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Former friends, turned bitter rivals, Google and Apple now own a virtually duopoly on the U.S. smart phone market.  (Source: Flickr)

RIM appears to be fading fast with the BlackBerry smart phone brand dropping over half its U.S. market share over the last year. RIM is rumored to be considering pushing a new OS -- QNX -- to its smart phones in a bid to revitalize them.  (Source: Smart Phone Mag.)

Nokia and Microsoft are looking to Windows Phone 7.1 "Mango" to revitalize their smart phone sales.  (Source: Engadget)

HP courteously recused itself from the market, to webOS fans' chagrin. The departure leaves Microsoft, RIM, Apple, and Google as the only remaining major OS makers.  (Source: Mobile Knots)

  (Source: NPD Group)
Google solidifies its lead, Apple remains close behind

When it comes to veteran market research firm NPD Group, Inc., the latest report [press release] on smartphones is more good news for two major players and more very bad news for a third.

I. Google and Apple's Gains are RIM, Microsoft's Losses

For Google, Inc. (GOOG) and Apple, Inc. (AAPL) the news is happy.  Google rose from a 33 percent market share in Q2 2010 to a 52 percent market share in Q2 2011 -- a 57.6 percent increase in market share which came despite its legal troubles [1][2][3][4][5].  Apple, resigned for now to play second fiddle to Google grew from 22 percent to 29 percent -- a 31.8 percent increase in market share.

The bad news came for Waterloo, Ontario-based Research in Motion (TSE:RIM) who saw its U.S. market share drop from 28 percent to 11 percent -- a 60.7 percent decline.  In the last year the phone maker has lost nearly half its stock value as well.  

RIM appears to be fading fast.  Things look increasingly bleak for the company, which is rumored to be preparing to push its new operating system -- QNX -- into the smartphone market in a desperate revitalization bid.  It's easy to draw analogies between RIM of today and Palm, Inc. at the start of the webOS era -- beloved by some loyal customers, but increasingly scorned by the masses.  The similarities run deep in that both companies followed the largely defunct first-party OS model, a sluggish pace of handset releases, and inferior hardware.

The study also showed troublesome signs for Microsoft Corp. (MSFT).  Windows Mobile held approximately 10 percent of the U.S. market last year.  But by this year its successor, Windows Phone 7, had only accrued approximately 1 percent of the market, while Windows Mobile hung on to 4 percent of the market.  In other words, Microsoft saw its cumulative market share halved.

However, unlike RIM, Microsoft has deep pockets to try to revitalize its sales.  And with the upcoming launch of WP7's first major OS and hardware refresh, Mango, which seems to have strong support from a number of top third party handset makers, Microsoft looks poised to turn the corner and become a viable third place competitor.

II. Motorola Dips, Faces Puzzling Outlook

In terms of individual phone manufacturers, the biggest loser was recent Google purchase Motorola Mobility, Inc. (MMI).  Motorola saw its total market share drop from 15 percent to 12 percent, and its share of the Android handset market drop from 44 percent to 22 percent.

It saw its market share gobbled up by Android rivals LG Electronics (SEO:066570) and Samsung Electronics Comp., Ltd. (SEO:005930).

NPD analyst Ross Rubin was enthusiastic about Google's acquisition, though, which he says is beneficial to Android as a whole.  He comments, "Google's acquisition of Motorola shifts the balance of power in the handset-patent conflict between Google and its operating system competitors. Android's momentum has made for a large pie that is attractive to Motorola’s Android rivals, even if they must compete with their operating system developer."

He adds, "Much as it did in the feature phone market in the RAZR era, Motorola is experiencing increased competition from Samsung and LG in the smartphone market. Closer ties to the heart of Android can help inspire new paths to differentiation."

Of course, the Google acquisition of Motorola Mobility appears to have been primarily motivated from an intellectual property standpoint, so it remains unclear whether it will give choose to give unique advantages to its first party feature phones at its third-party partners' expense.

