{Mobile Portland} Interesting Data Point

[Steven Osborn]

Is Android really outselling Apple?
http://mediamemo.allthingsd.com/20100510/is-android-really-outselling-apple/

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[Elia Freedman]

It was bound to happen sometime. After all, there are 5 or 6 models of
Android out there now on all carriers. Interestingly, it doesn't
appear that Apple is losing market share, though.

Elia

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[Preston Crawford]

I think there are a couple things here. 

#1 - Smartphones are selling like crazy. More people are switching from flip phones or "kinda-smart" phones like the Instinct and going with full-fledged smartphones. So the pie is growing bigger, definitely.

#2 - People who buy smartphones right now generally just want the Internet. People are buying it for Facebook and Twitter and the web. That's about it. Savvy shoppers who know what the Apple App Store provides are buying Apple. But I have a lot of friends who are buying Android. These people are generally not tech savvy. They're not particularly technical. They just know they want "something like the iPhone" without having to switch carriers and spend all the money. If the iPhone were on all the carriers, I think this would be a different story. But I have at least 5 relatives and a half dozen friends who have bought an Android phone in just the past 6 months. And what you often hear is something like, "Well, I'm on Verizon and AT&T sucks, so this Droid looks pretty cool". 

It's a very interesting phenomena. I have both an iPhone and Nexus One on AT&T and once I bought the Nexus One I found myself carrying it instead of the iPhone. I like it better. If it could play copyrighted video from iTunes and had just a few more apps I could relegate my iPhone to fulltime dev phone duty. As it is it's the other way around. 

In short, yes, I believe these numbers because I'm watching a lot of first time smartphone buyers jump in with Android. And most of them are really happy. I'm not sure what that means for developers. I'm just starting and I'm starting with Android as I know Java and thus I feel more comfortable with Android to start with. However, there's that whole thing about Android users expecting apps for free, so we'll see. I plan on learning both in the long run.

Preston

[Jer Warren]

you're estimating a little low...

Verizon has 4 now, T-Mobile has 4, Sprint has 2, At&t has 1.

And that's not even taking into account the models that are available unlocked that'll work on US carriers.

On Mon, May 10, 2010 at 11:17 AM, Elia Freedman <el...@infinitysw.com> wrote:

[Jason Grigsby]

LOL. You guys are essentially saying the same thing.

BTW, if you want a comprehensive list of all Android devices announced or shipping, it is here:
http://www.googleandblog.com/faq-about-google-android/

There are 115 phones and 50 non-phone devices as of March 23rd.

Regarding Apple's marketshare, it is hard to tell from what NPD has released whether or not Apple has lost marketshare in the US.

Here is what we do know:

* NPD says Apple and RIM lost marketshare in the US in Q4
http://www.npd.com/press/releases/press_100209.html

* NPD says Apple at 21%, RIM at 36% for Q1. We don't have Q4 numbers to compare.
http://www.npd.com/press/releases/press_100510.html

* Comscore says Apple has stayed the same (-0.1%) from Nov to Feb, but Comscore measures installed base not sales so isn't directly comparable
http://bit.ly/d15maJ

* IDC says Apple holding steady worldwide (Q1: 16.1%, Q4: 16.0%) Strategy Analytics has similar numbers.
http://www.idc.com/getdoc.jsp?containerId=prUS22333410
http://moconews.net/article/419-global-smartphone-market-soared-50-percent-over-past-year/

* 20% of Smartphones in the UK are Android
http://www.v3.co.uk/v3/news/2262372/smartphone-sales-rise

We really don't have any data on US sales market share that we can use to compare Q1 to Q4 to see if Apple has lost market share in US. We do know that Apple saw a huge burst in sales in China which helped sales in Q1. They mentioned this during the call.

The only remaining numbers to come out will be from Gartner. Gartner's numbers will be interesting because unlike IDC and Strategy Analytics, they list smartphone numbers by OS, not manufacturer. This should give us a good sense of how Android is doing globally.

