree that the variety of Android phones makes the OS-based market share question ill-posed. As a recent, happy Droid owner, I’m glad to see that my options in the US have finally grown beyond iPhone (w/ AT&T) or Suck.

    I’d love to see LTE change things such that one hardware design of the iPhone could work on more than one carrier in the US. I trust the carriers to empower the consumer even less than I trust Facebook with my privacy, however. Regardless, I think Apple is waiting for LTE rollout to end its exclusivity deal with AT&T. If it were on both of the top 2 carriers in the US (in terms of customers), it would have access to the majority of the market and all of those consumers currently willing to pay a price premium for their service. Unfortunately, I see that transition period where 4G is rolling out being yet another period where “early adopters” will be charged more as 4G becomes a “feature” of the phone.

    Regarding Android phones, I think hardware designs will start converging and come down to a single choice within each hardware brand: To keyboard or not to keyboard (e.g. Droid vs Droid Incredible/Eris). Everything else is in the noise (LED backlit vs AMOLED backlit, case color, #microphones). Significant differentiation will have to come from the hardware speed, software licensed/allowed to run on it (e.g. Skype, Activesync/Exchange support), and the rest will be from salesmanship.

  2. Dan Johnson Says:

    As a longtime iPhone owner, item #3 is my vote for the top factor here. Love the device, but poor service is the main reason our eyes tend to wander. Can I get an “Amen?”

  3. ediedi Says:

    I love my 3GS, but I can’t help but think how nice it would be to have a phone with a similarly nice interface, but which I didn’t have to mess with (jailbreaking) in order to utilize at full potential. Things became a little bit less frustrating since the recent untehtered jailbreak method. Of course, it will mean that I will have to wait a lot longer for OS 4 to be available (not that I really want to enable iAD anyway).

    In conclusion, I understand the Android positive trend. If I had to choose between an unjailbroken iPhone and an Android phone, I’d pick the Android hands-down.

  4. Hamranhansenhansen Says:

    The key is that there is no Wintel-like ecosystem in Android. It’s US-centric, most of the phones are CDMA. It only has Java apps, it can’t provide an app platform for the C apps users want. Wintel took off when it became easy to port Mac apps to Windows, but C to Java is not easy. Only 25% of the phones run (or ever will run) Android v2, which is bad for native app developers and also why FlashPlayer possibly coming to Android v2.2 is a non-issue, there simply won’t be many phones running it. There are no enterprise features like encryption or remote management. The native apps are unmanaged and there’s malware. Devices have 512MB of space for apps compared to 7-63GB on iPhone OS devices. Most of the things that are said about Android only apply to Droid, which is a tiny fraction of Android. It’s really only Droid that competes with iPhone. Nexus One sold too few to even be mentioned.

    So from the perspective of a developer, your target on iPhone OS is iPhone (not just in the US, but worldwide), iPod touch (almost as many as iPhone), and iPad (best-selling tablet in history already), compared to a few million Droid (not Android). And you can port your existing C code from desktop apps or console games to iPhone OS easily, and with no effort get 70% of retail every month. On Android you have a few million potential users, and there just isn’t nearly as much Java code out there, so you have to start from scratch.

    iPhone has influenced a lot of phones over the past few years, but nobody has taken the apps seriously. So Android may be a lot of things, but it’s no Wintel.

  5. Dale Larson Says:

    Does anyone buy apps for Android?

    Watch that. Something that matters has started to change when that changes.
    Or when folks stop buying apps for iPhone (which might signal that HTML5 is winning rather than either Android or iPhone).

    Or watch dominance in web browsing from mobile devices.

    Part of what’s so interesting about iPhone isn’t its unit sales but its usage patterns. So far, Android users are more like users of outdated phones than like users of iPhones.

  6. drphysx Says:

    You forgot the most important reason.

    4. There’s a bunch of Android phones that are better than the iPhone. No, really. Much better, actually.

  7. drphysx Says:

    You also forgot that Android phones are also competing against each other.

    Even more than they’re stealing sales from the iPhone, Android phones are stealing sales from each other.

    The “there are more phones” argument isn’t complete, unless you consider this.

    Plus, we’re comparing operating systems, not phones. It’s like Windows vs. OS X and NOT like MacBook vs. Inspiron.

    And we know how the Windows vs. OS X story ended. If you don’t know it, look it up, cause the Android vs. iPhone OS story will have the same (happy) end.

  8. Eric Says:

    I think #3 is all that really needs to be said. Switching networks is either entirely unreasonable or a very tough call for most people (especially with AT&T’s mediocre reputation). The iPhone might very well still hold a healthy marketshare lead if they went to Verizon last summer, if only because “HTC” and “Android” had little brand awareness until very recently and your average consumer is probably comfortable with iTunes.

