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Comscore’s Latest Stats Show Android Wiping The Floor With Its Competition, Besting Everyone By Ever Greater Margins
Comscore is out with its most recent numbers and the results are
predictable for anyone who has been following BoomBustBlog for the past
year. Android is literally smoking the competition in the US, and
according to Gartner and others globally as well. As a matter of fact,
the Comscore numbers show that not only had Android taken the number one
market share spot, it has done so at an increasingly greater rate of
growth – see comScore Reports January 2011 U.S. Mobile Subscriber Market Share. This must be quite disheartening for the competition.
Now, I have been warning of this occurrence since Android was actually in last place, early last year.
- Math and the Pace of Smart Phone Innovation May Take a Byte Out of Apple’s (Short-lived?) Dominance
- Android Now Outselling iOS? Explaining the Game of Chess That Google Plays in the Smart Phone Space
- Empirical Evidence of Android Eating Apple!
- More of the Android Onslaught: Increasing Handset Revenues and Growth
- The Complete, 63 pg Google Forensic Valuation is Available for Download
- iSuppli Continues to Validate BoomBustBlog’s Original Thesis: Android as the Viral Game Changer!
- BoomBustBlog Research Hits Another One Out the Park! Google up nearly 10% after hours, true blowout earnings
The reasons for Android’s ascendence are multi-fold, but the two
primary factors and a tertiary factor that many may not believe –
performance and capability. Yes, as capable as Android is, tech is not
the reason for its success. It is the business model upon which it is
predicated. Since Google is primarily a services and ad company, it can
afford to give away such technology and wait patiently for contingent
returns as the market eats at itself until margins are dropped to near
zero. No other competitor (except for possible Microsoft, who had
anti-trust issues and big company-I can’t get off my ass-itis) could
have afforded such a long term, binary option strategy. Now Google, as
did Microsoft in the ’90s, can benefit from both rampant growth in the
market and destructively competitive margin cutting as it sits back and
reaps the benefits of its longer term investment. This is one of the
best attributes of this company – it invests strategically for the long
term and ignores performance now for this quarter to please Wall Street
fever. Youtube, Android, Admob and Grandcentral (Google Voice) purchases
have positioned this company to do very well in the mobile space –
which according to Steve Jobs is the new PC space. Here’s why Android
has taken over the smartphone space and why it will quickly take over
the tablet space as well.
- The Android OS replaces a deep and ongoing cost of research and
development for hardware vendors with a null line that costs them close
to nothing and probably has a negative costs since Google splits
revenues with them. Android also engages in revenue sharing with
carriers. Which OS would you rather sell, iOS which charges you a
participation fee as a carrier or Android which actually kicks back
revenue? Which would you rather do as a vendor, dump money into an OS
which has been getting beat up by iOS or outsource it at no cost to
Google, and still benefit from a humongous app store and state of the
art tech – all the while getting a cut of revenues? As you can see,
there is a very legitimate reason why every major (and minor) carrier is
carrying a whole portfolio of Android products. There is also no
mystery as to why so many hardware vendors are jumping on the Android
bandwagon - particularly since so many carriers actually lost money
selling iPhones despite high volumes. - Android is progressing very, very, very quickly. It has development
cycles that literally run circles around ALL of its competition. The
major reason is because it is a popular open sourced product, hence
benefits from literally hundreds of thousands of developers and coders
adding to and perfecting its code base. No single, or even group of
companies can compete with that. The result: A development year for
Apple or RIM is akin to a development quarter for Android, and that’s
being pessimistic. - As a result of number two, the Android tech is now constantly
cutting edge – no actually bleeding edge. Any distance that it has
gained technically over Apple, Microsoft, Nokia and RIM will simply be
exacerbated as more and more sources such as XDA and Nookdevs add
features and ideas to the code base that are incorporated over (a very
short) time or added unofficially through cooked ROMS and kernels which
serve as proofs of concept for the next iteration.
Just imagine if Google offers to give retailers a slice of ad and
service revenues in exchange for carry its products. Android everywhere.
Instead of buying ad space they will simply purchase the retail space
directly. This is the power of the Google model! This unique and
powerful business model is taking its toll on market darling Apple (and
to a much greater extent, RIM – but I will get to that in a later post),
but that toll is invisible to many due to the extraordinary growth in
the mobile computing market.
Apple is pulling phenomenal numbers in terms of revenues and profits.
Much or those numbers came from fantastic growth and outmaneuvering the
competition. Since Android has become ascendant, those numbers are
increasingly being derived from another – much less desirable source.
As you can see from the chart above, for two out of three quarters,
Apple has grown market share slower than the actual market has grown –
clearly indicating that the growth of iOS products is being buoyed by
the mobile computing market’s explosive growth. Looking below, Android
has consistently grown at many multiples of the market’s growth.
