Any of you who have been reading iSource for the last few months may have seen my previous rant on the accuracy and validity of analyst reports on smartphone sales and market share. There have been precious few that either had enough data to be meaningful, or weren’t horribly skewed in one direction or another. […]
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Finally, An Analyst Report That Makes Some Sense

Any of you who have been reading iSource for the last few months may have seen my previous rant on the accuracy and validity of analyst reports on smartphone sales and market share. There have been precious few that either had enough data to be meaningful, or weren’t horribly skewed in one direction or another. Well, yesterday brought us a new report from Nielsen on US Smartphone market share as of Jan 11, 2011 that actually has some teeth. While I won’t personally be satisfied until we can also see tablets, media players, and set top devices reported in the same way and all totaled together in a single report, this is definitely the form that everyone else should be copying.

This level of reporting isn’t necessarily unheard of. I actually gave Gartner a little credit for a report they released back in November of last year which broke down both OS and manufacturer numbers for the 3rd Quarter of 2010 together. So what exactly is Nielsen doing better? They gave us an easy to understand visual chart that shows the number broken down by both manufacturer and OS at the same time.

The way Nielsen presents the data is highly informative and accessable. It is easy to see how the OSs stack up head-to-head, as well as calculate total numbers for cross-platform manufacturers like HTC, Motorola, and Samsung. The only thing I would like to see in addition, at least for smartphones and 3G tablets, would be the same type of chart, but showing OS and/or manufacturers broken down by cell carrier. However, since the iPhone just showed up on Verizon, those numbers will be a little more meaningful after another quarter or two.

The numbers themselves aren’t really a surprise. OS-wise, we see Android, iOS, and Blackberry OS leading the pack. However, these numbers taken in the context of the last year, show that Android is winning the pure numbers game with a large number of models covering all carriers, market segments, and form factors. Apple and Blackberry are just behind Android in OS market share, which is notable since they are the sole hardware manufacturers of their respective platforms.

However, looking a little deeper, we see Apple and Blackberry going in very different directions over time. Blackberry is hemorrhaging market share, despite the fact that they cover a large number of carriers. Apple, on the other hand, has been steadily eating away at Blackberry’s lead for the last year, and seems poised to overtake them as the single largest US smartphone manufacturer. This seems inevitable at this point when you consider that the iPhone has now appeared on Verizon, as well as the fact that recently revealed product roadmaps have Blackberry sticking with their outdated OS6 on phones until next year.

The more interesting battle over time will be the one between iOS and Android. Over the course of this year, we should get an idea whether Apple’s move away from AT&T exclusivity will help them equalize the US smartphone OS numbers, or if Android’s wide availability, especially at the low-price end of the market, will keep them on top.  However, this is where I personally think we should all broaden our focus a bit to include tablet, media devices, and set top boxes. With all devices taken together, it is likely that Apple is on top of the entire connected device market right now, with Google steadily gaining and stretching out into traditional Apple strongholds. Hopefully with the emergence of legitimate competitors to the iPad, we will see more analysts pay attention to these other market segments, and eventually see some truly reliable total mobile OS numbers reported.

Another interesting aspect of Nielsen’s report is the fact that they also broke down the major US smartphone OS market share by the age of owners who have postpaid plans.

Despite the novelty of this information, I don’t think it actually tells us too much that we didn’t already suspect. The only market number that really stands out to me is that Android has a higher percentage of younger users than iOS and Blackberry. However, this doesn’t surprise me at all when you consider that the iPhone is a higher priced phone, even when you take the availability of last year’s model at a lower price into account. There is a growing number of good quality Android phones available at no charge with contract, and even models like the Optimus V on Virgin Mobile, which is priced at $150 with no contractual strings attached. Add to this the constant parade of BOGO deals on higher-end Android phones from Verizon, and you have easier access to younger users who (or whose parents) may not be able to shell out $200 + for a new iPhone.

In my opinion, these numbers do add some validity to the rumors of Apple releasing a new, but lower cost iPhone that may be available at similar prices to these Android phones. That, in conjunction with wider carrier availability, should help Apple offset what is now a disadvantage to them in terms of sheer numbers. However, when you own 50% of the smartphone industry profit share and have the more robust ecosystem, are volumes the most important issue? Food for thought as the battle rages on.

Something else that would be interesting to see would be the bleed over effect of Apple’s iPod Touch into the 18-24 year old demographic, as well as even younger market segments. I’ll use my own family as an example. My wife and I have three children and one already has a new 4th Gen iPod Touch that he gave up his Nintendo DS to get. My middle child will be getting a 3rd Gen iPod Touch (that I got an insane deal on) for his birthday, and my youngest will probably get my wife’s iPhone 3G with the SIM removed when she upgrades this summer. While we may be a little more gadget inclined than the average family, I know plenty of other families with kids who have traded in their DSs and PSPs for iPod Touches, as well. Considering that Apple owns this market right now, and will continue to do so until Android has a viable music store and more quality games available, it will be interesting to see if these kids will switch platforms when they get older, or if they will want to preserve their app investment and stick with iOS. It may be a few years before we start to see solid data on this, but it definitely an area to watch.

Well, I have to tip my hat to Nielsen. This report is more informative than any I looked at last year. The information seems solid, and the format is top notch. I just hope they will carry this over to all of the other market segments that the major players are competing in, so we can get an even clearer picture of who is leading, and who is struggling to keep up.


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