Analyst: Android US smartphone share drop to continue
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 Android?s 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.
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 Android?s 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.
Comments
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 there will be quite an explosion of iPhone use in the US.
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.
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
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.
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.
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.
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.
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!!!
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'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.
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
The best part is the second graph of this article has US and Rest Of The World using the same symbols!
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.
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.
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.
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.
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.