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Analyst: Android US smartphone share drop to continue

post #1 of 69
Thread Starter 
After Google's Android experienced its first loss of market share in a region since 2009 during the March quarter, one analyst believes Apple's iPhone will continue to win back share in the U.S. smartphone market.

In a note sent to investors on Monday, Needham & Co. analyst Charlie Wolf predicted Android would regain share in the June and September quarters before a "material decline" in the December quarter following the expected launch of the iPhone 5. "In our opinion, this is just the beginning of Androids share loss in the U.S.," Wolf wrote.

Android's share of the U.S. smartphone market fell from 52.4 percent in the December quarter to 49.5 percent last quarter. The drop was the first sequential loss of market share in any region for Android since it began its "growth rampage" in 2009.

Wolf attributed the dip to the launch of the iPhone 4 on the Verizon Wireless network, while also acknowledging that a "substantial percentage" of Verizon subscribers appear to be waiting for the next iPhone before upgrading. Verizon has indicated that it will receive the next iPhone at the same time as AT&T. Wolf also speculates that "the iPhone could launch on the Sprint and T-Mobile networks this fall," which could give Apple another boost in share.

U.S. smartphone market shares | Source: IDC

The fact that the iPhone's share of the U.S. smartphone market jumped up 9 percent in the March quarter, while the device's share in other regions held steady, suggests to Wolf that the Verizon iPhone drove iPhone growth in the U.S. last quarter.

iPhone's market share by region | Source: IDC

Worldwide, Wolf views Android as "well positioned" to make gains in the two markets with the largest installed bases of feature phone users -- Asia Pacific and the Rest of World regions. Apple, on the other hand, is faced with the challenge of building an "iPhone Lite" for prepaid markets like China, said Wolf.

Apple has, by its own admission, "been on a tear" with the iPhone in China. iPhone sales were up almost 250 percent in Greater China last quarter. However, the iPhone maker has yet to scratch the surface of the Chinese market, which has an estimated 896 million mobile phones in use as of May.

Wolf takes recent comments from Apple COO Tim Cook regarding the company's extensive market research in China to mean that Apple "appears to be considering" a cheaper iPhone for emerging markets. In February, Cook reportedly said the company is planning "clever things" for the prepaid handset market and doesn't want its products to be "just for the rich."

Rumors swirled this spring that Apple plans to release a cheaper iPhone for prepaid customers. Reports also suggested Apple could make the device smaller and significantly lighter.

A March survey found that 53 percent of respondents planning to buy a 3G smartphone would purchase an iPhone if the price was lower, compared to 30 percent who would purchase the smartphone at its current price.

In his report, Wolf highlighted continued struggles from Research in Motion and Nokia. Calling it "a tale of two continents," Wolf pointed out that the BlackBerry's share of the U.S. market has "imploded" from 37.8 percent a year ago to 13.8 percent in March, while Nokia's share of the European market fell from 40.6 percent to 20.2 percent.

The broader smartphone market, however, continued "torrid growth," with shipments increasing by 84.7 percent. Smartphones' share of the mobile phone market accelerated to 28.1 percent in March, compared to 25.3 percent in December and 17.8 percent a year ago.
post #2 of 69
It doesn't surprise me. Just about all my friends that own Android phones bought based on price, or because the iPhone was not available at the time (Verizon).

They hate their phones for many reasons. Quality, user-experience...etc. Things the iPhone excels at.

That being said, expect this thread to decay quickly once the iHaters burrow out.
post #3 of 69
Just wait till the current iPhone 4 becomes $99 after the next iPhone comes out...

I think there will be quite an explosion of iPhone use in the US.
post #4 of 69
Quote:
Originally Posted by sflocal View Post

It doesn't surprise me. Just about all my friends that own Android phones bought based on price, or because the iPhone was not available at the time (Verizon).

They hate their phones for many reasons. Quality, user-experience...etc. Things the iPhone excels at.

That being said, expect this thread to decay quickly once the iHaters burrow out.

I think this is very close to the truth for many users. My wife got an Android-based phone on Verizon which she has grown to hate and doesn't want another. I have an aging iPhone 3G which she has grown to envy. Her two years is up early next year and she wants to bail on Android and get an iPhone.
post #5 of 69
I saw better looking graphs from Quattro Pro in 1992.
post #6 of 69
Quote:
Originally Posted by mdriftmeyer View Post

I saw better looking graphs from Quattro Pro in 1992.