I'm surprised that Android is doing so well so quickly and that the US seems to be leading the way here. I'm not sure if we will be able to get another data point to validate NPD's analysis, but even if Android hasn't passed iPhone, it is quite clear that it is rapidly catching up.

-Jason

On May 10, 2010, at 11:37 AM, Jer Warren wrote:

> you're estimating a little low...
>
> Verizon has 4 now, T-Mobile has 4, Sprint has 2, At&t has 1.
>
> And that's not even taking into account the models that are available unlocked that'll work on US carriers.
>
> On Mon, May 10, 2010 at 11:17 AM, Elia Freedman <el...@infinitysw.com> wrote:
> It was bound to happen sometime. After all, there are 5 or 6 models of
> Android out there now on all carriers. Interestingly, it doesn't
> appear that Apple is losing market share, though.
>
> Elia
>
> On Mon, May 10, 2010 at 10:55 AM, Steven Osborn <osborn...@gmail.com> wrote:
> > Is Android really outselling Apple?
> > http://mediamemo.allthingsd.com/20100510/is-android-really-outselling-apple/

--

[Steven Osborn]

I find the article about penetration in the UK pretty interesting.
Does anyone have any data points on Android market share in other
countries?

--
Steven Osborn
http://steven.bitsetters.com

[Jer Warren]

I think another factor that needs to be taken into account is the looming 4th-gen iPhone. I suspect that's dampening sales. Also, I think usage metrics would be a lot more useful than sales metrics here.

On May 10, 2010 1:17 PM, "Jason Grigsby" <ja...@cloudfour.com> wrote:

LOL. You guys are essentially saying the same thing.

BTW, if you want a comprehensive list of all Android devices announced or shipping, it is here:
http://www.googleandblog.com/faq-about-google-android/

There are 115 phones and 50 non-phone devices as of March 23rd.

Regarding Apple's marketshare, it is hard to tell from what NPD has released whether or not Apple has lost marketshare in the US.

Here is what we do know:

* NPD says Apple and RIM lost marketshare in the US in Q4
 http://www.npd.com/press/releases/press_100209.html

* NPD says Apple at 21%, RIM at 36% for Q1. We don't have Q4 numbers to compare.
 http://www.npd.com/press/releases/press_100510.html

* Comscore says Apple has stayed the same (-0.1%) from Nov to Feb, but Comscore measures installed base not sales so isn't directly comparable
 http://bit.ly/d15maJ

* IDC says Apple holding steady worldwide (Q1: 16.1%, Q4: 16.0%) Strategy Analytics has similar numbers.
 http://www.idc.com/getdoc.jsp?containerId=prUS22333410
 http://moconews.net/article/419-global-smartphone-market-soared-50-percent-over-past-year/

* 20% of Smartphones in the UK are Android
 http://www.v3.co.uk/v3/news/2262372/smartphone-sales-rise

We really don't have any data on US sales market share that we can use to compare Q1 to Q4 to see if Apple has lost market share in US. We do know that Apple saw a huge burst in sales in China which helped sales in Q1. They mentioned this during the call.

The only remaining numbers to come out will be from Gartner. Gartner's numbers will be interesting because unlike IDC and Strategy Analytics, they list smartphone numbers by OS, not manufacturer. This should give us a good sense of how Android is doing globally.

I'm surprised that Android is doing so well so quickly and that the US seems to be leading the way here. I'm not sure if we will be able to get another data point to validate NPD's analysis, but even if Android hasn't passed iPhone, it is quite clear that it is rapidly catching up.

-Jason

On May 10, 2010, at 11:37 AM, Jer Warren wrote:

> you're estimating a little low...
>

> Verizon ...

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[Jason Grigsby]

No doubt Q3 numbers for Apple will look much better than Q1/Q2 because of the new iPhone release.

What do you mean by usage metrics and why would they be better? Or rather for what?

-Jason

On May 10, 2010, at 1:42 PM, Jer Warren wrote:

> I think another factor that needs to be taken into account is the looming 4th-gen iPhone. I suspect that's dampening sales. Also, I think usage metrics would be a lot more useful than sales metrics here.
>

[Jer Warren]

Well, for instance, I have purchased two iPhones, a G1 and now a Droid. I'm only using the Droid. There's a huge aftermarket market for smartphones, as the nerds willing to shell out tons of money for them are also willing to do it again when something cooler comes out.

