∞ 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