I'm going to have to agree with you on this one. I think Edward Tufte would be horrified. lol

I think this one is up there with the graphic in the XServe article:

http://www.appleinsider.com/articles...er_market.html
post #7 of 69
Could someone define market share for me? I thought market share was the number of units of a particular brand that people are out there using as compared to all units. But, the way iPhone market share takes some dramatic drops before the releases of new models in that graph, I'm wondering if I'm confused and market share is only the number of units of a particular brand sold in a particular quarter out of all units of all brands sold in that quarter, ignoring any units people already own.
post #8 of 69
Quote:
Originally Posted by Michael Scrip View Post

Just wait till the current iPhone 4 becomes $99 after the next iPhone comes out...

I think there will be quite an explosion of iPhone use in the US.

once again people confuse unlocked prices with prices on a plan. The iPhone 4 may well drop to $99 on some plans but would be about $400-$500 were it to available without a plan - judging by costs of the 3GS over seas.

By cheap, and by for the pre-paid market - this analyst means about $250 or so. Unlocked.
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post #9 of 69
Quote:
Originally Posted by Apple? View Post

Could someone define market share for me? I thought market share was the number of units of a particular brand that people are out there using as compared to all units. But, the way iPhone market share takes some dramatic drops before the releases of new models in that graph, I'm wondering if I'm confused and market share is only the number of units of a particular brand sold in a particular quarter out of all units of all brands sold in that quarter, ignoring any units people already own.

The latter. The first is generally called installed base. Market share is generally the share in the period being monitored, mostly a quarter. Can be a year.
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post #10 of 69
Quote:
Originally Posted by Michael Scrip View Post

Just wait till the current iPhone 4 becomes $99 after the next iPhone comes out...
.

That may not happen, because it's possible that the next iPhone will be superficially similar to the iPhone 4 - at which point they will probably prefer to keep their cheap phone as the 3GS - possibly updated with a new A5 core.

The other reason for Apple to keep the 3GS alive, or at least its doppleganger is the suit against Samsung. Several of the claims against Samsung are based on Trade Dress and Apple strengthens its case by continuing to make the 3GS since that is the phone that Samsung seems to have copied most heavily.
post #11 of 69
This is an awkward moment... The android fans definitely can't celebrate this, and the Apple fans can't say 'Told ya'! after the repeated argument of why Apple doesn't care about market share. Time for RIM to cheer up?
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post #12 of 69
Quote:
Originally Posted by asdasd View Post


once again people confuse unlocked prices with prices on a plan. The iPhone 4 may well drop to $99 on some plans but would be about $400-$500 were it to available without a plan - judging by costs of the 3GS over seas.

By cheap, and by for the pre-paid market - this analyst means about $250 or so. Unlocked.

I wasn't talking about the unlocked price. I'm in the US... and we don't really deal with unlocked phones

I was talking about how Apple keeps last year's model around for a cheaper price.

The 3GS was kept around for another year and became the $99 phone... and now you can get it is $49... (on contract of course)

I'm assuming Apple will do a similar thing again this year.
post #13 of 69
Quote:
Originally Posted by ranReloaded View Post

This is an awkward moment... The android fans definitely can't celebrate this, and the Apple fans can't say 'Told ya'! after the repeated argument of why Apple doesn't care about market share. Time for RIM to cheer up?

The obvious argument you are missing is that market share does not matter for Apple, but it does matter for RIM who ARE DOOMED.

Oh wait. Sorry. Misread the article. Apple's share is UP?!

Android is doomed!!!
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post #14 of 69
Quote:
Originally Posted by ranReloaded View Post

This is an awkward moment... The android fans definitely can't celebrate this, and the Apple fans can't say 'Told ya'! after the repeated argument of why Apple doesn't care about market share. Time for RIM to cheer up?

That's very funny. Nonetheless surprised Android lost the share so soon.
post #15 of 69
Quote:
Originally Posted by matrix07 View Post

That's very funny. Nonetheless surprised Android lost the share so soon.

I'm not surprised. Of course the masses went out and bought the cheap/free model first, also satisfied that they were bucking the trend, and then learned what a piece of junk and compromised experience they were getting. Now they're more willing to see what all the fuss is about.

That, and new availability on everyone's favorite network.
post #16 of 69
What's really amazing here is that Android is losing market share to a phone that is a year old, and has a refresh imminent. It's a good thing I'm tied to my contract for another 6 months because at this rate the iPhone 5/4S/whatever will have a HUMUNGOUS waiting list.
post #17 of 69
Quote:
Originally Posted by mdriftmeyer View Post

I saw better looking graphs from Quattro Pro in 1992.

