by Simon Hill, 6 months ago
Gartner’s report on Q3 2012 reveals that worldwide smartphones sales are up nearly 50 percent on the same quarter last year. The overall mobile phone market actually declined, but smartphones are still on the rise…
I guess you might expect more than a one word article? Fair enough, it is a bit more complicated. Let’s take a closer look.
The argument about Android being popular because it’s cheap instead of because it’s good has been around for years, but it just got reignited over at Gizmodo. It’s classic bait for a bit of Android bashing from the Apple-loving wannabe elite. Fair enough, that’s part of the fun of the mobile tech world right now. There’s nothing wrong with a bit of a heated debate and until the Android army and the cult of Apple are killing each other on the streets, where’s the harm?
There are lots of different ways to measure success in the smartphone market. Given the choice, Google will talk about market share for Android while Apple talks about profit for iOS. The truth is that both platforms are incredibly successful. The vast majority of people in the world who go shopping for a new smartphone want to buy an Android or an iPhone.
Statistics for November 2012 in the U.S. released by comScore show that 53.7 percent of smartphone subscribers had an Android and 35 percent had an iPhone. We know that Android is growing more popular. IDC revealed a 75 percent share of all smartphones shipped worldwide in Q3 2012. We also know that Android is comparatively more popular outside the states, the platform accounted for 90.1 percent of Q3 2012 shipments in China, for example.
You can always cut statistics the way you want to make a point. Market share of devices shipping during a single quarter doesn’t equate to market share of all devices sold. We also have to remember that the whole market is growing all the time. IDC reported 45.3 percent year-over-year growth in 2012. That’s the reason why RIM could continue to add BlackBerry subscribers despite having a dwindling market share. Their piece of the pie was shrinking, but the pie was growing bigger all the time.
In traditional self-congratulatory form in Apple’s earnings call yesterday we heard Apple CEO, Tim Cook, boasting about selling ten devices per second last quarter. The company made a record quarterly profit of $13.1 billion and sold almost 50 million iPhones. Estimates vary, but it’s generally agreed that Apple extracts the lion’s share of profits from the smartphone industry despite not having a dominant market share. Cannacord Genuity estimates around 59 percent of the profits in the smartphone market go to Apple.
Apple makes more from selling the iPhone alone than Google makes from everything it does. A fairer comparison would be Samsung. According to Cannacord Genuity they account for 47 percent of the total smartphone industry profits. The fact you get 106 percent when you add them together shows off the losses that everyone else is making.
Making money is what Apple does. That extends into more money being spent on the app ecosystem surrounding iOS. Developers make more on average with iOS releases than they do with Android. Owners of iPhones buy more apps and games and they pay more. According to App Annie Intelligence iOS monthly revenues are four times Google Play revenues, although it concedes that Google Play is growing faster and earnings are on the rise.
There’s no denying that one of the main reasons that Android has accumulated such a large market share is because there are more devices on offer at more price points. What’s a little difficult to swallow is the idea that this is a negative thing. It says a lot about certain Apple fans and their delusions of elitism that they are proud that poor people can’t afford the phone they have.
The fact that Android is affordable and has allowed the smartphone revolution to spread to people with less disposable cash is a good thing. This idea that Apple products are exclusive is just clever marketing. So you own an iPhone? Well done, but you do realize that Apple sold 47.8 million of them in the last three months right? You’re not special because you own an iPhone.
It's not enough to be cheap anyway, you have to be good as well. Just ask Windows Phone 7, BlackBerry 7 and the rest of the also-rans.
The entire argument is disingenuous because Android has no real competition at the budget end of the market. Of course it’s going to sell more low cost smartphones. Apple doesn’t sell any.
It’s also pretty clear that Android isn’t just for poor people because there are lots of high-end Android devices that cost just as much as the iPhone does. Over the last few months the Galaxy S3 has outsold the iPhone in some countries. The Galaxy S3 beat the iPhone 4S in Q3 2012 to become the best-selling smartphone worldwide.
People splashing out on the Galaxy Note 2, the HTC Droid DNA, or waiting for the Sony Xperia Z or the Galaxy S4 right now are choosing those devices over the iPhone. They aren’t choosing Android because they can’t afford an iPhone. If the forthcoming Galaxy S4 can repeat the S3’s form against the iPhone 4S and outsell the iPhone 5 then the entire argument collapses.
It’s natural for American tech journalists to write about the market as though the U.S. smartphone market is the world, but what they miss when they do that is the American bias towards Apple. Look at the stats elsewhere in the world and you’ll consistently see the iPhone being outsold by high-end Android devices.
There’s definitely resentment in some quarters towards any company that’s raking in Apple’s level of profits in the current financial climate. How is Apple able to generate such gigantic profits? It’s not that Android is cheap, but that it represents greater value for money. There isn’t a large premium attached for the brand, like there is with Apple.
Apple grew popular because it offered innovative alternatives to the status quo. At launch iOS was a breath of fresh air compared to the lazy incumbents. The iPhone, the iPod, and the iPad were all awesome when they were released and had no real competition. Success leads to stagnation, the hunger is gone, you become what you hate, and shareholders get used to rocketing value and refuse to admit that that kind of growth is unsustainable in the long term.
The innovation isn’t coming from Apple anymore. The open nature of Android encourages innovation from competing manufacturers and it doesn’t need meteoric profit margins to succeed. Of course Android isn’t just for poor people. Android is for everyone.