The Curious Gap Between Android Market Share and Usage

by Steve Wildstrom   |   November 26th, 2012

There’s been plenty of debate in these pages and their comments about who is winning and who is losing in the battles between Apple’s iOS and Google’s Android. Asymco’s Harace Dediu takes a close look at Thanksgiving weekend data from the IBM Digital Analytics Benchmark and reaches a surprising conclusion: Despite the sharp growth in Android market share, the iPhone and, especially, iPad share of online shopping activity is actually growing.

Dediu’s full analysis is well worth reading. But in the end, he is as mystified as everyone else by the phenomenon he calls the “Android engagement paradox”:

I’m not satisfied with the explanation that Android users are demographically different because the Android user pool is now so vast and because the most popular devices are not exactly cheap. There is something else at play. It might be explained by design considerations or by user experience flaws or integration but something is different.

 

 

Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.
  • Defendor

    Taken in isolation, the tablets can make sense, iPad is the dominant player and it has a larger form factor better suited for browsing, than most of the Android tablets sold.

    But when you add in smartphones, I am also mystified. iPhone has a smaller form factor than most top android phones. If anything I would expect them to be better for browsing.

    • FalKirk

      Insightful, as always, Defendor.

    • WeaponZero

      There is actually a simple explanations for this. As someone who keeps an eye out on deal sites I notice that there are a lot of exclusive deals given to iphone users to shop and not to Android users for some reason.

      Another thing to note is a lot of iphone users already have their credit cards hooked up to the phone so they feel more comfortable buying. Popular games like Angrybirds requires you to buy it on iOS while on Android they have a free ad version. Using myself as an example, I have been able to get pretty much everything I need without spending a penny due to the free versions being available. (Don’t get me wrong it is not necessarily a bad thing, because companies make more money on ad revenue then they do on sales in mobile stores and it offers incentive for companies to update their apps, if your selling your app for $1 you eventually give up on the app in favor of a new app to continue making money, on the otherhand with ad revenue you can keep adding levels none stop and constantly make money on ads). If more companies were to throw deals for Android users as they do for iphone users though, I wouldn’t mind hooking up my credit card.

      • steve_wildstrom

        I don’t think this can begin to explain the IBM numbers. They were talking primarily about general e-commerce shopping, not app store purchases.

        • WeaponZero

          It does not matter. I will give it out of Google’s own mouth when they described mobile ad revenue in their quarter earnings report(has nothing to do with android in specific it was about mobile in general). Advertisers are paying less on all mobile platforms in comparison to desktop due to people are less likely to have their credit card handy when using mobile. Its not about where the purchase is, its about getting a consumer accustomed to making credit card purchases with their phone.

          Once a user starts making purchases they are not going to stop. The appstore is just a gateway drug to getting them to enter their credit card. But when I said deals being given out I didn’t mean appstore. I am talking about retailers like just the other day HSN gave iOS users 5$ to shop with them using your phone.

          • AdamChew

            You are being defensive.

            They were talking about e commerce and iOS devices being more successful.

            Looks like the android devices are either gathering dust or very little use.

        • Defendor

          I don’t think exclusive deals would really tip the balance. It might be an accumulation of small things that include that. A lot of Android phones sold could be cheap phones that just get used as phones. It could be that people Trust their iPhone more for eCommerce than Android phones.

          It is most speculation right now.

  • FalKirk

    “…in the end, (Horace Dediu) is as mystified as everyone else by the phenomenon he calls the “Android engagement paradox”.

    I agree. I’ve thought about this question long and hard. I like to find overarching rules – sometimes subtle, sometimes invisible though they may seem – that bind disparate information together and unravel seeming paradoxes. But the Android paradox eludes me.

    As I’ve written previously, there are many explanations and many of them are quite good. But all of them taken together don’t explain the enormous disparity between Android market share and Android engagement.

    Someday we’ll figure this out and then the answer will seem obvious. But for now, we’ll just have to keep pondering upon this all important question. If Google can cut this Gordian knot, then their victory in smart phones seems assured. If the problem is inherrant and intractable, then Apple will be the winner in mobile and Google – despite all its market share and activiation numbers – will be in deep, deep trouble.

    • Rich

      John,

      Dediu’s article says “iPhone users are about three times more engaged in shopping with their devices than Android users.” The explanation for this seems simple to me: iPhone users like using their phones better than Android users do.

      In this theory, the Android market share is higher because Android phones, taken overall, are cheaper than iPhones taken overall. I know price is not the only determiner of what to buy, but my personal observation is that it’s a big factor. Many people see themselves as budget-constrained and if Android phones are good-enough (which I assume they are), Android will be the choice of those people. But then after the phones are purchased, another principle takes hold that isn’t always true, but generally is: you get what you pay for. This suggests that Android phones, although good-enough, aren’t as enjoyable to use as iPhones. High-end products typically are more satisfying to their owners than mainstream products are. (A BMW is more pleasing to drive than a Ford.) The result is that iPhone users like using their phones better than Android users do, which would explain the Android paradox.

      • FalKirk

        One of many good theories that doesn’t quite satisfy. It’s hard to believe that Android phones are so dissatisfactory the people won’t even use them to shop.

