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Apple rose quickly between October and December, while Android fell in the U.S., RIM virtually out of the game

According to market research firm Nielsen Mobile, Apple, Inc. (AAPL) and Google Inc. (GOOG) have pulled into a neck-and-neck tie in the U.S. smartphone race, as Canada's Research in Motion, Ltd. (TSE:RIM) steadily loses market share.

I. An Apple Win

Globally, Apple's single smartphone -- the iPhone -- has been grossly outsold by Android of late, or at least was earlier in the year.  In October 2011, Nielsen says 61.6 percent of smartphones sold ran Android, versus 25.1 percent that were iPhones.

In December 2011, Apple took 44.5 percent of the market, while Android took 46.9 percent of the market.  Given its recent losses interspersed with Pyrrhic victories in court [1][2][3][4] [5][6][7][8] [9][10][11][12] [13][14] against Android and Android's market share domination in both U.S. and global sales, some had begun to cast doubts on Apple's long term prospects as a top player in the smartphone market.

Market share

But if Apple is going anywhere in the long term, it clearly has a good bit more life in its lungs.

II. Why the Shift?

While the most obvious cause for Apple's search is the release of the iPhone 4S, which broke with Apple's traditional annual cycle, taking a year and a half to launch, a host of other factors likely also came into play.

The iPhone 4S does not exactly amaze in the hardware department.  But it does fill a small phone (3.5-inch) space that Android has largely failed to market to, with Android focusing its high-end hardware on larger >4-inch smartphones.  Some consumers want a smaller phone.

Secondly, while the base operating systems of Android and iOS looks very similar as of Android 2.3 Gingerbread, the Apple operating system enjoys slightly more polished core apps (including the fancy Siri).  That's not to say that Gingerbread's apps are bad, merely that Apple's apps are that much better.  Of course Apple lacks some of the customization of Gingerbread, but ultimately this does not make a huge difference to the casual electronics buyer.

IPhone 4S

This situation could soon change with the release of Android 4.0 Ice Cream Sandwich, which takes Google's operating system in a somewhat "Windows Phoneish" direction.  It also has put a great deal of effort into polishing core applications like the browser, messaging hub, and email.  The results from ICS, upon initial examination, are equal or perhaps even better to their iOS equivalents.  However, the only ICS device on the market as of December was the Galaxy Nexus by Samsung Electronics Comp., Ltd. (KS:005930) which was only on one network -- Verizon Wireless -- a joint venture between Verizon Communications, Inc. (VZ) and Vodafone Group Plc. (LON:VOD).

It should be interesting how the monthly sales situation when ICS updates go from the realm of Android modders to the masses, and new ICS-optimized handsets go on sale.  Clearly this coming event will put pressure on Apple to overhaul iOS or risk losing its brief market resurgence.

Both platforms have an overabundance of apps, with hundreds of thousands available.

Outside of the phone's actual physical merits, another factor is that Apple continues to maintain a strong brand image.  While enthusiasm about Android, attack ads mocking extreme Apple fanboyism, and backlash against its lawsuit "crusade" have soured some on the Apple brand, among your average consumer it remains one of the strongest brands on the market.  To these consumers buying an Apple device is equivalent to buying "cool points" that some people would (literally) give an organ for.  

Android has become a household name and has a strengthening brand image, but it hasn't yet developed the sort of fanatical loyalty that Apple enjoys among many consumers -- significantly, many of whom are not technophiles.

III. Numbers Paint Bleak Picture for RIM

Android overall has a 46.3 percent market share and iOS has 30 percent, according to Nielsen.  RIM trails in distant third with 14.9 percent.  Amazingly, Windows Phone only has 1.3 percent of the market, compared to 4.6 percent for the ancient Windows Mobile. 

Among buyers in the last three months, Windows Phone crept slightly upwards to 1.4 percent, while Windows Mobile dropped to 2.4 percent.  RIM, meanwhile was in free fall, hitting 6 percent.  IOS grew faster than Android over the last few months, rising to 37 percent, while Android rose somewhat to 51.7 percent.

