∞ Android market share over iPhone not as impressive as it looks

When news broke on Monday that Android had taken over the second spot from Apple’s iPhone OS, I thought the Internet was going to blow itself to pieces. But there is more to the numbers than a simple boost in Android sales and Apple agrees.

“This is a very limited report on 150,000 US consumers responding to an online survey and does not account for the more than 85 million iPhone and iPod touch customers worldwide,” Apple spokesperson Natalie Harrison, told The Loop. “IDC figures show that iPhone has 16.1 percent of the smartphone market and growing, far outselling Android on a worldwide basis. We had a record quarter with iPhone sales growing by 131 percent and with our new iPhone OS 4.0 software coming this summer, we see no signs of the competition catching up anytime soon.”

The most important thing to see in the data released by market research firm, NPD is that Verizon Wireless is now offering a buy-one-get-one-free deal on all of its smartphones. That applies to all Android and BlackBerry smartphones.

A headline on Fortune.com yesterday read, “Android demolishing iPhone in sales.” Although the story did mention the discounted Android and BlackBerry phones, it didn’t give it the weight it deserved.

Looking at NPD’s numbers, we see that RIM’s OS is in first place with 36 percent market share, followed by Android with 28 percent and Apple with 21 percent.

Imagine for a moment if Apple allowed AT&T to have a two-for-one sale on the iPhone and iPad. Simultaneously, Apple had a two-for-one sale on the iPod touch, which also runs the iPhone OS. Do you think that would have a dramatic effect on the market share numbers for the iPhone OS? Of course it would.

In its last fiscal quarter, Apple posted a profit of $3.07 billion on revenue of $13.5 billion. The company sold 8.75 million iPhones in the quarter, representing 131 percent unit growth over the year-ago quarter.

We don’t know how many iPod touches were sold in the quarter, but overall, Apple sold 10.89 million iPods.

Let’s not forget the iPad, which weren’t reported at all in the financial quarter. It took Apple 28 days to sell 1 million iPads in the U.S. alone.

Now double all of those numbers if Apple had a two-for-sale and I bet you will find those market share numbers would change dramatically.

Apple doesn’t have to launch a fire sale for its portable products to compete in the market. It believes it has strong products and I think most of the market believes it has strong products.

Two-for-one sales do increase unit market share, but they do more damage to the brand and product than they are worth.

Update: Added comment from Apple 8:43 am PT

  • AlfieJr

    yes, these ‘market share’ reports on based on numbers of units sold. they should at least also report market share by sales revenues too. which is really more important …

    and then there is “value.” the value of an iPhone is perceived as $200 and up (most ignore the two year contract total). whereas the value of RIM and Android phones is perceived as $50 or less.

    the market has spoken!

  • guardianali

    Wow…this was kind of a good and bad post. Good cause yes, the global sales wise Apple is still in the lead..but again its a numbers game..ONE company making ONE phone being released usually only by ONE carrier in country. Vice Android is sold by MULTIPLE companies, on MULTIPLE carriers. Google started the Android blitz here. It is only just starting to get it going over seas. I think logically the same thing is gonna happen in other countries around the world. Its not a matter of being an Apple fan or being a Android fan..its a matter of numbers…multiple carriers…multiple companies…multiple SALES points (sub $100 phones..mid range phones..high end phones). Android will win in the end..hence apples patent push in the courts. To try and stem the tide.

    Also…the what if situations dont mean ANYTHING. You keep saying WHAT IF apple had a 2 for 1…WHAT if the Ipad is 2 for 1. but guess what…THEY ARE NOT. Verizon did..and people bought. It was a shrewd and smart move. And its not like the second phone is going to waste and the numbers are inflated artificially. The second phone is being used..by a family member…girlfriend…or wife…whatever.

    Its like losing in a foot race and saying “well i couldve beaten him if i could run faster”…well no duh Sherlock..but ur not are u?

  • anyway blackberry is my most favourite smartphone. 🙂

  • Jocca

    Apple sold 8.5 million iPhone this quarter, of which only 2.7 millions were activated with AT&T. Sales of iPhones are exploding in the international market and Apple did not have to resort to the gimmick of giving away one free phone for everyone sold. That is something that neither Blackberry nor all the Android phone makers have been able to achieve so far.