        Samsung alone sold 30 million Galaxy S phones. Are these phones so inferior to iPhones that their users won’t user them to shop? It seems extremely improbable.

        • Rich

          Dediu doesn’t say Android users won’t use their phones to shop. He only says iPhone users are more engaged in shopping. To me it’s no surprise that a high-end product is preferred for a discretionary activity, but I seem to be in a minority with that view.

          • steve_wildstrom

            The problem with this line of analysis is that a lot of Android phones, including the top-selling Samsung Galaxy S 3, are as expensive as the iPhone. If people find them unpleasant to use, why on earth don’t they buy iPhones instead? There’s something else going on here.

        • capnbob67

          I think there are 3 main factors at play here all of which we are all aware of. Note – this is all about the US market only (as per the IBM data).

          1) US Android sales are massively over reported by the survey/sample methods employed by market analysts (vs. the hard sales numbers from carriers). Installed based for iPhones is probably 1:1 or better vs. Android in reality as we complain every quarter where iPhones outsell Androids at all major US carriers.

          2) The demographics of iPhone users financially are significantly stronger than the average for Android users. iPhone users are wealthier and spend more in general (as proven by year-round app/content sales) and during the holidays. Higher $ per user will drive superior iOS performance in holiday sales.

          3) Apple users are already much more accustomed to purchasing online (for $s, not free downloads) via their devices based on all the other online sales stats by mobile platform. iOS already has higher engagement in online commerce.

          The fact that iOS has more great apps for online buying is the icing on the cake. e.g. there is no equivalent of the fantastic Amazon WindowShop app for Android (that I can find), only the mediocre mobile phone app or poor, cluttered website.

          Remember, these shopping stats are US only, where the iPhone clearly has the most entrenched and proportionately highest user base.

          PS Is the 30 million GS sales a US stat too? I couldn’t find that reference. If it is global sales (many mentions of 30M GS1/2/3 sales), it is an irrelevant statistic since we don’t know how many GS phones have been sold in the US.

          • steve_wildstrom

            I think points 1 and 3 are definitely valid, though iPhone shopping considerable outpaces Android even if we correct for over-reporting. I’m not so sure about 2; it may well be true, but where’s the data to support it?

          • capnbob67
          • FalKirk

            Good analysis, capnbob67. The problem with #2 is that this IBM data measured shopping, not buying. It’s hard to believe that people don’t shop on their phones just because they have less money. That may be true to some extent, but not to the extent being exposed by these numbers.

          • capnbob67

            I think there is probably a very elastic relationship between total income levels and disposable income which is what drives holiday binge shopping on Black Friday. I would hazard a strong educated guess that limited to no disposable income (or facing economic uncertainty) reduces shopping instances significantly (online or otherwise). There will be more layaway, and other forms of planned/structured purchasing or queuing at the B&M stores for those really limited bargains rather than the online binge shopping that seems to dominate the Black Friday use case.

            I highlighted a couple of recent studies in reply to Steve below that seems to show that iOS users are better off than Android users on average.

            It is also important to note that these three drivers are not necessarily equally important but all three (and the better tools point and several others mentioned elsewhere) are all operating together and each amplifies the other to achieve the significant overweighting.

            As usual in life, there is no single answer but lots of concurrent contributing factors.

        • Krabbie

          I think there are a couple of reasons for this phenom. That Apple phone/pad buyers have a mindset of paying for their devise and their content. Whereas, I believe that Android buyers have the get it cheap and don’t pay for anything mindset.
          Mindset and expectations are important in the workflow of the buyer. If I believe that all the “stuff” is free then… but if I know that all that stuff will “cost” then…

          • jfutral

            Overall, I think there is just a perfect storm condition going on here. It’s a little bit of everything adding up to the whole.

            But I do think there is an important psychographic that is alluded to in this thinking. I do think people buy Apple products largely because of the promise of what it can do. I think a large portion of Android buyers purchase Android devices less for what it can do, but for what it is. I think there is a lot of validity to the active vs passive motivations of owning each platform.

            I mean, all you have to do is watch the commercials. Android is less concerned about what the platform can do and more concerned about what it is. Samsung is starting to catch on, I think. If one could break out the Android data and look at device makers, you might find Samsung trending more like Apple amongst the Android devices.

            And I still contend that the Android market is not near as large as everyone makes it out to be. Call me a conspiracy theorist if you must.

            But I could be wrong,
            Joe

          • FalKirk

            “I think this is also a huge mistake MS is making in their Surface commercials.” – jfutral

            I’m willing to cut Microsoft a little slack here. Both their Windows 8 and RT products are brand new. It’s probably that they need to do some brand awareness commercials first and move on to more focused commercials later.

          • jfutral

            I get that, too. But what is a brand if not a promise? And exactly what are they promising in their commercials? Buy this product and you, too, can dance like angry, little school girls?

            Joe

  • Rich

    Apple and Amazon share an essential characteristic: as the CEOs of both companies have stated publicly, both of them place the customer experience first. This differentiates them from other vendors who typically are more focused on their own competition. Consequently, the customers of Apple and Amazon are loyal and devoted.

