Apple's advantage has been that it hit the ground prepared and running when it released the first iPhone. Since then, the smartphone market has largely been a collection of vendors trying to catch up. One-time leader Research in Motion (RIMM) has tried to maintain its position. But RIM was late with necessary changes. Here's a Nielsen graph of the smartphone operating system market share of June 2010 through November 2010:
Android has made tremendous strides. Although RIM seems to be tied for second place, the inherent lack of precision in the statistical data means there is no way to tell whether it is actually tied with Apple or Google. However, RIM's general downward trend is pretty clear.
This breakout suggests the relative market shares among all U.S. owners of smartphones. However, the graph changes dramatically when the question becomes what smartphone people purchased in the last six months:
No, Android doesn't lead overall, but it has a massive share of those who have been buying cell phones. That is likely in part due to the iPhone being available only through AT&T (T), and not Verizon (VZ). Still, given that people can now move from one network to another while keeping their phone numbers, Android could retain a lead over iOS, although likely not as wide as it is today. Here's why the question of recent purchases is so important:
At the moment, under a third of adult consumers have smartphones. Of those adults who have recently acquired a cell phone, 45 percent get a smartphone. In other words, there is a massive and rapid movement toward smartphones, with a large number of consumers who are likely to purchase one in the near future. Although an early head start was helpful to Apple, now is the critical time in the market. Whichever operating system can attract the most converts now could be in a position to dominate the domestic market. The likelihood of rapidly dropping smartphone prices, with technology favoring Android, will be a big factor in Google's direction. In fact, Apple may find that it has to significantly drop prices over time -- still keeping a premium position, but recognizing that there is only so much more the company can charge and still obtain the interest of enough consumers.
The understated point in all these graphs is how poorly everyone else seems to fare. Microsoft (MSFT) Windows Phone or Windows Mobile? HP (HPQ) (formerly Palm) webOS? Not even on the radar. These two companies are going to have quite a challenge to even begin to catch up, let alone race ahead.
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