Putting Smartphone Market Numbers Into Perspective

Today there has been another rash of news articles and blog posts about smartphone sales numbers, with a Nielsen Company report that Android phones accounted for 27% of smartphone sales in the U.S., with iPhone accounting for 23% of the sales. The report puts some numbers to the perception that Android is gaining on the iPhone, but one has to ask, does it matter? Tim Bray, who works for Google, makes some good points about the smartphone market in a recent blog post. Granted, Bray is biased towards Android, but his post is less about Android vs. iPhone and more about the smartphone market overall, and as such I think it is worth reading. Bray's points along with my observations: 1. The number of mobile phone sales globally is huge, with more than a billion phones sold each year. Bray says the number of active subscriptions is greater than half of the human population. The point is that the market is big enough to support several companies making a nice amount of money. 2. The smartphone market size is hard to measure because of differences in defining what to measure. For example, if you want to know how pervasive iOS is, you have to account for the iPhone, iPod Touch, and iPad not just the iPhone. Likewise, with tablets that run Android now coming to market, Android's reach will extend beyond smartphones. 3. Bray doesn't think there will only be two mobile-software platforms, the question is, which one will succeed at becoming third? Like a NASCAR race, the real action won't be between first and second place, but back in the pack between several companies. 4. The reason why more than two companies may succeed in the mobile market is because of the control the mobile carriers have on the U.S. market. Google's accelerated rise in the market over the last six months has been do in large part to Verizon's marketing. I've seen reports that AT&T will be Microsoft's premiere partner for selling Windows Phone 7, and a strong marketing campaign by AT&T will help Windows Phone 7 sales. If AT&T loses the iPhone, they will be looking hard for an alternative to market and whoever they select will benefit mightly from that marketing. It appears to me that Microsoft is aligning themselves to be the winner at AT&T. 5. Both Apple and Google have been targeting the higher price point for mobile devices, and there is a huge market opportunity for lower priced (sub $100) devices. I would expect to see Android take a good amount of that market simply because Google is willing to give it freely to anyone, while Apple controls the entire package. Apple would have to manufacture a low priced phone, Google simply makes Android available for any company willing to sell cheaper devices. I think some at Microsoft envisioned Kin going after the lower priced market, and the lessons learned from Kin are: the mobile carriers matter (see #4 above) and the market expects smartphones to provide a broad range of capabilities, and sales will be impacted by limitations on capabilities.

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Putting Smartphone Market Numbers Into Perspective

Frank McPherson

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Frank McPherson