My 4 phones show up as 4 sales, but in actuality they're not indicative of phones being used. Not sure how to measure usage.

Although, some of them have changed hands after I was done with them, so maybe it's not the disparity I imagine.

On May 10, 2010 1:50 PM, "Jason Grigsby" <ja...@cloudfour.com> wrote:

No doubt Q3 numbers for Apple will look much better than Q1/Q2 because of the new iPhone release.

What do you mean by usage metrics and why would they be better? Or rather for what?

-Jason

On May 10, 2010, at 1:42 PM, Jer Warren wrote:

> I think another factor that needs to be taken int...

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[Jason Grigsby]

What you're looking for then is subscriber numbers which is what Comscore's report measures.

The three most common reports I see are:

* Sales numbers
* Subscriber numbers
* Browser usage numbers

I thought you were referring to the browser usage numbers which are horribly unreliable. Little Springs Design has a recent post on how unreliable browser numbers are:

http://www.littlespringsdesign.com/blog/blog/2010/05/01/making-sense-of-the-mobile-web-statistics/

-Jason

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[Cryptopur]

Does anybody know how app sales are comparing?
As a guy writing scope docs here I'm at least a little bit fearing the
Android rush. In fairness, I'm not very educated here but when I hear
Jason say there are 115(!) different models either out there or coming
I start to get the hives. One of the biggest things I love about the
iPhone is still the very short list of possible handsets. I don;t have
to plan for hundreds of variants.

That said, the whole idea rests on whether or not the Android app
store will generate the kind of app sales that will encourage folks to
want to buy android development. So far I haven't seen any 'I made my
first $1M in Android apps' stories. I assume they must be out there?

Without trying to be biased, people are still USING the iPhone OS for
more than just simple phone tasks. Do you Android users experience the
same thing on the Droid? Do Droid folks buy a phone that has some cool
features or do they buy a mini-computer that can make phone calls?

[Rob Banagale]

The broader question seems to be, do these sales numbers show that the Android is gaining on the iPhone OS as a competitive threat.  Handset sales numbers do matter, (even if the devices are being given away 'free'), but do the numbers make a strong statement about the success of Android?

Also, given that we are witnessing the birth of the smartphone revolution first hand, what does mobile platform success look like today?  Is it building gross use of your core platform, or is it in creating an effective combination of products, infrastructure and transaction processing where your platform serves as the best gateway to the content, products and services that make users lives better.  Probably, both--but I'd suggest the latter to be far more important right now.

It seems unlikely that Google is on the verge of partnerships that string together a support ecosystem for Android devices that provides anything close to parity with the experience you get out of iTunes and the App Store.  This is in part because each device maker is focused on making their smartphone outshine all others running the same OS.

In addition, despite the technical strengths of the Incredible (which is a great name, btw) and other iPhone OS competitors, we are moving toward a place where hardware technical miracles alone do not equate to better user experiences.

If you buy into the idea that Apple's iTunes / App Store ecosystem provides an genuinely better experience to the average reasonable person then it seems people will continue to favor and select the iPhone OS as a substitute when it is available.  This difficult-to-measure sentiment is a more valuable benchmark of successful mobile platform today.

Strangely, I think Microsoft gets this.  Which is why they rebooted development of their mobile OS and are more tightly controlling the user experience with Windows Phone 7.  They've been so invested in improving their perception of what good user experience is that we won't see a Windows Phone until this fall.  

I also think HP gets this with their acquisition of Palm and abandonment of supporting Microsoft's mobile line.  As Preston said, people want the internet, and Google should be commended for putting more internet in people's pockets.  However, an approximation of a good user experience is no substitute for the real McCoy and that may be counterproductive to the long-term health of Android.

