July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Two weeks ago Apple announced that it hit 50 billion apps served. That’s the last major milestone the first big player in the mobile app market will hit first.

What goes up, I suppose, must come down.

As sure as gravity, Google Play will surpass Apple’s app downloads in September of this year. It’s simply a matter of mathematics.

Apple is adding two billion downloads a month, according to Asymco’s Horace Dediu. That’s a lot of apps. And individually, iOS users download more apps than Android users, too: 83 per device compared to 53. But the flock of global Android users are downloading 2.5 billion apps a month from Google Play, Google recently announced.

And with a rapidly growing installed base of over 900 million Android users, that gap is going to continue to grow.

Do the math. Or, rather, let me do it for you:

Source: John Koetsier

Google Play vs Apple iOS app downloads

In reality, of course, neither platform is increasing at a static rate of acceleration. Both are growing monthly app download numbers each and every month. But Google Play is growing faster on a larger installed base, and so will almost certainly surpass iOS in total app downloads in September.

And that, of course, is not even counting the 200+ app stores for Android in addition to Google Play — many of which in China and Korea are extremely popular and well-used.

Which means that Android might already have surpassed iOS in app downloads … even if Google hasn’t.

The real question, however, is whether it matters.

Android has the majority of the market share — about 70 percent globally – while Apple has the majority of the profit share, perhaps as much as two-thirds of all profits generated from mobile. Until Android can prove that someone beside Samsung can make money on Android, it all remains rather academic.

There are lots of apps in both app stores, and lots of downloads on both major mobile platforms. And one more platform in third place trying to displace them both.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The conventional wisdom in the smartphone market is that Android is overtaking everything else. But in surprising news released this morning by Kantar, Apple’s iPhone and Microsoft’s Windows Phone are actually growing market share faster than Android.

Even more interesting is where that growth is coming from.

This quarter, Android still leads, with almost 52 percent market share. Android took the U.S. lead in 2012, lost it in the holiday quarter, and regained the title in January. And, of course, has not looked back.

But iOS, Apple’s mobile operating system, grew from 39.1 percent of smartphone sales in February, March, and April 2012 to 41.4 percent in the same period in 2013. And Windows Phone continued to see positive growth, jumping from 3.8 percent of the market to 5.6 percent. Both those growth rates are faster than Android’s, which was just 1.4 percent.

Windows Phone in particular was impressive. While it grew just 1.8 percentage points, that translates into a growth rate of 47 percent year-over-year. In comparison, Android’s 1.4 percent market share increase translates into just under three percent growth.

Who’s jumping on the Windows Phone bandwagon?

Increasingly, it’s former feature phone users — and Android users. In fact, 42 percent of those who bought a Windows Phone converted from a feature phone. Another 23 percent switched from Android.

And, interestingly, younger people.

“When looking at those changing now and in the last year, we’re seeing Windows now gaining share among those aged 25-34,” Kantar analyst Mary-Ann Parlato said.

In the previous quarter, it was clear that Windows Phone already had positive momentum, growing 1.4 percentage points and increasing market share by 52 percent. It was also clear that BlackBerry has fallen off a cliff, going down to .7 percent market share — exactly the same as its June numbers, released this morning. But while BlackBerry hasn’t recovered in spite of some hot new devices, Windows Phone has maintained positive momentum.

But iOS had dipped in April as well — down seven percent. And the newest Kantar numbers are a positive sign for Apple that the battle for smartphone marketshare is not lost yet — at least in the United States.

That’s good news for CEO Tim Cook, who reaffirmed in the company’s last earnings report that Apple does care about market share and did “want to grow faster,” even though the company does not view market share as the only indicator of a company’s health. Internationally, however, Apple has slid far behind Android in market share, with just under 20 percent global share last year. Some analysts, however, have said that Android market share is a “joke” and that profit share — which Apple has a majority of in the smartphone market, is all that matters.

Source: Kantar Worldpanel

U.S. smartphone sales by carrier

If Cook does care about market share, of course, Apple can’t ignore the international markets. Which is why China, the largest smartphone market on the planet, is increasingly important to the Cupertino company.

In the U.S. market, Verizon continues to own the largest share of smartphone sales, with 36.3 percent, followed by AT&T with 26.3 percent and Sprint with 13.1 percent.

