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Android Elbows iPhone Out of Second Place in US Market

By Erika Morphy
May 10, 2010 12:11 PM PT

The Android operating system has moved past the iPhone to capture the No. 2 ranking in smartphone operating systems in the first quarter of 2010, with 28 percent of the U.S. market, according to the NPD Group. The Research In Motion OS was still No. 1, with 36 percent marketshare, based on unit sales to consumers. Apple's iPhone OS held steady with 21 percent.

Android Elbows iPhone Out of Second Place in US Market

It was the second consecutive quarter in which the Android posted strong growth, Ross Rubin, executive director of industry analysis for NPD, told the E-Commerce Times.

Much of that growth has to do with the carriers' -- particularly Verizon's -- strong promotion of Android devices, he said.

"We have seen a number of Android devices roll out in 2009 on T-Mobile and Sprint, but once we saw Verizon get behind the OS with its advertising and promotions and a trademark reserved for its own Android handsets, that is where the momentum truly kicked in," noted Rubin, adding that he wouldn't be surprised to see an even greater boost from AT&T as it ramps up its own Android portfolio.

A Fluke?

That said, both Apple and RIM are preparing to update their own operating systems, so it is unlikely that Android will get too far ahead, said Ross. It may not even keep its current new perch at No. 2.

Android surpassing the iPhone is something of a shock to the industry, which had expected this to happen later rather than sooner. It may well be that these numbers are just a fluke, Jack Vonder Heide, president of Technology Briefing Centers, told the E-Commerce Times.

"I think the primary reason for the jump were the sweetheart deals Verizon was cutting. I think next quarter we will see the numbers much closer together," he predicted.

A Permanent Change

Another school of thought is that the Android's jump in market share illustrates trends under way that will have permanence -- and that the shift happened faster than expected.

In Q1 2009, while iPhones were flying off the shelves, a number of major mobile players were sitting on the sideline, unable to participate in the modern smartphone market, Azita Arvani of the Arvani Group, told the E-Commerce Times.

"So, this vacuum in the U.S. market caused three major responses that created a perfect storm for Android," she said.

One was that Verizon realized iPhones were adding significantly to AT&T's bottom line, so it aggressively developed and promoted its lines of smartphones, including its first BlackBerry and then Android phones.

Then there was Motorola, on the brink of going under and not having much of a smartphone line, which aggressively developed several Android phones in rapid succession. Finally, HTC saw a big opportunity to grow in the U.S. smartphone market and put out several Android models, Arvani said.

"As a result, there are many Android phone models available to U.S. subscribers in different form factors, from different manufacturers, and through different service providers," she noted. "So, subscribers have a greater choice with Android phones -- and perhaps most importantly, Android phones start at a lower price point. Backflips started at US$49, HTC Droid Eris goes for $79.99, while the least expensive iPhone starts at $99."

In short, the iPhone has come to dominate the high end of the smartphone market, while Android models cover lower price points as well.

"Not surprisingly, we get more subscribers attracted to lower price points," Arvani said.


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