Overall it's important to take these numbers with a grain of salt, as Apple had one extremely good month that drew it into a tie, but Android holds the lead both for the last three months and for the estimated total market share for all active U.S. smartphones.  On the other hand, there is a clear trend in the last three months that's boosted Apple and sunk Android.

market share

RIM in October held approximately 7.7 percent of U.S. sales, but had faded by December 2011 to 4.5 percent.  RIM is doing decently in emerging markets like Indonesia, partially because its handsets are generally low cost, owing to their weaker hardware.  However, this also means RIM's profit margins are quickly eroding, and with only $1.5B USD in cash, an acquisition by a competitor appears increasingly likely.

In Q4 2011 46 percent of Americans with cell phones had a smartphone, and for those who purchased phones during that quarter, the total rose to 60 percent.

Nielsen uses a very strong multi-component analysis that looks at over 65,000 cell phone bills monthly (volunteer based); surveys of 300,000 users yearly; and iOS and Android apps that offer metrics from volunteers.  Together these methods allow Nielsen Mobile to reduce its margin of error when assessing trends like different kinds of usage and market share by company/platform.

Sources: Nielsen [press release], [methodology]

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RE: Pointing out the bias
By testerguy on 1/20/2012 7:49:56 AM , Rating: 2
Thanks everyone for posting links to the survey, first time I've seen a request for a link - thought it was common knowledge.

'Based upon Bianor blog, as the comparisons are even it is a fairer comparison with regards to affluent IOS users. But that only gives a slight edge in the number of IOS users making >$200,000, basically a 1.06% difference with the edge to IOS users.'

This is an example of reading the numbers incorrectly. The separate study carried out by Bianor is further evidence that iOS users are better paid.

To quote their own article:

'Example demonstrating how to read the chart: 12.18% of our Android users are in the $100-200K group, while this number for our iOS users is 13.24%. Hence the difference of 8.70% depicted on the chart above.'

In other words, if you use iOS, you're 8.7% more likely to be within the $100-200k group.

'The fact that you seem to using the Hunch Blog for your unsubstantiated basis is a falsehood. As the blog shows that the percentage numbers they are showing are only those that have responded and as clearly shows that 32% of respondents are IOS and only 21% of respondents were Android users. Now if you were to factor in the number of respondents based upon the actual number of sales that IOS is only 37% and Android is 51% and work out the numbers accordingly, you'll find that the 1.06% having and annual household income of $200K or more to be more honest, so guess where that leaves your other numbers?'

This, statistically, is a complete nonsense.

It does not matter at all whether there are 100,000 iOS replies and 10,000 Android replies, or 100,000 Android replies and 10,000 iOS replies. Given a sample size which is big enough for one data point, on it's own (and this survey sample size was over 15,000 people) - achieving equal replies would make no difference to the stats whatsoever. Furthermore, as the article states, if you read it 'Hunch crossed those responses with answers from dozens of other “THAY” questions, totaling over 80 million responses between March 2009 and July 2011 and found:'

Note that during this time iOS was significantly in the lead usage wise so the numbers tally up just fine (not that they needed to, as I just explained) - and your argument completely falls down.

To make guesses of random numbers which argue the case because of the fact that there were more iOS users at the time is simply ludicrous.

You're essentially making an assumption that if we asked 2,000 MORE Android users, their demographics would be completely different to the 6,000 or so already interviewed, and would completely change the stats. Like I said, this, mathematically, statistically, and logically, is a total fail. The most probable and rational likelihood is that they follow the same pattern as the original 6,000. The very premise, by the way, which is why representative surveys are used at all.

If you're going to try to debunk a legitimate survey, please have a logical reason next time. (you 'liar')

RE: Pointing out the bias
By DeluxeTea on 1/20/2012 2:08:44 PM , Rating: 2
You missed the part where Hunch mentioned that they only asked for which OS a respondent used between March and July 2011.

Also: it's a blog.

RE: Pointing out the bias
By Cheesew1z69 on 1/20/2012 2:33:13 PM , Rating: 2
It's not a "legitimate survey", sorry. It's a BLOG site.

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