Rob

---
Rock Show, the Concert Posters app for the Apple iPad
www.rockshow.fm

[Jason Grigsby]

On May 11, 2010, at 8:24 PM, Rob Banagale wrote:

> If you buy into the idea that Apple's iTunes / App Store ecosystem provides an genuinely better experience to the average reasonable person then it seems people will continue to favor and select the iPhone OS as a substitute when it is available.

I agree that it is a genuinely better experience, but disagree with the conclusion that a majority of people will choose the better experience.

Were experience the only primary motivating factor when buying technology, Apple would have a dominant share of computer hardware and Windows would be in the minority.

Given sufficient price differential, good enough will suffice for a majority of people.

Apple has made its mark as the brand that values design. It believes people will pay a premium for well-designed products. Apple consistently has higher margins and larger profits than its competitors. It isn't in Apple's financial nor brand interest to deliver lower quality products to gain market share.

Average prices of smart phones in Q1

* Apple $622
* RIM $320
* Nokia $195

I know we rarely think about the full price of the iPhone, but the total price does make a difference in unsubsidized markets.

It is important to recognize that the US market is not indicative of the rest of the world. Tomi Ahonen makes the point that "true free-market economics, where a smartphone is judged primarily on its merits and its marketing, only applies to one out of three smartphones sold worldwide."
http://bit.ly/aMHRjm

FWIW, I think Apple would be very happy with a minority market share that is very profitable. My suspicion is that they top out with something between 20% and 30% of the largest technology market.

Big enough to control their destiny and not be ignored by developers. While others fight it out for market share a low end, they collect outsized margins and revenue.

-Jason

[Elia Freedman]

>
>> Rob Banagale: If you buy into the idea that Apple's iTunes / App Store ecosystem provides an genuinely better experience to the average reasonable person then it seems people will continue to favor and select the iPhone OS as a substitute when it is available.
>
>
> Jason Grigsby: I agree that it is a genuinely better experience, but disagree with the conclusion that a majority of people will choose the better experience. Were experience the only primary motivating factor when buying technology, Apple would have a dominant share of computer hardware and Windows would be in the minority.

As of Windows 95 and especially today with Windows 7, there really isn't that substantial a difference between Microsoft's and Apple's operating systems, at least not enough to say that UI, integrated systems and ecosystems will make any difference in the decision process. That is different in mobile just like it was different in portable music players.

> Jason: FWIW, I think Apple would be very happy with a minority market share that is very profitable. My suspicion is that they top out with something between 20% and 30% of the largest technology market.

I think you are right on this, that Apple is aiming for a high margin business that captures 20-30% of the market. The reality is there will be 2-3 big players in mobile and a few smaller ones that make a living.

I also want to point out that what is good for them is not necessarily good for us. We need well supported platforms where the devices are refined and have consistent UI and the OS is being improved to make money. I have yet to hear any true revenue generating stories from the Android world (or webOS or Symbian or BlackBerry).

Elia

[Venkat Yellepeddy]

On May 12, 2010, at 7:11 AM, Elia Freedman wrote:

>
>>
>>> Rob Banagale: If you buy into the idea that Apple's iTunes / App Store ecosystem provides an genuinely better experience to the average reasonable person then it seems people will continue to favor and select the iPhone OS as a substitute when it is available.
>>
>>
>> Jason Grigsby: I agree that it is a genuinely better experience, but disagree with the conclusion that a majority of people will choose the better experience. Were experience the only primary motivating factor when buying technology, Apple would have a dominant share of computer hardware and Windows would be in the minority.
>
> As of Windows 95 and especially today with Windows 7, there really isn't that substantial a difference between Microsoft's and Apple's operating systems, at least not enough to say that UI, integrated systems and ecosystems will make any difference in the decision process. That is different in mobile just like it was different in portable music players.

Even so and even in mobile there is more to a "buying" decision than just experience and availability. Price, as Jason pointed out, in unsubsidized markets is a huge factor.

