Apple’s Amazing Quarter Makes the iPhone Bigger Than ALL of Android!

It was only a few weeks ago when I posted the news that Android and iOS were in a virtual tie for market share of the smartphone market based on recent data, I said that ‘everyone wins’. I still believe that – I think that having strong competition in any market makes everyone work harder … and the results are better products for us as consumers!

Last week Nielson put out estimates of smartphone market share for the fourth quarter of 2011, showing that iOS had significantly closed the gap with Android for recent months. Now, after the final tally from Apple we have a report at Reuters showing that Apple has actually completely evened market share and perhaps pulled slightly ahead of Android for the quarter. The estimate is 44.9% for iOS and 44.8% for Android. For those without a trusty calculator at hand … that leaves 10.3% for everyone else, including RIM, Windows Phone, Windows Mobile, Palm/webOS and Symbian.

As an aside it is worth noting that this is the FIRST time the iPhone has been the quarterly leader in smartphone sales – since launch they have been second or third or fourth behind Windows Mobile, Symbian, RIM and more recently Android.

Again, why do I think this is important?

Well, exactly HOW did Apple sell 37 million phones and double their market share year-on-year? Was it all sales of the new iPhone 4S? No … and that is really important.

Much has been made of the fact that there were 93 (!) Android phones released in the U.S. market alone last year. 93 … that is just staggering! They ranged from free to $300 on contract and every possible price point in between; came with keyboards, sliders, touch-only, physical buttons, dual cameras, no cameras, 3D cameras, and on and on and on!

In a word – Android offered CHOICE, while Apple offered THE iPhone.

But as of October, things took quite a change: the iPhone 4S came along and offered a step-change in performance but basically the same design. Apple also made the decision to fully diversify their lineup: you could get the iPhone 3GS (AT&T Only) for FREE, the iPhone 4 (AT&T, Verizon or Sprint) for $99, and the iPhone 4S (AT&T, Verizon or Sprint) for $199/$299/$399 depending on memory. Suddenly Apple had a full line-up – and based on playing around with my brother’s 3GS it offers a better ‘free on contract’ experience than just about anything else I have tried.

Some have speculated that the late launch of the iPhone 4S is the anomoly that caused the market share surge; others cynically point to the death of Steve Jobs; still others the late launch of the Galazy Nexus. Those are all excuses – the reality is much simpler.

Loads of people want an iPhone, but weer unwilling to pay top-dollar to get one, or to switch carriers.

We already know that the iPhone accounted for MORE THAN HALF of Verizon smartphone sales in the 4th quarter … which basically answers the question ‘did LTE matter in 2011’? with a resounding NO.

People are OK staying on contract, but most really just want to slide from phone to phone without significant outlay of cash. Until October their real choices were Android or … stay on a feature phone. Now they can get an iPhone to fit their budget or an Android phone – and many chose the iPhone instead of Android.

The Reuters article also mentions Windows Phone, talking about the impact of Nokia emerging but also stating that more WP devices are needed (such as the upcoming HTC Titan II) … but that based on what they are seeing Windows Phone could account for 10% of sales by mid-year! That is more aggressive than my estimate which had it hitting 10% by end of year … but it shows that there is a lot of potential upside for Microsoft’s new push in mobile.

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4 replies

  1. If more than half the smartphones at Verizon were iPhones, it wasn’t because of free 3GS phones – there are no 3GS CDMA phones.

    I still think that the major reason why iPhone lagged Android in Q2 and Q3 and not in Q4 was people delaying their planned purchase of iPhones until the new handset was released. As long as Apple releases one handset a year – and why will they not? – iPhone sales will remain cyclical.

    • That was why I spelled out how the tiered distribution worked, assuming I wouldn’t have to re-state for the Verizon case … but you are right, and it means that people were willing to pony up ~$100 or more for iPhones rather than freebie Androids.

  2. Check out this article on allthingsd about iPhone buying habits from October through December:

    – 89% of iPhone buyers in the period bought the iPhone 4s!
    – 19% of 4s buyers were upgrading from a 4!
    – 42% (!) of iPhone 4s buyers broke a carrier contract to get the 4s!

    Key quote:

    “Early upgrades, broken contracts, and selling used phones — all allow buyers to purchase the new iPhone 4S, when conventional wisdom suggests that these users would follow the two-year contract cycle, or at least purchase the cheaper models.”

    Ok, this is a survey of US buyers, not worldwide, and I do not know what percentage of iPhone buyers in the period were from the US, but this points to the fact that a significant amount of iPhone sales in the last quarter were 4s sales, and not many were free 3Gs sales.

    42% broke their contract! That is absolutely astounding to me, as I am sure it is to you!

    • I did see that this morning … and I was really stunned at those numbers … 15 million people breaking other contracts to get the 4S … 90% of the 37 millions were 4S … just amazing stuff.