    • FalKirk

      Agree with every word. Still doesn’t explain the disparity in engagement.

    • les_madras

      Nobody who places the customer experience first would have force Apple Maps on their customer.

      • FalKirk

        “Nobody who places the customer experience first would have force Apple Maps on their customer.” – les_madras

        I take your point, but I can’t fully agree with it. Google maps was useless to me because it did not have audible turn-by-turn directions. Now I use Apple maps every single day.

        • les_madras

          Turn by turn navigation to the wrong place is not helpful. I was in Seattle last week and needed to find a walgreens. Apple maps took me a location that turned out to be some college tennis courts. Asked some pedestrians who said there never has been a Walgreens at that location. The nearest walgreens was a 20 minute walk away.

  • Gregory Isom

    apple devices are more beautiful. simple as that. people like to look at beautiful things.

    • steve_wildstrom

      So why don’t they just buy beautiful iPhones? As I note in a comment below, many of the top-selling Android phones cost as much.

  • df

    How do you know money cannot be earned from Android app when you have never written app for it? And how do you know fragmentation is a problem when you have never tried to write an app using Google Android compiler or its built in simulator?

    • FalKirk

      “How do you know money cannot be earned from Android app when you have never written app for it?” – Eastmont

      If you’ve been paying any attention at all, you know there is a mountain of evidence proving that iOS developers make far more than Android developers.

      I don’t need to make a mistake in order to learn from that mistake. I can save myself the trouble by learning from the mistakes of others.

  • Miguel Lopez

    Could this be as simple as certain individuals use a certain product [iPad/iPhone] due to its simplicity in shopping, whereas the other individuals use a laptop or pc because they prefer to simply not use their Android device for shopping? My case in point, I do all my online shopping on my pc, my wife does her shopping on her iPad.

    • FalKirk

      I’ve seen this line of argument postulated many, many times and it does seem to have some merit. However, it’s hard to believe that the Android online shopping experience is, while perhaps inferior, so inferior as to cause the huge discrepancies that we’re seeing.

      Perhaps, of course, it’s a combination of all the factors being discussed, but that feels like a cop out.

      • Miguel Lopez

        One thing I haven’t read about (nor do I have a clue about) is whether or not a phone counts as “activated” when a new Rom is installed. Since the missing community is fairly large and people do root their phones, this could add to the high number of activations.

  • bernie1001

    interesting analysis and observations by Horace,
    lets start by assuming we can rule out any methodological, technical mishaps from IBM side, they make their money from consulting, software, hardware to retail, telco, banks etc and any mistakes from IBM side in these findings would blow up in their face, they wouldn’t dare screw up,

    however, all other explanations are plausible while some are more likely than others, over time we will learn more about that,

    the huge questionmark for Google (beyond potentially miss-stating Android activation numbers publically, which would be very very serious)
    is how they are going to handle this report both towards advertisers and towards stock market,
    if mobile ad’s seems to be a slow starter there could be even more concerns about the effect of even doing it if a large portion of the mobile device users don’t seem willing (or able or whatever) to actually shop and buy stuff,
    if iDevices are a just a minor part of mobile device market and the rest don’t seem willing or able to m-shop then there is question mark about price tags for mobile ad’s,
    because audience is much smaller than expected or don’t behave as we expect,
    this means biiiig problems for Google,
    (Facebook too I assume),
    if, and I really say IF, these shopping numbers are correct,
    and IF there is even a hint of Android activation numbers being overstated,
    then I wouldn’t want to be a Google sales rep in the next meeting with an ad client intent on buying mobile ad’s,
    neither would I want to be the one to explain it at the next conference call with stock analysts,

  • SCOTT LIGHT

    I have used both apple and android devices. I used to shop on my apple devices. Then i realized that apple doesn’t have the security it preaches so i went to android for the abilities. I however do not shop on any of my devices now except my mac. Both operating systems are great in there own way. But i believe apple users tend to feel safe, even though they aren’t. You can preach walled garden all you want. That is just a teddy bear feeling for the weak minded. I believe that is the reason for the difference in numbers. One tries to make you feel safe, one tries to do the job you ask of it.

    • steve_wildstrom

      I’m curious as to just what you see as the security flaws of iOS for shopping.

  • General Hordak

    IPhone users like to spend. Many are female.

    Android users are more sensible with their money.

  • victor

    Or maye we should just use simple explanations. Flagship Galaxy S III is not a typical Android phone. Typical Android phone is glorified feature phone with two years old OS, horrible screen, used for making calls and text messages. Would you shop online with this?

    And tablets? My guess – all those market share estimates of “tablets” other than iPads are overblown out any proportion. Those estimates are telling us that somewhere in the wild around 40 % of tablets are non-Apple. That means that for every 3 iPads you see in office, airports, at home, at work, in shopping malls, Starbucks…., you should be able to see 2 “tablets”. Is this your experience? Not mine, mine is more like 10 to 1. And when you confront those market share estimates with any other real world usage (shopping, browsing, app downloading) data, 40 % non-Apple tablets are nowhere to find. My take – market share numbers are bul….t