Quote:
Originally Posted by One Fine Line View Post

I'm going to have to agree with you on this one. I think Edward Tufte would be horrified. lol

I think this one is up there with the graphic in the XServe article:

http://www.appleinsider.com/articles...er_market.html

The best part is the second graph of this article has US and Rest Of The World using the same symbols!
post #18 of 69
Quote:
Originally Posted by cloudgazer View Post

What's really amazing here is that Android is losing market share to a phone that is a year old, and has a refresh imminent. It's a good thing I'm tied to my contract for another 6 months because at this rate the iPhone 5/4S/whatever will have a HUMUNGOUS waiting list.

Correction: Dozens of new Android-based phones with faster/better/more HW are losing to the year old iPhone with an imminent refresh.
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post #19 of 69
Quote:
Originally Posted by solipsism View Post

Correction: Dozens of new Android-based phones with faster/better/more HW are losing to the year old iPhone with an imminent refresh.

Indeed - that's a better way to put it. But I'm really thinking about the 'imminent refresh' part - if you look at iPhone sales they have historically slumped in the months before a refresh as consumers wait. Clearly not this time.
post #20 of 69
Apple DOES NOT NEED A CHEAPER IPHONE IN CHINA. Any analyst that says Apple should make an iPhone Lite wants Apple to play the race-to-the-bottom game.

The Apple Online Store for China for months was showing the iPhone 4 as not available at all. Now it's showing 24 hours finally. But still no WHITE iPHONE4.

The key to China is prepaid or whatever but also tackling China Mobile, the biggest carrier.

China Unicom has only 15 million 3G subscribers, with China Mobile having 23 million 3G subscribers:
http://www.itu.int/ITU-D/ict/newslog...ion+China.aspx

The article claims "The number of 3G subscribers in China has passed the 50 million mark". An iPhone 4/5/6 going multi-carrier in China has massive potential. No need for iPhone "Lite". Sure, there may be a customised iPhone, but I don't think Apple should sacrifice ANY profit margins to tap into the China market.

Plus, Apple must remain a LUXURY item in China. An iPhone Lite would erode the brand for no reason. You could dump 10 million iPhone4s in China right now and they would all be snapped up, scalpers notwithstanding... IF those iPhone 4s could work across all Chinese networks.

And remember, the figures talk about existing "3G subscribers", not those on 2G, prepaid, etc. which is a much larger number.
post #21 of 69
Quote:
Originally Posted by nvidia2008 View Post

Apple DOES NOT NEED A CHEAPER IPHONE IN CHINA. Any analyst that says Apple should make an iPhone Lite wants Apple to play the race-to-the-bottom game.

The Apple Online Store for China for months was showing the iPhone 4 as not available at all. Now it's showing 24 hours finally. But still no WHITE iPHONE4.

The key to China is prepaid or whatever but also tackling China Mobile, the biggest carrier.

China Unicom has only 15 million 3G subscribers, with China Mobile having 23 million 3G subscribers:
http://www.itu.int/ITU-D/ict/newslog...ion+China.aspx

The article claims "The number of 3G subscribers in China has passed the 50 million mark". An iPhone 4/5/6 going multi-carrier in China has massive potential. No need for iPhone "Lite". Sure, there may be a customised iPhone, but I don't think Apple should sacrifice ANY profit margins to tap into the China market.

You cant go on pre-paid , in China or anywhere else, unless the entry level phone is cheap. Apple ( or Cook at least) have already said they are going to do this, and they have warned about falling margins.

Quote:
Plus, Apple must remain a LUXURY item in China. An iPhone Lite would erode the brand for no reason. You could dump 10 million iPhone4s in China right now and they would all be snapped up, scalpers notwithstanding... IF those iPhone 4s could work across all Chinese networks.

IPod nano's dont erode the brand, nor did the Mac Mini. This wont either. It does need another name, and clearly cant have the top of the line features - no retina display. If people get higher status from an iPhone 4S and iPhone 4 then that market will still grow, as the cheaper market grows.
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post #22 of 69
There is a big dip in iPhone market share in early 2008. Is that due to the initial iPhone losing its allure? I see a large Blackberry gain there too. Did RIM announce something new at that time?
post #23 of 69
Quote:
Originally Posted by asdasd View Post

IPod nano's dont erode the brand, nor did the Mac Mini. This wont either. It does need another name, and clearly cant have the top of the line features - no retina display. If people get higher status from an iPhone 4S and iPhone 4 then that market will still grow, as the cheaper market grows.

Exactly! They can go with a scratch-resistant plastic screen rather than glass, a plastic enclosure rather than metal. There are lots of ways to make the phone less luxurious without impacting the functionality and so keep a strong differential between it and the full price brand.