It is this explosive market growth that kept RIM in the game, and it
is also giving a distorted view of Apple’s performance relative to other
OS vendors. be aware that it is quite possible that this market growth
can shrink considerably with another economic collapse or dramatic spike
in input costs, which is currently occurring.
Of course, component manufacturers benefit no matter who wins the
wars, as long as the mobile computing market keeps growing – making them
marginally less risky.
Monetizing the Mobile Computing Race
We have a pretty firm idea of who is in the pole position as of now,
but that position is both risky and volatile, not to mention medium to
long term in nature – see Navigating BoomBustBlog Subscription Material To Find The Google Valuation Drilldown.
A more risk averse strategy is to go long on the component vendors
who supply those battling for pole position. Last week we released the
document
Long candidate #1 – Hardware: The Mobile Computing Wars
to subscribers that outlined who our number one pick was after an
initial scan. This is not necessarily the absolute final say on the
matter since we have yet to perform a full forensic analysis, but the
company does look good in comparison to over 120 peers. Non-subscribers
should reference The Potential Equity Investments Most Likely To Prosper From the Google/Apple/Microsoft Mobile Computing Battle.
I am releasing the draft of the full shortlist of prospective long
candidates as of now (17 pages, 5 companies) to subscribers. Please be
aware that is a draft document and work in progress, but it is quite
informative nonetheless. See Mobile Computing Vendor Long List Note WIP. Those who wish to subscribe should click here.
Click here to read up on all of Reggie Middleton’s Mobile Computing War opinion, analysis, and research.
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Interesting - just got asked to accept the new facebook email. Given that the majority of my messages come from facebook or linkedin or some other social site, I probably will need to accept in the future. I actually think it is a brilliant move for facebook.
Edit: I have an android
Android : Iphone/Ipad as Windows : Macintosh
Any Hardware : Proprietary Hardware Only
Developer Friendly : Heir Jobs Nazi
Worse Graphics : Better Design
Less Expensive : Need to Sell a Kidney
Growing : Heading Towards Obsolence
Well Duh. How many manufacturers are using android now, and each making multiple phones. Comparing single companies to a multiple platform with multiple manufactures will show results like this.
How about showing single company sales.
I am starting to think that Reggie is being paid to promote Android judging from the number of articles I have seen on his analysis...
Hey Reggie, I wonder how Samsung shareholders feel about this bit of good news:
http://www.eetimes.com/electronics-news/4213873/Apple--TSMC-to-expand-fo...
Samy execs had better hope sales of those Android hansets pick up substantially -- it's not good when dogs bite the hand that feeds them, especially when it's attached to somebody with initials SPJ.
Observations to the contrary.
Apple uses open source. There are plenty of open source frameworks and libraries for iOS.
Apples Macbook Air is getting phenomenal reviews and sales of it will only accelerate.
Still no virii for Apple products.
iPad2 will clean up. As I said when I was in Florida the only store packing them in was Apple. Certainly not AT&T, Verizon or RadioShack. Small sample size but still.
So far, only geeks ever seem to download anything for their Android. All the consumers I ask about just use the phone and the basic crapps that come with it.
Apple is so much more than a frigging cheap handset. Sheesh.
And to RogerWilco's point... where is the monetization again?
I have never seen a product/company draw such Pavlovian, knee-jerk reactions from it's customers/evangelists as Apple. Very cult-like.
Not trying to be hyperbolic here, I'm dead serious. If anyone has any observations to the contrary, I'd love to hear them.
I'd criticize Google's strategy for monetizing Android, if I could find any evidence of one.
Reggie - always a great read, always includes references, and always a year ahead of every other "analyst".
Keep up the great work!
Actually, the iPhone is still unavailable on some key carriers (including China Mobile) which is skewing the market share picture.
To gain insight into the market and make money from it. The fact the iPhone was only available to about 1/3 of US mobile phone subscribers up to now has definitely played a major role in the rapid rise of Android. In spite of this, the iPhone has maintained its market share. The picture might change in the next reports now that its reach has doubled.
The comScore data do not include iPad and iPod touch sales, only smartphone sales. As such, your first graph should be labeled Smartphone OS US Market Share and your second, Change in Smartphone OS Market Share.
A major reason for Android's success in smartphones has been the restricted availability of the iPhone, available only on AT&T up to the end of January. Android tablets will have no such advantage over the iPad.
Keep dreaming fanboy.
Just dumped 2 old apple Ios platforms in favor Android at my household. S.O. was a fangirl like you.
It took her less than 24 hours of having an Android phone in her hand to jettison Apple.
Android is a MUCH more capable platform than apple.
A market study of 2: very convincing.
Android leads iOS world wide and the ATT issue is a US situation only. Why is I that everyone feels the need to explain away Apple's waning comparative market share?