    Other than the option to have a keyboard, I don’t think that hardware is much of a differentiator these days. I doubt that most non-techie users even notice the Droid/Incredible resolution and megapixel advantage.

  9. fjpoblam Says:

    Well, yep, come to think of it: ignoring ANYTHING about the qualities or innards or whatsoever of the two, it’s like you say: a case of duh!

  10. Tom Ross Says:

    Look, NPD is highly respected for the video game charts. They compile them by polling thousands of retailers, with those retailers being promised accurate total sales data in return for their accurate individual sales data.

    But what NPS did for these smartphone stats was something different. They asked customers what they bought.

    Now how reliable is that? About as reliable as asking people how they vote. About as reliable as those Changewave surveys were 25 % of respondents tell the interviewer they’ll buy every new gadget immediately, and another 50 % that they’ll buy it within the next 12 months. Which of course they never do.

    If you want definitive stats for smartphones, look at what Canalys, Gartner and IDC hand out to the press every quarter. If that’s not enough, pay for their detailed stats broken down country-by-country. That’s definitive. This NPD opinion poll is not.

    …that and the fact that NPD explicitly excludes enterprise/corporate/business and government and education customers. These stats are for consumers only.

    Since RIM is huge with corporations, while Apple is quite good and Android is very bad, one can assume that even NPD, were they to publish total US marketshare, would give RIM a bigger percentage at 45 % %, put Apple back into #2 at 25 % and Android to #3 at 15 %.

    And another post scriptum: According to NPD, just one year ago (Q1 2009), Windows Mobile was still #2 and Apple #3 in that same chart, which is another suggestions that Android is mostly replacing Windows Mobile in the off-brand sector.

    And this is the last one:

    Conservatives 36 %
    Labour 29 %
    LibDem 23 %

    Funny, huh?

  11. Tom B Says:

    The ATT thing and the $20 phone thing will work in the short term. To date, nobody has created a Droid phone that is anywhere CLOSE to worth buying based on merits.

    In a year? Maybe the AAPL v. HTC suit will be in full swing, with HTC getting its sorry butt kicked all the way back to Taiwan.

  12. Stilgar Says:

    Does Apple even care? They’re quite content to not try and conquer the desktop PC market (and they never will at their current pricing structure). Maybe they’re also satisfied with having a fraction of the cell phone market. The only reason this news seems odd to everyone is because Apple is starting as the top dog and not as the little guy.

  13. Brandon Backlin Says:

    Hamranhansenhansen,

    Nobody cares about what language the apps are written in; as long as they work, that’s all that matters.

    I still think it’s impressive that a phone only offered on one network and only offered and controlled by one company takes 21% of the market, but see the first comment I made in this post.

  14. Bill Says:

    ” The only reason this news seems odd to everyone is because Apple is starting as the top dog and not as the little guy.”

    Apple did not start as the top dog. In fact, everybody laughed at Apple when they announced they were going to build a telephone. How the hell did Apple think they could compete with the big boys already established in the mobile market? Well, they did. They stood the market on its ear. Now everybody’s copying Apple’s model. They built their advantage.

    I’m not saying they’re the best phone, I’m actually quite impressed with a number of the HTC/Android phones. But stating that they started on top is just downright wrong.

  15. Tom Ross Says:

    And Apple is still growing at a breakneck speed. They’ve more than doubled compared to last year and there’s nothing on the radar able to stop their growth, certainly not Android. It’s true that Android is growing as well, just not at the expense of Apple, but other competitors.

    In a way Android fans are oblivious to the fact that we’re nearing the end of another iPhone cycle. As iPhone 3GS sales are slowly, but surely winding down to make space for the next iPhone, the Androidist dilude them themselves into thinking that it was Android which brought the mighty iPhone to its knees, when in fact the only phone that can do that is the next iPhone, in this case the iPhone HD expected to go on sale within the next 6 weeks or so.

    Whatever it is that NPD is counting, expect the iPhone to do an impressive rebound jumping back in front of Android by the next time NPD is reporting. What’s more, should Apple finally extend distribution to Verizon, Sprint and/or T-Mobile (doesn’t really matter which), expect Android to receive a painful thrashing. There’s not a network in the world on which Android is outselling the iPhone.

  16. Simon Says:

    open software (as distinct from open source software) will always win in the end …

    want to lock down your device and gain a reputation for restrictive practices and expensive prices. fine, whilst you can get away with it but those days are coming to an end (if they haven’t already)

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