2012: The Year Google Fixes Android or Loses the War

by Ben Bajarin   |   January 31st, 2012

The end of 2011 brought about some interesting market developments. Both Nielsen and NPD shared data that the once so dominant Android actually declined in market share over the holiday quarter of 2011. Both Nielsen and NPD also shared that during the same quarter iOS, mostly due to the iPhone, closed the gap on overall Android market share.

Now, with all of these quarterly market share reports, we have to keep in mind that this data only reflects the current quarters data and not the annual or overall installed base. Still, it is important to note that during the holiday quarter (perhaps the most important quarter) Android market share declined and iOS jumped dramatically. This reality should concern Android partners and Google.

We sensed this trend early on and shared with our clients last fall the fact that Android could be headed for a decline in market share. In my TIME column in October of last year I outlined many of the ways that Google was mis-handling Android and unfortunately further straining their already strained relationship with their partners. If Google does not get a handle on not only the fragmentation issues but also their relationship with their partners (by being more transparent and trusting with them) then I anticipate the decline in Android market share to continue. Not solely based on more consumers choosing iOS but by Android’s partners vesting more resources and upping their commitment to Windows Phone.

I don’t expect any Android vendors to completely dump Android but I could see them shipping fewer Android devices overall as a part of their product mix in favor of Windows Phone, which inevitably would lead to fewer Android devices on shelves at any given time, which would lead to even further Android market share decline. I firmly believe that Android device volume is its strongest competitive advantage. Right now Android currently has the bigger share of OEM resources and overall device mix per OEM. However, that could all change very quickly and in 2013 Microsoft will have a compelling story around Windows Phone and Windows 8 for their partners. If Google does not adjust their strategy with Android quickly they run the risk of OEMs shifting the balance of their resources more toward Windows Phone (or something else) and away from the Android platform.

If you line up all of these underlying trends it could spell real trouble for Android. My biggest concern for Android overall is that the platform itself creates no significant hardware loyalty. That is a dangerous truth for any of Google’s hardware partners. The same can be said of Windows Phone, or any other horizontal platform for that matter. If you are going to be in the hardware game you have to differentiate and more importantly create a partner ecosystem that creates customer stickiness.

Lastly, on my point that Android’s competitive advantage is volume of devices in channel at any given time. NPD shared their data on the top devices sold over the Oct/Nov time period. If you look at the chart you see that the top three are iOS devices. Note these are three different phones. If Apple does continue to diversify their products on the market and leave legacy devices in channel at lower price points, they will themselves be creating their own iPhone army of devices that could further hurt Android’s market share over the long haul.

Ben Bajarin

Ben Bajarin is a Principal Analyst at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research. He is a husband, father, gadget enthusiast, trend spotter, early adopter and hobby farmer. Full Bio
  • nononoono
    • benbajarin

      Responding the same way as below:

      I actually pointed that out in my column. In paragraph 2. Congratulations on missing the entire point of the article. And the facts are that more consumers chose the iPhone in the holiday quarter than Android devices. IF that happens in more quarters to come then Android will loose overall market share.

      Also Android only has smartphone market share lead, not all mobile software lead as there are still way more iOS installed base than Android.

      Keep this article in mind at the end of 2013 and we will see where smart phone market share sits.

    • melci

      Umm. Yes.
      Android’s marketshare growth has plateaued, plummeting from 367% growth in 2010 down to only 28% in 2011.

      In contrast, the iPhone has gone from a 14% marketshare loss in 2010 surging to a 38% market share growth up to Oct 2011 according to NPD. And this was before the blowout Christmas quarter finished with the iPhone surging to be neck and neck with Android.

      In addition, when you add in the 15.4 million iPads and 8 million iPod touches sold to the 37 million iPhones sold last quarter, you realize that daily iOS device sales worldwide match the 700,000 Android devices activated every day.

      Android has slowed enormously and iOS is only accelerating.

      • AppleFUD

        apparently if you say it enough and long enough sooner or later you might be right. . . but once again not yet . . . .

        I guess the latest market share analysis now shows just how ridiculous you are/were. . . no. . . yeah, Android growth plateaued LOL

        what an apple shill you are! doesn’t the web suck when people can go back in time and read your ridiculousness? its gotta hurt!

        • melci

          Come to spread your hate here as well eh Mr FUD?

          Yes Android has indeed continued to plateau.

          This last quarter has seen 78% of all smartphone sales at AT&T, 76% at Sprint and 51% at Verizon captured by iPhones.