Kantar runs the largest consumer research mobile phone survey in the world, conducting 240,000 interviews with consumers in the U.S. alone every year. By tracking phone sales, smartphone bills, and usage, the company’s Worldpanel ComTech builds a comprehensive picture of sales in three-month periods.

photo credit: fd via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Android’s market share is a joke, and most tech writers aren’t getting the punchline.

That, at least, is the opinion of John Kirk, a “recovering attorney,” financial adviser, business coach, and investor who wrote an interesting column recently stating that market share in general, and Android’s market share in particular, is not an appropriate measure of success.

And that contrary to all popular opinion, Apple is “winning the smartphone wars — and winning them handily.”

That’s not what you hear from most pundits, industry analysts, or Wall Street investors these days. Rather, the news is all about how Android has won, how its market share is massively outpacing Apple’s, and how Apple has failed by slowing innovation and refusing to release cheaper and more diversified iPhones.

I wanted to understand Kirk’s position, so yesterday we chatted about Apple, Google, Android, and Wall Street.

Source: John Koetsier

Android is open for business, apparently.

VentureBeat: You stated that Android’s market share is a joke. Why?

John Kirk: It’s a reference to the old joke that you can lose money on every sale but make it up in volume.

Many companies in the Android ecosystem are losing money or, at best, breaking even. HTC, Motorola, and many of the other phone manufacturers are in that boat.

VentureBeat: But isn’t profit a trailing indicator?

Kirk: Yes, it is.

But market share isn’t necessarily a leading indicator. Profit comes from a combination of market share times margins, and people are completely ignoring margins.

VentureBeat: That’s typically explained via platforms and ecosystems, and the network effects that a bigger platform has, and that the profits are coming — at some point.

Kirk: Different business models should be scored differently.

I’m talking almost exclusively about hardware manufacturers, which I think are poorly measured by market share and should be measured by profit share. If you’re looking at Apple and companies like Motorola, HTC, and Samsung from the manufacturer perspective, Apple is winning, Samsung is in second, and everyone is in a very distant third.

Source: John Koetsier

Android meets Wall-E.

Regarding platform, there’s an assumption that market share is the only thing that matters. And yet, all the evidence indicates that Apple’s iOS has a very strong platform, even with much, much smaller market share than Android.

The way the Android advocates explain this is to say that their theory is sound and that profit share must follow market share and that it’s going to happen any day now … but there’s no evidence that it actually is happening.

Saying that market share is the only thing that matters in platforms is like saying that acreage is the only thing that matters in real estate. Sure, the size of a property matters, but the location matters more. And sure, the size of market share matters, but the quality of the market share matters more.

In other words, Apple owns the high end of the market.

VentureBeat: One example that platform effects might be starting to impact iOS and Android is Google Music. Apple can’t seem to get a streaming music deal done, but Google was able to.

Kirk: Just because Apple hasn’t done it yet doesn’t mean they won’t do it. I think the music industry would much, much rather have Apple’s ecosystem than Android’s because that’s where the money is.

I’m not saying that Google Music won’t be OK, but it doesn’t impress me. It’s not necessarily another Google TV, but I don’t think it’ll be that big a deal.

Market share is like advertising … a huge audience is fine, but it’s much better to have a very focused, targeted audience.

VentureBeat: Are Google and Amazon wrong? They’re betting on the value of an ecosystem being a function of the value that flows through it — media, apps, books, ads, commerce — not just the value of the device it’s on.

Kirk: Google is playing a different game and wants to be scored differently … and it should be scored differently.

But Apple is winning in manufacturing … and that doesn’t mean that Google is losing in the advertising war. In fact they are winning, too — they’ve got exactly what they want.

It’s a mistake to think that Android is the only platform that matters to Google … in fact they’re spending a ton of resources on iOS apps as well.

VentureBeat: Leveraging a high profit share on a low market share is certainly efficient. But is it safe?

Kirk: There are two possible answers to that.

You can look at the PC wars versus the Mac, which everyone says that Apple lost … but what Apple “lost” by losing that war was winning 45 percent of the current market’s profits! So despite the fact that currently they’re at 8 percent market share, they’re doing very well.

