In reality, the opposite is true: the bigger the Android pool, the better for Android, no matter how many different devices are out there. Why? This early in the smartphone game, market share is everything -- and the more diverse the Android phones, the more customers the platform appeals to.
If there is a critical mass of Android users out there waiting to spend money on apps, developers will jump through hoops to tap that market. As one Android developer at mobile analytics firm Medialets said to me this week: "There will definitely be some developer backlash if their platform gets too fragmented. But if enough Android devices get out there, then those developers may have no choice."
The Android-or-iPhone ultimatum is a false construct. Android doesn't need to dethrone Apple to get customers or developers; it simply needs to be much bigger than the third-place platform. And it looks like it will be. Look at AdMob's most recent stats, and you see that Android's marketshare is growing with the iPhone's, not in spite of it. In other words, Android is stealing users from Blackberry, Palm and Windows. Google isn't competing for iPhone customers; it's competing for everyone who doesn't want (or can't get) an iPhone, perhaps because they're not with AT&T. (For the record, that Verizon/T-Mobile/Sprint pool is some 170 million people.)
But of course, not every developer will be willing to put up with Android's hassles just because there are lots of Android phones out there. Android developers will be a self-selecting group. The ones who feel "forced" to develop for Android will be the ones that have made smartphone software their business -- as companies like Shazam and Foursquare have. Moonlighting bedroom developers may decide the marginal benefit of porting their iPhone app to Android just isn't worth it. Developers like Marco Arment, who developed Instapaper for iPhone on his own time, have said as much:
Apple's App Store is not popular because it gives developers an opportunity to write more software and sell it through a proprietary, pain-in-the-ass storefront system. It's popular because it came with a huge audience, so the development-time investment was more likely to be worthwhile. Trust me -- we wouldn't put up with Apple's bullshit if there wasn't a lot more money to be made than any other mobile platform.So the Android Marketplace will end up with plenty of great apps like Shazam and Foursquare, but it will lack that long tail of "boutique" or homegrown apps. For the average smartphone user, this won't matter; they're primarily interested in having email, Web, Google Maps and sticking with their contracted carrier. They'll be happy with a few popular apps and won't really miss the niche apps like Instapaper.
The buyers that care enough about specialized apps to switch to iPhone (and tolerate AT&T's awful service) will be a kind of smartphone elite: a haute-design crowd that believes Apple's elegant UI and its boutique apps are worth a dropped-call rate that averages 30%. In other words, the next three to five years may see the iPhone become more like other Apple products: beloved by the top 10% of buyers, and ignored by the rest. For them, Android will be waiting.