    • jfutral

      Then problem with this thinking is that there is no such thing as “Android market share” since Google has taken the stance that carriers and handset makers should be able to differentiate their devices to the point of obviating a unified OS ecosystem. In reality, if any hardware maker and/or carrier wants to have a shot with Android, they really need to follow Amazon’s lead and create their own ecosystem. Then, what Google does or doesn’t do has no direct or immediate bearing.

      Currently the biggest competitor to Android handset makers are other Android handset makers. In other words, Samsung is pretty much eating every other Android handset maker’s lunch. No one else is making profit selling Android. HTC was for a short while, but they seem to have dropped the ball, too.

      As long as the smart phone OS race is only a two horse race, it really doesn’t affect Google directly (depending on the Motorola buyout). But as MS gets closer with Windows Phone and depending on how HP’s webOS is handled, the other device makers, no doubt even now, see little incentive to offer Android either exclusively or even primarily. It just isn’t working out for them except they don’t have to expend the engineering resources to build their own OS.

      MS is really the only other OS maker that can provide an effective ecosystem for handset makers so the handset maker doesn’t have to. MS can offer fairly onerous terms, too, but if the end result is _profit_, such as with many PC makers, I can see a handset makers shifting focus and Android slowly dropping off the radar.

      And that would be for the exact same reason Android proponents think fragmentation is not an issue (but really only for the customer. You better believe it is an issue for developers). The cell phone market was built on fragmentation and that is the environment customers have come to expect from the cell phone industry. (That is one reason why Apple was able to disrupt it so thoroughly.) For the average, non-commited cell phone buyer, Windows is as easy a choice as Android.

      Provided Ballmer doesn’t muck it up.

      Joe

  • Guest

    recent acquirers is NOT the same as total market share. get your facts right.

    • benbajarin

      I actually pointed that out in my column. In paragraph 2. Congratulations on missing the entire point of the article. And the facts are that more consumers chose the iPhone in the holiday quarter than Android devices. IF that happens in more quarters to come then Android will loose overall market share.

      Also Android only has smartphone market share lead, not all mobile software lead as there are still way more iOS installed base than Android.

      Keep this article in mind at the end of 2013 and we will see where smart phone market share sits.

      • Sanuelvs

        Really? Maybe i was just confused by your wording of

        “Both Nielsen and NPD shared data that the once so dominant Android actually declined in market share over the holiday quarter of 2011.”

        • benbajarin

          Yes, it can be confusing. It is stupid how these data sites are doing things. For example when the news came out in Q3 that Samsung was the leading smart phone vendor, they were only talking about for that quarter not overall. So it was true Samsung sold more phones than anyone, but only in that quarter.

          So what data hounds like Nielsen, NPD, IDC, Gartner etc are all doing is looking at OS share by quarter not overall for the year or total install base. That is however slightly helpful in looking at the data like I did and looking at the implications that the OS share of sold devices for the quarter dipped. So it is true for the quarter their OS share of devices sold in just that time period dropped.

          BUT, that had not happened in quite a long time since Android has been dominant. So the fact that in that time period more consumer choose the iPhone is a worrying sign because if that continues it will lead to the overall market share decline of Android on an annual basis.

          That is the point of my article. Plus, if OEMs shift resources and ship less Android devices as they add Windows Phone to their portfolio there will be FEWER Android devices on the market on an annual basis. This again, if it happens, and I think it will, will lead to market share decline.

          So my article was pointing out signs that could come and what MAY happen in the market, based on some data trends.

    • melci

      Guest, you are the one who needs to get your facts right.

      You are getting confused between “installed base” and “market share”:

      Definition: Installed Base
      “Installed base or installed user base is a measure of the number of units of a particular type of system—usually a computing platform—actually in use, as opposed to market share, which only reflects sales over a particular period”

      Ben is entirely correct, Android’s marketshare is plummeting. In terms of installed base, iOS is also far larger than Android with 315 million iOS devices sold versus only 200 million Android worldwide.

  • http://twitter.com/rickroberts Rick Roberts

    You really should look up and learn the difference between less and fewer.

    • benbajarin

      Done. Thanks.

  • Peter S Kastner

    Android has already lost as a single-OS competitor to Apple’s iOS. Android should be thought of like Linux: common genetic DNA but lots of different flavors. There is no one Linux, and there is not and will not be one Android. Take Amazon’s Kindle Fire, where the Google apps were ripped out and new Amazon code, store and all, were inserted. So for me, the battle was lost in 2011. Total Android market share is only relevant going forward in that it represents lost opportunity for Apple.

    • DavidR

      Umm why have you decided android has lost? Actaully wait dont answer that i really dont care