Apple has historically demonstrated that they’ve been able to not just survive but thrive on limited market share.

I don’t think that history is repeating … it seems much more likely that we’re ending up with a duopoly rather than a monopoly, and that Apple’s ecosystem is large enough to be self-sustaining right now.

So what Apple needs to do is continue to add value to its ecosystem.

VentureBeat: If you’re right, why does Wall Street disagree with you?

Kirk: Wall Street had Apple valued at $700 last fall, and they have Apple valued at under $400 six months later.

So Wall Street was either wrong about Apple then, or they’re wrong about Apple now, or they were wrong both times. You shouldn’t judge the business value of a company by Wall Street’s variable estimates — you need to judge the fundamentals.

Frankly, if you’re investing in Wall Street, you need to be lucky as hell.

Image credit: Jesus Belzunce Gomez/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Windows Phone is now the third-leading mobile phone platform, more than tripling its market share year-over-year and more than doubling unit sales while pushing past a slumping BlackBerry.

And Windows Phone could jump into second place quicker than you think.

While they’re not Android or iOS-style numbers, Windows Phone sold 7 million units in the first quarter of 2013 for 3.2 percent market share, according to the latest IDC report. Meanwhile, BlackBerry sold 6.3 million units, down a third from the previous year, for 2.9 percent market share — less than half of its share just a year ago. Market leader Android took its customary massive 75 percent of the market, and Apple’s iPhone slipped from 23 percent global market share in 2012 to 17.3 percent share.

“Windows Phone claiming the third spot is a first and helps validate the direction taken by Microsoft and key partner Nokia,” the IDC’s Kevin Restivo said in a statement. “Given the relatively low volume generated, the Windows Phone camp will need to show further gains to solidify its status as an alterative to Android or iOS.”

Those further gains are possible over the next year or two as Microsoft’s primary phone parter, Nokia, transitions to an all-smartphone lineup.

Part of Apple’s quarterly weakness was the company’s lack of any new hardware or significant new announcements. That made Apple slip to its lowest global smartphone market share in years, now less than a quarter of Android’s size, with only 37.4 million iPhones sold to Android’s 162.1 million. But systemically, Apple is falling out of the race for smartphone supremacy. And that puts Apple at risk of being in Microsoft’s sights for the number two position in the global smartphone market share battle.

How?

Nokia is going all in on Windows Phone — mostly by necessity — and now accounts for 79 percent of all Windows Phone sales. The Finnish company has sold over 20 million Windows Phones to date, which is not bad, considering the challenges of Android, iOS, and Microsoft’s stutter-stepping from Windows Phone 7 to Windows Phone 8.

Source: IDC

Global smartphone market share, Q1 2013

But the real opportunity for both Microsoft and Nokia will come as Nokia continues its transition from feature phone sales over to Windows Phone. The company still sold something like 55 million feature phones in the first quarter of 2013, and while those cheap phones are going largely to developing nations, they will transition at some point to Windows Phone.

Those feature phones sales are decreasing, and the transition from cheap feature phone to somewhat more expensive Windows-based smartphones will decrease them still more, but they will be higher-value sales.

And, they might just be high enough, depending on what Apple does in the region of a cheaper iPhone, to catapult Microsoft to number two.

Image credit: Microsoft

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

In the first quarter of 2013, a third of smartphones sold in the U.S. were prepaid, double the amount from the previous year. Apple’s share of the prepaid market? A mere 8 percent.

People are just trying to get the best long-term deal, says Stephen Baker at the NPD Group:

“In a quarter without a major product launch from either of the two market leaders, consumers refocused their attention away from the postpaid wars and toward finding the best value for their dollar.”

Those two market leaders, of course, are Samsung and Apple. But Apple is hardly even a participant in the prepaid market.

The portion of the market sold prepaid has been increasing for years, says Baker.

“Sales of prepaid smartphones doubled from the previous year, continuing a string of more than 12 quarters of triple-digit sales increases.”

Apple’s share looks tiny, especially in a U.S. market where it has dominant market share, but it has quadrupled year-over-year since the first quarter of 2012. However, with the prepaid market growing so quickly, Apple’s latest –and typically expensive — phones have not been the big sellers. Rather, it’s the year-old iPhone 4S that is Apple’s leading contender in prepaid, just as one of Samsung’s top prepaid sellers is the now somewhat aged Galaxy S II.

