The Android and iOS mobile operating systems combined to power 85 percent of all smartphones shipped in the second quarter of 2012, according a new report published by research firm IDC Wednesday. The total represents a new high for the two dominant mobile platforms together, but shows a rare iOS market share decrease despite an increase in unit shipments.
Is Apple’s shipment market share decrease bad news for the company? We provide some thoughts on the subject but, first, the numbers for the quarter:
Individually, Google’s Android represented 68.1 percent of all smartphones shipped during the quarter, up from 46.9 percent in the same quarter last year, with total shipments of 104.8 million units, up from 50.8 million.
“Android continues to fire on all cylinders,” Ramon Llamas, senior research analyst with IDC’s Mobile Phone Technology and Trends program, said in a statement. “The market was entreated to several flagship models from Android’s handset partners, prices were well within reach to meet multiple budgetary needs, and the user experience from both Google and its handset partners boosted Android smartphones’ utility far beyond simple telephony.”
He added, “Apple’s iOS posted double-digit growth, but not enough to keep up with the overall market.”
According to IDC, Apple’s iOS represented 16.9 percent of shipped units in the second quarter, down from 18.8 percent last year, a rare decrease. Conversely, iOS shipments rose by 5.6 million units year-over-year, to 26 million units, up from 20.4 million.
“Demand for Apple’s flagship smartphone has cooled off now that the device has been available since October, and the rumors around the blogosphere have fueled speculation about a new design and features. Despite these trends, iOS remained the solid number two operating system behind Android worldwide, and greater than the total number of smartphones on the remaining platforms,” the report stated.
Struggling BlackBerry and Symbian each fell below five percent for the quarter, shipping 7.4 and 6.8 million units, respectively.
Windows Phone 7 and its predecessor Windows Mobile combined for 3.5 percent with 5.4 million units shipped during the quarter.
In total, 154 million units were shipped during the second quarter, up from 108.3 million a year ago, for a year-over-year increase of 42.2 percent.
“The mobile OS market is now unquestionably a two-horse race due to the dominance of Android and iOS,” said Kevin Restivo, senior research analyst with IDC. “With much of the world’s mobile phone user base still operating feature phones, the smartphone OS market share battle is far from over. There is still room for some mobile OS competitors to gain share, although such efforts will become increasingly difficult as smartphone penetration increases.”
Bad News for Apple?
Wednesday’s numbers from IDC showing a decline in iOS market share represent only unit shipments for the quarter. While some industry analysts hang their hats on this metric, others prefer to look at overall usage share or profitability, both of which show Apple in a growing, healthy position.
Recently released numbers from comScore, as an example, show Apple at 15.4 percent of total mobile subscribers last quarter (that includes feature phones), up from 14 percent in the previous quarter. Looking at just smartphones, Apple more than doubles its position to 32.4 percent of smartphone subscribers last quarter, compared to 30.7 in the previous quarter.
Even better for Apple is profitability, with Canaccord Genuity analyst T. Michael Walkley reporting that Apple claimed 71 percent of second quarter 2012 profits for the entire mobile phone industry in a quarter that saw many major mobile companies, such as Nokia, RIM, and Motorola, record significant losses.
Can Apple Sustain Profitability?
However, as noted by IDC in their report, Apple’s growth of 5.6 million units was “not enough to keep up with the overall market.” If Android continues to outpace Apple, how long will it be until iOS finds itself in single digit market share?
Apple may continue to sell tens of millions of iOS devices, but in a rapidly approaching reality of multiple billions of devices sold each year, will Apple be able to sustain its profitability?
Apple supporters claim that the quality, ease of use, and immersive ecosystem will keep the platform viable, even if Android, or another competing platform, becomes completely dominant.
Others fear that if Android reaches 70 or 80 percent of the total market, the draw of advertising dollars and potential customer base will be too large for most developers to ignore. While it’s certainly possible for app developers to maintain apps on multiple platforms, if Android becomes the “preferred” platform, will a dearth of quality apps (something that iOS fans have chided Android fans about for some time) cost iOS its user base?
In a Market of Billions, Does it Matter?
During the introduction of the iPhone in 2007, Steve Jobs told the audience that Apple’s goal for the phone was to reach 1 percent of the global phone market in one year. Apple’s rationale was that to reach 1 percent in a market (at the time) of 1.2 billion phone shipments per year was “pretty good.”
The iPhone, and the entire mobile device industry, has changed dramatically since Mr. Jobs made that modest prediction over five years ago, but the rationale hasn’t. During the period from the rise of Windows to the introduction of the iPod, Apple rarely enjoyed a market lead in any product category. Although the company fell on hard times, it was still able to climb back to profitability with multiple products that were highly profitable but not necessarily market share leaders.
If iOS shrinks further in the coming quarters, even if it falls into to the single digits of mobile marketshare, will it mark the “beginning of the end” for iOS and Apple’s resurgence? The answer to that question depends on how the market, and consumers, view the relative importance shipment market share, usage share, and profitability. If Apple can maintain market-leading levels of profitability and product quality, it is doubtful that the executives in Cupertino, or Apple customers, will care much about any other metric, even if Google partisans cherry pick a metric that proves a Google “win” in their eyes.
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