They'll reduce their margins on average but they won't cannibalize their high end sales because people will still aspire to the more beautiful luxurious handset.
post #24 of 69
Quote:
Originally Posted by stelligent View Post

There is a big dip in iPhone market share in early 2008. Is that due to the initial iPhone losing its allure? I see a large Blackberry gain there too. Did RIM announce something new at that time?

No - that was just as iPhone-1 neared end of life and people stopped buying in anticipation of the 3G which launched in Mid-2008. Oh and there was a month between the 3Gs announcement and release - during which I imagine iPhone sales dropped to almost nothing, but presumably Apple had already ran down inventories at that point.
post #25 of 69
Quote:
Originally Posted by stelligent View Post

There is a big dip in iPhone market share in early 2008. Is that due to the initial iPhone losing its allure? I see a large Blackberry gain there too. Did RIM announce something new at that time?

The iPhone sales dropped because supply dropped. Apple stopped production on the original model too soon so that the weeks running up to the iPhone 3G there was literally no supply in stores. For months before that the supplies were constrained.

Here is a graph of iPhone sales: http://en.wikipedia.org/wiki/File:IP...ter_simple.svg

What you'll notice is the typical holiday surge (Apple's Q1) followed by a still high post-holiday (Q2) sales with the drop off for the 2nd calendar quarter.

What's most alarming is that Apple has continued to grow quarter-over-quarter for the past two years so even the typical post-holiday drop isn't being seen. The drop is now recognized based on product release cycles, which might be one of the reasons Apple has moved the release to the Autumn. I hypothesis other reasons are bring their most profitable device release inline with their least, non-"hobby" profitable device release that is most propped up by a device that is very near the iPhone in many regards.
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post #26 of 69
I bet also, that the day they formally announce the iPhone 5/ 4S is the day, or week, of it's availability.
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post #27 of 69
Quote:
Originally Posted by cloudgazer View Post

That may not happen, because it's possible that the next iPhone will be superficially similar to the iPhone 4 - at which point they will probably prefer to keep their cheap phone as the 3GS - possibly updated with a new A5 core.

This is highly unlikely, in my own opinion. If so, the 3GS would have to be capable of running iOS6 next year without reducing the functionality to a significant degree. Why? Because people still go onto 2 year contracts on the low-end model.
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post #28 of 69
Quote:
Originally Posted by sennen View Post

This is highly unlikely, in my own opinion. If so, the 3GS would have to be capable of running iOS6 next year without reducing the functionality to a significant degree. Why? Because people still go onto 2 year contracts on the low-end model.

Like I said, they'd have to give it an A5, or at the very least an A4 clocked at the same speed as the iPhone4. Apple so far have supported phones out to about 3 years, and I expect them to keep doing so as a point of difference to Android - where you are lucky to get software support for a year.

The 3GS as it currently is will almost certainly be capable of running iOS 6, because it's still being sold - it will probably fall off the support map around iOS 7.
post #29 of 69
Quote:
Originally Posted by mdriftmeyer View Post

I saw better looking graphs from Quattro Pro in 1992.

I was thinking of Lotus' Symphony! Rather embarrassing don't you think. Anyway, my Android EVO is gone as soon as Sprint gets the iPhone!
post #30 of 69
What I got from the article is that nothing RIM seems to do has any effect on reversing its slide. NOTHING.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #31 of 69
Quote:
Originally Posted by cloudgazer View Post

Indeed - that's a better way to put it. But I'm really thinking about the 'imminent refresh' part - if you look at iPhone sales they have historically slumped in the months before a refresh as consumers wait. Clearly not this time.

The latest data in that chart was from January. So it's not approaching "imminent refresh" when those data were gathered. And that's why there's no slumping in that chart.
post #32 of 69
I suspect that the "clever things" Tim Cook alluded to during the last earnings call was the use of iCloud to eliminate the need for physical synching of the iPhone with a host PC. Because a large portion of phone purchasers in Asian markets have no PC, the ability to manage music and other content and get OS updates over-the-air gives Apple a huge competitive boost. In other words, the way to make an iPhone more affordable in China or India isn't do dumb down and cheapen the phone. Rather you make it more affordable by eliminating the need to buy a PC!
post #33 of 69
You can just increase your market share with freebies and 2-fers for so long.
post #34 of 69
Quote:
Originally Posted by xsu View Post

The latest data in that chart was from January. So it's not approaching "imminent refresh" when those data were gathered. And that's why there's no slumping in that chart.