    • Although, worldwide, Apple doesn't have the same requirements for price. Over here in Germany, you can purchase an iPhone 3GS for €1 (a little over a dollar) on a two year contract. So everyone talking about how these cheap deals can hurt the product value, they need to look outside the United States to find that the Apple is using those same gimmicks elsewhere… or maybe the rest of the world isn't willing to put up with the crap that AT&T does for pricing. Also, Android handsets aren't nearly as available over here compared with the massive amount of different ones in the states. A lot of cell phone companies over here are still selling the original handset that first had Android. The HTC G1. Once more phones come out over here and people realize that having a smartphone does not necessarily mean having an iPhone, I believe the market will even itself out.

      Me? I ordered a Nexus One from the states and had it shipped over here (I am in the military stationed in Germany). When people see it, they think I somehow got the new iPhone. I respond back that I have something better than an iPhone, and after I show it to them, most people tend to agree.

      • Dennis

        That argument is a joke, because it is T-Mobile in Germany trying to get some publicity by putting that cheap price tag to get some customers into their stores. Also, they are using the iPhones brand equity wherever they can. Now go to the store and double check that contract:

        To get the iPhone for ONLY €1, you will end up paying €120 monthly for two years. Yep, you got it right, that's €2400 or $3000.. if you are not prepared to do that, pay €350 for the iPhone itself in the store.


        • I have the "iPhone plan" with unlimited calling to land lines and t-mobile phones, unlimited texting to t-mobile phones and unlimited data usage for €60 (Complete M package). The additional €60 is if you want unlimited calling to other networks. And pretty much all my friends have t-mobile, and I usually only end up paying about €20 for my "outside the network" phone calls. Seems pretty equivalent to the prices they have in the states. Now if you make a lot of calls to people outside of t-mobile, then yes, it might be more beneficial to be on the Complete L package. If you are looking for a US style plan in Europe, they either don't exist, or are extremely expensive.

          But the charging for outside of network calling is really common in Germany. I found it was actually cheaper to text a friend in Italy than it was to text a friend using Vodaphone in Germany. The cell plans here are just way screwed up. But it doesn't change my initial point that the cheap gimmick is alive and well in Europe. Apple just has a stranglehold on AT&T and there is nothing they can do about it until their exclusivity contract is up.

          And do you blame anyone for using the iPhone as a driving factor into the store? It is one of hte most recognizable smartphones out there.

  • Kjlly

    That's because the ridiculous Fortune article this refers to was referencing Android platform users vs. iPhone OS users & therefore iPhone, iPod Touches & iPads matter for the count. Of course it doesn't really matter because their BS numbers are coming from the OPINIONS of a small percentage of people surveyed online. Not from real sales numbers at all.

  • Verizon and Motorola are making the Android Phone nearly worthless as a brand by their fire sale prices. This not only reduces their profit, it reduces the consumer perceived value of the phone.

    The situation is similar to what happened to the Motorola Razer phone. It initially cost $500 per phone, but as Motorola got desperate and as its Razer development stagnated, in the end the Razer was given away for free to consumers and Motorola mounted every larger losses in its cell phone business.

    Good luck, Motorola. Interestingly, Verizon likes to stab you in the back by controlling the Droid trademark that covers your Android phones, and giving the name to other manufacturers cell phones.

    In the meantime, Apple laughs all the way to the bank and its customers love the iPhone rabidly.

  • http://www.t-mobile.de/iphone/ (iPhone for €1)

    I wonder why the international market is selling more devices. There goes your argument.

    Android fanboys aren't the only ones out there…

  • Bo

    Erm, iPhone is older than Android. Android is picking up the pace and Google actually TRIES when it comes to delivering what users really want. iPhone OS 4 will bring features that a 1 year old Android already has.

    Face it. Google > Apple. Android > iPhone. It’s just a matter of time.

    • bradi

      "…iPhone is older than Android. Android is picking up the pace and Google actually TRIES when it comes to delivering what users really want. iPhone OS 4 will bring features that a 1 year old Android already has.

      Face it. Google > Apple. Android > iPhone. It's just a matter of time."

      Sorry, you've got it wrong Google isn't greater than Apple and there's no guarantee they will be. Google isn't competing with Apple directly. No, I'm not saying either is afraid of the other – they are in different businesses; there is overlap but not direct competition. Now, Android will have more installed base than iPhone OS on phones, before it's all said and done; though not yet. I'll give you that. But again, how is that bad for either company or for consumers?

  • I work in strategy for Sony so have a close, and informed, interest in this.

    Apple has a much greater user share globally than Android. But in the states, Android has a greater new sales share, which implies future greater user share. The other reason why Apple is so worried is the rate of change; Android is going through the roof while Apple's isn't increasing by that much. Globally, yes Apple is ahead but the Android momentum is also there.