Up until 3-4 yrs ago, all of the handset vendors were competing on the technology plane. Apple came in, wrested the momentum from them, redefined the game and started innovating on the user experience front. In all fairness the Nokia/Samsung/Moto(s), ARM/TI/STMicro/NeoMagic/ADI and others (the list is long) of the handset world have contributed immensely to the technology innovation in this industry over the last decade+. Apple has gained from a lot of that innovation.

Their entrance is good for the industry. Now juggernauts of the industry will have to pause and reset their momentum and address this. It takes time. But I fully expect them to be competitive within the next 3-5 years. In the mobile handset space "replacement" cycles are KEY to the long term success of a company.So the pressure is on Apple to continue to innovate as the bar has been set high. Unless Apple wants to sell once and make up for it in content ( not sure they are there yet with the app store to do so).

As for people and their preferences, we are all different. And that is what makes it interesting. So I fully expect the mobile market to continue to be fragmented and there will never be one "ring" to rule them all. So for some the App Store/iTunes may be the deciding factor while for others the "closed"ness of the system might not be so appealing.

>
>> Jason: FWIW, I think Apple would be very happy with a minority market share that is very profitable. My suspicion is that they top out with something between 20% and 30% of the largest technology market.
>
> I think you are right on this, that Apple is aiming for a high margin business that captures 20-30% of the market. The reality is there will be 2-3 big players in mobile and a few smaller ones that make a living.

When you say "mobile" I am assuming that you are referring to the smartphone market alone. I would say there will continue to be 4-5 players and a few new entrants in the "other" emerging "form-factors" space that would carve out high margin niche businesses for themselves. I expect Android to be successful in such "adjacent" markets.

>
> I also want to point out that what is good for them is not necessarily good for us. We need well supported platforms where the devices are refined and have consistent UI and the OS is being improved to make money. I have yet to hear any true revenue generating stories from the Android world (or webOS or Symbian or BlackBerry).

I am assuming you are referring to the "App" market alone? Otherwise there are lots of success stories around Symbian and RIM/Blackberry that come to my mind. Our own startup that was a Symbian/WinMob/Linux SI house that was acquired by Flextronics in 2004 (completed in 05) is one. Last yr alone 80.9 million Symbian phones were shipped. Without getting into details, a company that has a per unit royalty agreement in place with Nokia alone would make a decent amount of money.

There are several fundamental differences that I see between the Apple Ecosystem and the Android ecosystem. Most ISV development in the Apple ecosystem is relegated to the app space. Whereas in Android the ecosystem is essentially that of the handset vendor + that which Google has put together. So the distribution channels in the Apple world are the App Store and in the Android space are the "Market" + the traditional distribution channels of handset vendors. I personally like the latter for various reasons. The primary amongst them being b-2-b sales, a predictable cash flow, ability to develop a pipeline, fewer customers and larger deal sizes and so on (plus the added ability to sell to an end customer directly) .

Venkat

[David Stannard]

I can resonate with Jason's thought process.

I've seen 'good enough' versus 'better|best' occur in way too many
markets and product lines; retail and B2B. I'm biased because I've
made a great living selling all 3 categories. I suspect but have never
verified that the percentages have been modeled by countless Harvard |
Kellogg and other marketing PhDs.

So it makes me wonder whether his FWIW comment isn't a key factor to
consider. Apple continues to command a price premium and is very
effective at creating/managing the entire brand experience. I don't
perceive that they wish to be as ubiquitous as other suppliers. Their
messaging is intentionally different & I believe Apple's marketing is
core competency and forms part of their competitive advantages;
therefore intentionally crafted and managed.

Having lived outside the US (Europe and Canada) the majority of my
life, I have been accustomed to a huge lack in understanding of other
markets. The US view isn't the world view. IMO, we are used to a
constantly having the new version of XYZ and in the case of smart
phones, we don't realize how the subsidization affects our purchasing
habits. Given Apple's sophistication in marketing, I imagine that they
have considered this as they release products, but I would love to see
numbers comparing the adoption & upgrade rates in Europe and other
expensive areas.

Having not developed anything on the Android platform, I wonder about
the implications of developing for that amount of diversity. How does
this differ from iPhone and iPad product development. Just curious

d