The Android smartphone onslaught may have hit its peak, at least in the U.S., according to an analyst who thinks that the expanded rollout of the iPhone to other carriers will check the rise of Google’s mobile OS. Charlie Wolf of Needham & Co. pointed out that Android’s market share of smartphone sales in the U.S. fell to 49.5 percent from 52.4 percent in the first quarter, its first sequential loss in any region in the world.
Wolf believes this is the beginning of more market share losses for Android, which began with the introduction of the iPhone on Verizon, and will continue with the release later this year of the next iPhone on Verizon and AT&T, and perhaps other carriers such as Sprint and T-Mobile. Apple’s share of sales during the first quarter grew to 29.5 percent, up from 17.2 percent in the previous quarter. This tracks with a previous NPD report that found that Android sales in the first quarter fell to 50 percent of total, down three points from the previous quarter, while iOS grew by 9 percentage points for 28 percent of smartphone unit sales.
Wolf believes the iPhone 4 launch on Verizon was only “tepid,” and that the big boost to Apple will hit with the next version, which is what he thinks many Verizon customers are holding out for:
It’s reasonable to assume that a material percentage of Verizon subscribers who plan to switch were content to wait until the iPhone 5 arrived later this year. One reason Apple delayed the launch of iPhone 5 until September is that it reportedly plans to coordinate the launch of the GSM and CDMA versions of the phone. To do so in June would likely have upset Verizon subscribers who purchased iPhone 4 in the preceding months. It’s our expectation, then, that the anticipated surge in iPhone sales on the Verizon network is likely to occur this fall after Apple launches iPhone 5.
Will Apple continue to slowly win back Android market share, though? I think it’s safe to say that getting the iPhone out to all carriers will boost iOS market share and Android may take a hit for a while if Apple can expand to all four national operators. That’s been one of the big limiting factors for Apple and removing that will allow it to compete on more equal footing.
But there’s still a lot up in the air right now, especially as smartphones turn from an early adopter device to a mainstream tool that is poised to outsell traditional feature phones this year. We’re getting into a place where less savvy and more price conscious consumers are taking the plunge. Many will choose an iPhone, but there’s still plenty of growth opportunity for Android to hit lower price points and appeal with a wide array of design choices. If Apple continues to put out just one phone a year at just a couple of basic prices, it won’t be able to keep grabbing share back from Android.
Apple understands this and has been indicating that it plans on releasing cheaper iPhones, that are “not just for the rich.” That’s going to be key for Apple in the market share battle, especially as the Mac maker pursues other markets overseas. Assuming Apple does get out some cheaper phones and continues to expand carrier distribution deals, we should see Android and iOS settle into some more stable market share positions long term. But as I’ve said before, it’s still early in this game. Android’s share might fluctuate over time and Apple may close the gap. But the real story is that these two platforms are very much driving the market, while the rest of the industry plays catch-up.