  • bradi

    Verizon is a vestige of an old Baby Bell so that part of your comment is ignorance. However, perceptions of AT&T's cellular service (as well as reports of poor service in a few of the largest metro markets – ex: NYC, SanFran) are certainly hindering the iPhone. I don't think Apple is risk averse. In the US they made a deal with one carrier that was willing. AT&T was probably a better partner than Verizon anyway, certainly from GMS radio perspective; IMO from the flexibility perspective as well. The strength/quality of Verizon's coverage is better than AT&T (in some places, though not others like my market for example) but just enough to make V more arrogant. I can surf and call at the same time on ATT but not V – there is a quality difference in ATT's favor.

  • bradi

    Please stop with the "fanboi" comments… There is an argument that everyone who prefers one thing to another is a fan. Who gives a S___! Now I'll put forward a fake suggestion that you're a "fanboi" of making fun of people who like Apple stuff. What a waste of time. Let's just stick to discussing the points instead of name calling.

    My perspective on the article and subsequent comments is this: Apple is responding to the comments of Android OS devices selling more than iPhones by putting some "excuses" or "pr" out there. It is smart of them to do so. If they don't then they allow competitors to position them as falling behind. That Android based phones are outselling iPhones seems perfectly logical to me. It is at least partially because Verizon is offering two for one deals. And, as many comments have stated, this isn't a bad thing for Verizon nor Google. It isn't a great thing for the handset maker (HTC or Motorola for example). It doesn't ruin them, but it doesn't make them healthy either.

    @Peter: YES, I am applauding Apple for making enough money off of my phone purchase to keep a healthy bottom line and continue being able to produce and compete in the market. How recently was Motorola, maker of the best selling Verizon Android model, in the financial toilet? Very recently. And if they don't do a better job of making enough money off of Verizon's selling of their hardware, they'll end up right back where they were. You write as if Google or Verizon or (plug in your fav) cares more about the well being of their customers and isn't trying to make money off their customers. I don't think you actually believe this – but your comment seems that way.

    • Motorola was in the toilet because they never innovated after they released the RAZR. Same thing will happen with anybody out there. If you release an awesome product, you need to keep releasing awesome products afterwards.

      And, I am pretty sure Motorola or HTC or (insert another maker here) is making the same amount of money no matter what the deals are with the carriers. That is what subsidies are for. The carrier buys the phone at whatever price the manufacturer is selling it for, then gives discounts to the buyer because they know they will make money over the course of their two year contract. In these cases, the only one is is not being as profitable would be the carrier, but if they have a 2for1 deal and they get that individual to sign up for a family plan, it suddenly becomes profitable again.

      These companies are not in this to get the most [insert phone type here] phones out on the market. It is to get the most phones with people paying the most money for the highest plans. They could care less what phone is in the persons hand as long as they are making the most possible money off it.

  • bradi

    Your second sentence shows why Apple has to comment and seems to indicate you can't read. Apple's sales and growth isn't flat in this market. Breathe in breathe out…… keep doing it, don't want you to hurt yourself.

    There is plenty of market for more than one quality OS, companies making devices, etc. Android is good, RIM is good (but appears to be sliding), Apple is good. No one else appears to be moving positively in the smartphone arena (in the US). Competition and multiple options is good. Proviso: everywhere I wrote "good" I meant "seeming to achieve positively". This is not a "good" vs "evil" discussion (in my book). There is no point to that……

  • bob

    everyone and their – not there – dummy, has an iphone. it's the new walkman. there's nothing special about having one other than signaling to the world that you love to overpay for the privilege of walking around staring at a piece of plastic. the cell phone industry is laughing all the way to the bank because eager suckers think they need to be ''connected'' all the time, for urgent messages like 'where r u?'' it's the invasion of the cell zombies, stumbling down the street, staring at the chunk of plastic in their hands. dopes

  • bob

    Yeah, that's a difficult concept. So hard to understand. Here are some numbers to chew on, mr. sophisticated financial professional. Note: stop saying things like "yep'' – it makes you sound like a dummy and a know-it-all in the same dopey word. I'm sure "uh'' is in your vocabulary, too: http://www.google.com/finance?client=ob&q=NAS… Key points: Earnings per share: Apple – $11. Google -$22. (that's double if your calculator isnt working.) Gross profit margin: Apple — 40%. Google — 62. Operating profit margin: Apple — 27. Google — 35. Price per share: Apple – $258. Google — $510. Apple takes in more money. I wonder why? Surpise, it's a retailer. It sells stuff. Google is what? Some kind of a Web search/advertising brand that's also trying to sell stuff. Beyond that, who cares? These are companies trying to get your money for a product that has almost no value. Do you know how pathetic it sounds to argue over who has the best cell phone? Fascinating. Let's argue about who makes the best kitchen sink, too.