Actually the lastest data from Apple were much later than that. For example http://www.comscore.com/Press_Events...r_Market_Share

There have also been hints of Q2 numbers that are holding steady - but I can't recall exactly where.
post #35 of 69
Quote:
Originally Posted by cloudgazer View Post

[...]The 3GS as it currently is will almost certainly be capable of running iOS 6, because it's still being sold - it will probably fall off the support map around iOS 7.

I really hope so. In the mean time, the iOS beta 1 does not give any indications that that is the case
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post #36 of 69
Quote:
Originally Posted by ranReloaded View Post

This is an awkward moment... The android fans definitely can't celebrate this, and the Apple fans can't say 'Told ya'! after the repeated argument of why Apple doesn't care about market share. Time for RIM to cheer up?

I think every even remotely intelligent person has known for a long time that the iPhone was constrained in the US by only being on one carrier and expected it to regain share from Android once it was on Verizon. The iPhone is still constrained by being on fewer carriers than Android, both in the US and globally. When Samsung released the original Galaxy Tab they said it was going to be on 500 carriers in 120+ countries. RIM makes similar claims. I believe the iPhone is only on around 200 carriers in under 100 countries (I think it was 80-something countries at last count). They're missing some significant markets. Apple is a relative newcomer whereas Android is being used by established players who had existing relationships with carriers, so this is to be expected. They're also trying to do something different (i.e., sell primarily through their own retail channels using their own marketing) whereas Android fits neatly into the existing model where you choose a carrier and they give you a choice of phone. So they're going against the grain. But they're continually making progress and that's what we're seeing. Android doesn't appear to be slowing them down.
post #37 of 69
Quote:
Originally Posted by Joseph L View Post

The graph shows the iPhone bouncing up and down between 20% and 30%. Android is growing at the expense of RIM and M$.

I don't see Apple continually making progress. Their share is about the same as it was in 1998.

Apple's share right now at the end of their iPhone's 4 life cycle is the same as it was in mid-2008 at the start of their iPhone-3 life-cycle. At this rate they'll be 40% in the US once the next model launches.
post #38 of 69
Perfect. Couldn't happen to a more deserving bunch of corrupt, insidious ***holes.

Remember Windoze 98? I do...and ME, and 2000, and Vista...

May the plummet continue.

Cheers,
Cameron
post #39 of 69
This is gonna sound a bit fanboyish, but I do think that a greater percentage of Android customers are not loyal or actively seeking out an Android phone. The platform has its strengths, but I think people just simply get them because:
-they don't have a choice; it's what their carrier has
-it's cheap
-they go down to the store every 2 years and pick the one that looks cool

This demographic would probably include both of my parents and my girlfriend (before I "converted" her). Obviously there are genuine fans of the Android platform and that's great. But I think marketshare/installed base don't really capture the STRENGTH of a platform - just how widespread it is. Loyalty, brand awareness, customer satisfaction, usage, app attachment rate, app store profitability, etc. are all stronger on the iOS platform.

Even if I weren't a reader of AppleInsider, I would probably favor iOS in the long term. Whether that means a 15% market share or a 50% marketshare I honestly couldn't care less. Give me the BEST platform, not the biggest...
post #40 of 69
Quote:
Originally Posted by poke View Post

I think every even remotely intelligent person has known for a long time that the iPhone was constrained in the US by only being on one carrier and expected it to regain share from Android once it was on Verizon. The iPhone is still constrained by being on fewer carriers than Android, both in the US and globally.

I agree to the logic, but everyone and their mothers were like 'meh' when the huge lines to buy the Ver-i-phone never materialized. Of course, there's online purchasing though...


Quote:
Originally Posted by poke View Post

When Samsung released the original Galaxy Tab they said it was going to be on 500 carriers in 120+ countries. RIM makes similar claims. I believe the iPhone is only on around 200 carriers in under 100 countries (I think it was 80-something countries at last count). They're missing some significant markets.

Tell me about it: Japan. The other day I met a friend of my boss who now works at Samsung. She was all like "You'll see, now it's gonna flip in favor of Android, we're unstoppable".

(First)About (Middle)F. (Last)Time is here name, I guess. It took like, How many manufacturers, how many models?

Quote:
Originally Posted by poke View Post

Apple is a relative newcomer whereas Android is being used by established players who had existing relationships with carriers, so this is to be expected. They're also trying to do something different (i.e., sell primarily through their own retail channels using their own marketing) whereas Android fits neatly into the existing model where you choose a carrier and they give you a choice of phone. So they're going against the grain. But they're continually making progress and that's what we're seeing. Android doesn't appear to be slowing them down.

All in all, iOS is doing great considering Apple is only one manufacturer.
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