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Android Sales On Track to Surpass iPhone

Google (GOOG) Android phone shipments have been growing so fast that they could overtake iPhone sales by Apple (AAPL) within a short amount of time -- if present trends continue.

According to CEO Eric Schmidt, 60,000 Android handsets now ship each day. Putting that into perspective, HTC released the first Android-based phone in the fourth quarter of 2008. Four quarters later, Android phones have hit a 5.4 million per quarter rate.

In comparison, Apple shipped the first iPhone in the third quarter of 2007. Over the following four quarters, unit sales reached a peak of 2.315 million and then sank to 717,000. In its sixth quarter, the iPhone hit 6.89 million units, but only with the introduction of the iPhone 3G.

After the 3G iPhone appeared, it took three more quarters for Apple to again break 5 million units. We don't have quarterly unit sales movement data from Google, so it's impossible to know whether Android has seen the same up and down gyrations as the iPhone (at least until the last few quarters, when it saw constant growth for the first time) or a steadier upward trend. Even so, in their fifth quarter, Android phones shipped at 62 percent of the unit movement that Apple has taken nearly three years to achieve.

If the trends continue -- and apparently this quarter's volume is double that of last quarter -- it seems reasonable to estimate that Android handset sales could actually overtake the iPhone within 12 months. They might even overtake Blackberry unit sales by RIM (RIMM). That would be impressive.

The main reason is Google's business model, which leverages multiple handset manufacturers, all of which target RIM and Apple as major competitors. Because Google doesn't charge for Android, manufacturers have more interest in it than a platform like Microsoft (MSFT) Windows Mobile or the new Windows Phone 7, which aren't free.

Remember: we're talking about units shipped here, not about revenue generated. From that perspective, Apple and RIM continue to wipe the financial mat with Android. However, Google's interest is in mobile advertising, no OS sales. The more Android units people own, the greater a chance that the company will eventually make significant profits from its effort to seed the market today.

Photo: inju