    • paul

      product that has almost no value? wtf do you mean by value, because you obviously aren't talking about money. despite the fact that they're the first thing many people see when they wake up, last thing they see when the go to sleep, and the thing they look at and interact with more times a day than any other object in their lives?

      • Curiouslyyellow

        thats my penis?

  • Shawn

    What I find amusing about this article, is not once do you give any credit to the Android for being a great platform.

    At no point do you mention that maybe some of it's sales are due to positive word of mouth, and quality of experience? Maybe, just maybe, Android is selling well because it deserves to be?

    It's like the apple-lites seem to think that iPhoneOS is automatically superior to anything else on the market…and I'm sorry this is just not the case.

    Without a shred of context to indicate how many of these sales are as result of a 2:1 purchase, all I see is an extremely weak attempt at spin.

    Even with the numbers, it would still be a pretty weak argument, because market share is king, who cares how you get there. But without numbers, it's just a really really pathetic argument, and your apple bias certainly shine through clearly.

    • Shawn, you are right, that I didn't give Android its due. In interviews I've done since the article was posted, I have said that Android's market share has risen in part because it is a good OS and like by the people who use it.

  • shawn

    @ Andre Richards – If the people you know are rockin gen1 android devices, then it's no surprise they aren't too thrilled, in short these devices are sh!t, small screens, crappy performance etc…

    However, just wait until the majority are using Nexus One's, HTC Incredible's Sony Xperia's or any one of the new breed of Android phones, these guys have hardware that blows the iPhone away.

    • The screens are absolutely gorgeous, nearly double the resolution,
    • the CPU is much much faster (12fps vs 1.1fps in an HTML5 based particle test Nexus One vs iPhone 3G), and a fairly robust market which is exploding at the moment.
    • Removable sd memory,
    • tons of extra ram,
    • batteries you can replace yourself,
    • built in tethering,
    • built in multi-tasking,

    the list goes on…

    Granted the new iPhone is just around the corner, but my point is that the quality advantage (hardware wise) for iPhone is shrinking rapidly, and within probably a year, it will probably be a fairly clear cut win for Android devices in this area.

  • Bob

    2 for 1 deals do not hurt anybody let me tell you, verizon is making a cool 100 $$$ per month for two years on the so called ‘free’ phone and Verizon has paid the handset manufacturer the full price. And yes in other parts of the world android was non-existent till Q2 2010, but now you are seeing a determined push by the android manufacturers in the rest of the world. Xperia x10 is a big hit in Japan, HTC Desire is a big hit everywhere and so on, also Google is going to put the nexus one phone in retail stores in Europe, Japan, Australia etc. The reason why AT&T cannot afford to make a BOGO deal on IPhone is because they are paying a lot of money to Apple for the IPhone exclusivity, once again Apple has looked solely at balancesheet instead of trying to get more market share by targetting more customers. This 28 percent market share is with just one good phone Droid on Verizon and a number of mid-range android phones. Wait until Droid incredible and Evo 4g sales figures come in and in Q3 AT&T come into the android bandwagon fully and T-Mobile gets a great android phone compared to the mid-range android phones they have now and the lead is going to increase further.

  • Bob

    Google is a company that has competed with Microsoft when Microsoft was the total and dominant kings in PC much much more than how Apple is dominating smartphones today and won the search engine war with a fantastically cash-rich company, Google neither had its own browser nor its own operating system back then. Sky is the limit when Google has its own browser and operating system and it does not have to worry about paying toll to other companies for ensuring access to its services. After all the only thing Apple is better than Google is in devising intuitive and pleasing user interace which works so very well. That is the only moat Apple has, Apple has no other moat. The way I see it only two future situations are possible 1) Apple and Android will have equal market share. A company that can compete with Microsoft when MIcrosoft had more than 90 market share can and will compete with a company like Apple. 2) Android is no.1

    Other possibilities will not come to fruition.

  • Bob

    Google is a company that has competed with Microsoft when Microsoft was the total and dominant kings in PC much much more than how Apple is dominating smartphones today and won the search engine war with a fantastically cash-rich company, Google neither had its own browser nor its own operating system back then. Sky is the limit when Google has its own browser and operating system and it does not have to worry about paying toll to other companies for ensuring access to its services. After all the only thing Apple is better than Google is in devising intuitive and pleasing user interace which works so very well. That is the only moat Apple has, Apple has no other moat.