III. What Will the Market Look Like Next Year?

Overall there's still a great deal of uncertainty in the market.  Hewlett-Packard Company (HPQ) did refine the picture a bit, but voluntarily removing itself (and the ex-Palm webOS unit) from the smart phone market.  

Looking ahead, though, it remains to be seen whether RIM will find a way to revitalize itself or will become an acquisition target for one of the more successful or deeper-pocketed phone makers.  Don't be surprised if RIM has dropped even further in market share next year -- or has thrown its weight behind Android or Windows Phone 7.

But the biggest two outstanding questions are how Mango will be received and what will be the outcome of the Apple-Android legal war.  The outcome of those two factors should play a critical role in determining what the market looks like next August, when we sit back and look at the results of Q2 2012.

In the wild card category Intel Corp. (INTC) still has high hopes for Meego and Mozilla is cooking up a smartphone operating system of its own.  Don't get your hopes up that either of these projects will have generated even enough market share to earn a blip on next year's report, though.

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RE: ??
By NellyFromMA on 8/22/2011 2:59:44 PM , Rating: 2
Fact: Apple and Google want you to care because there is a HUGE demographic of people out there who respond to brands almost with regard for any common sense at all. best example without bashing Apple directly is to look at the US auto market and the various names/brands auto makers use to target different demographics. The VAST majority of people don't care, they just want a brand that make them FEEL good. That is, until the start seeing why, when it comes to technology, they are only limiting their options by allowing a near equal market split with no truly important differences between them.

On the other side of the equeation I think are more the type of people who come here; That is, techies, if you will.

Mostly, techies are just enamored with mobile compute, in general.

So, no, most people couldn't care less, as long as they feel like they have the best.

On the other hand, you have tech-snobs who reply like most of the above. ;)

RE: ??
By Ramstark on 8/22/2011 7:40:11 PM , Rating: 2
Actually is a little more about economics and the whole industry in which we "techies" know, maybe your husband or your uncle live from this too, so, before dismissing all the content of DT as "techie's rubbish" you could pay attention to what pays the bills...
On the other hand, iOS and Android will continue playing the "I kill you" legal game while WP7 takes over this Christmas season...mark my words ;)

RE: ??
By robinthakur on 8/23/2011 6:44:20 AM , Rating: 2
while WP7 takes over this Christmas season...mark my words ;)

Isn't that what they said last Christmas?

RE: ??
By NellyFromMA on 8/24/2011 8:07:40 AM , Rating: 2
Are you stupid? My husband or uncle? There's so much stupidity here I don't even know where to begin. You are more or less whats wrong with the internet and perhaps society. I didn't dismiss 'techies as a whole' because then I would be dismissing myself. I probably have never read a comment from someone as insecure as you and it kind of makes me need a refill on my coffee. What a tool

RE: ??
By Dr of crap on 8/23/2011 10:30:34 AM , Rating: 2
This is one of those statements on the very bottom of those posts and I agree -

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook "

And on top of that I again say - as long as it works and I didn't have to pay over $40 for that phone -

I care not WHO makes it or it's operating system.

It's not going make me healthier or anything important, so why would I care if it's Apple phone or is running WP7. It a phone. I don't care what brand of car I buy as long as it's a good buy and it has what I want inside and under the hood. Then if it's not a lemon I drive it for many many miles. I don't car if it a GM or Honda or whatever. Same for my cell phone.

And don't get me started on Apps. Money wasted and money for the companies offering them. Why do you think the cell phone companies are making so much? Users under 25 buying App after App. Used to be ring tones that brought in the cash.

So no I am not a teen or tween or "young adult" (I use that word only since I don't have another that fits) and I do not care who makes it or who has the opertating system on my cell. If it works and I get reception then I satified.

The fact that you really care that much about your cell phone makers means their marketing is working and your making us ALL over pay for these things!

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

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