  • navdeep_mahajan

    For google sales compute to profitability as google depends on ad revenues and also as sales increase the android tools gets sold more often. Google will be eying selling music also in the future. But the main reason behind success of android is the fact that google relies primarily on opening borders, you can access anything you want and you can interface with whatever you like while on the other side apple is very restrictive, they have done good on hardware but still i am not so fond of using apple software and being restricted on what i can do and can't do. Considering googles focus on performance i would say Google has the capability to be number 1 soon.

  • Brillow

    Google does not care if Android phones make money. All they want you to do is use the internet. They GIVE Android away for crissakes. Anything which makes you use the internet more is profitible for google. Android phones just push you into their ecosystem more, they always win.

  • Navigateur

    I really loved Edwin's point "Good point! If Apple sold more iPhones they wouldn't be selling less than Android." Haha. Does it matter? What matters is that Android is BETTER. That's really the simple fact.

  • >Two-for-one sales do increase unit market share, but they do more damage to the brand and product than they are worth.

    such as?

  • BigJeff

    Just thought I'd point out that Google sells 100,000 Android based phones a day. That's roughly 3 million a month, 9 million a quarter, and 36 million a year.

    Talk all you like, but Android phones are already out pacing iPhones. There will probably be a small shift for the iPhone 4g's numbers, but Apple can't keep pace with a half dozen manufacturers. Any unique features the iPhone may get will be improved upon in an Android phone before Apple can release version 2 of that feature. The market is fixing to turn the corner on them, and they'll just slip into a niche like Apple always does.

    The market was smaller then, but this is exactly the same situation Apple was in with the PC. Kings for a while, but they couldn't compete with a dozen manufacturers on an alternative system (they nearly went out of business because of it). What is interesting here, is the more popular Android gets the more at-risk their iPod market is. The current trend for iPods is to run the same stuff as the iPhone. That could end up biting them in the long run.

  • Kdsandeep

    My guess is by the end of year, Android will be activating 250000 phones a day. Android will displace Nokia either this year end or the Q1 of 2011.

  • Scottae316

    “they'll just slip into a niche like Apple always does”. Yes, and what a niche, the iPhone is available in two models 3G and 3Gs. Android, well what day of the week is it but at least 20 different models. So for the difference, that is not saying much. Another niche is laptops which Apple continues to rule the university student market, you know the future. As for iPod, it has been admitted by industry analysts that the MP3 market is reaching saturation point, so iPod sales will level off and begin to fall. But Android does not have the Eco system to mount any real threat. People love iPods because they are easy to use. Look at Microsoft, they keep hammering away with the Zune and yet it is still a loss for Microsoft. No, Apple is not the niche player it once was, it is a driving force. Will it always be on top, we shall see?

    One final thought, most who want an iPhone have waited buying because they know that June is the new iPhone. Lets check those figures at the end of this quarter and beyond. While I have no doubt that Android will eventually be number one in total units, they keep giving away 2 for 1 at Verizon that up the units in use, but not sold because one is a freebie.

  • Jhoth

    You can get an iPhone 3G at Walmart for $97. So is Apple getting desperate? Your argument is bogus.

  • So, the whole premise of your article was that Android market share gains really don’t mean much because Apple COULD HAVE had a 2-for-1 sale and that WOULD HAVE obliterated Android. And, if I had a million dollars I’d be a millionaire – but I don’t so I’m not.

    Marke share is all about what did happen. Because, you know, IF Palm paid everyone $1,000 to take a Palm Pre they would have crushed everyone so I guess they are the real market leader.

    Seriously stupid journalism.

  • John

    Meanwhile, Stevie is shitting his pants over Android.

  • At the same time as I love a physical keyboard, after dealing with the Samsung Captivate for about 15 minutes, it’s onerous to move back. At this time I am debating whether or not to go to Verizon for the Droid X, cross to Sprint for the EVO, or stick with AT&T for the Captivate…choices, decisions.

  • sybernut

    “This is a very limited report on 150,000 US consumers responding to an online survey and does not account for the more than 85 million iPhone and iPod touch customers worldwide,” Apple spokesperson Natalie Harrison, told The Loop

    either this person is ignorant of statistics theory, or Apple is indeed worried… 🙂

  • Well!, good news for me, thanks!