Even outdated models get pricy — the iPhone 4S can cost $400 to $600 unlocked and brand-new, while the Galaxy S II can be between $300 and $400. But consumers make up the heavy upfront cost by saving on cheaper plans, potentially saving hundreds, if not a thousand dollars over the lifetime of their phones.

For Apple, however, capitalizing fully on this fast-emerging market trend means bringing out a cheaper iPhone that can be sold as a new, current model-year device at a price point closer to Android models from Samsung and LG. And Samsung has some work to do, too — while its market share remained stable from 2012 to 2013, competitors such as Apple and HTC have gained share.

Where are people buying prepaid phones? Mostly at retail, NPD says.

“Prepaid has proven to be a real winner for national retailers,” said Baker. “The easy purchase cycle and grab-and-go nature of the product play into the strength of large-format stores. Certainly, companies like AT&T recognize this shift in purchasing as they ramp up their focus on prepaid phones with their recently announced ‘Aio’ product branding initiative.”

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Global shipments of smartphones, tablets, and laptops hit 308.7 million in the first quarter of 2013, with 216.3 million smartphones, 50.5 million laptops, and 41.9 million tablets shipped, according to the latest numbers from Canalys.

Once again, Android accounted for 75.6 percent of all smartphone shipments, and once again, Samsung is killing it.

The Korean smartphone king grew smartphone shipments by 64.3 percent year-over-year while shipping 82.2 million tablets, smartphones, and notebooks combined. Meanwhile, mobile rival Apple grew its iPhone shipments by a shockingly low 6.7 percent, hitting single digit growth in a market which has overall growth of 37.4 percent.

Let me say that again: Apple is at single digit growth in a market growing at almost 40 percent.

Source: John Koetsier

Android meets Wall-E.

If there’s any doubt why Apple’s stock in moldering in the mid-400′s after hitting highs last year of over $700, that’s why. And with Tim Cook basically telling Wall Street that Apple won’t ship any significant new products until this fall, or even 2014, the situation is not likely to change.

‘Despite its slowing growth, Apple still shipped over 37 million iPhones,’ Canalys analyst Pete Cunningham said in a statement. ‘But HTC and Samsung have raised the bar with their latest handsets and Apple needs to respond with its next iPhone. The iPhone user interface is now six years old and badly in need of a refresh.”

Tablets are one area of slight comfort for Cupertino.

Apple retains 46.4 percent of the tablet market, Canalys says, shipping 19.4 million tablets. That’s down from 58 percent market share in the first quarter of 2012, and once again, in a market growing at over 106 percent year-over year, Apple grew less than others — about 60 percent growth year-over-year.

‘Spearheaded by Google and Amazon, the commoditization of the tablet market has happened far quicker than that of the wider PC market,’ Canalys analyst Tim Coulling said.

The upshot?

Without significant new Apple products, major new product categories, and a much more intense Apple effort to produce a wider range of phones and tablets that the market is looking for right now, Apple share will continue to drop.

And one other interesting tidbit in the Canalys data:

Calculating operating system share over all “smart devices,” lumping in smartphones, tablets, and laptops does provide interesting insights. With that view of the industry, Microsoft ends up with an 18.1 percent OS market share — a very different proposition than high-90-percent share in the laptop/desktop world.

Image credit: Louish Pixel/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

In a global smartphone market that Android has been expanding at a breakneck pace, a bright spot for Apple has been increasing market share in the lucrative U.S. domestic market. A new report from the Yankee Group says that’s going to continue, and that Apple is winning the slow way, via customer loyalty.

The difference, according to analyst Carl Howe, is Apple’s ecosystem.

“Apple’s “black hole” ecosystem captures subscribers who never leave, while Android smartphones are losing one out of every six customers to other manufacturers,” Howe wrote when publishing the study.

That’s iTunes, the App Store, iBooks, iCloud, and the entire physical ecosystem of iPhone-compatible speakers, peripherals, and even cars, which sync and integrate an iPhone with users’ devices.

It seems difficult to believe, given the avalanche of sales Android has captured — led by Samsung. But Kantar Worldpanel data from January supports the Yankee Group’s thesis: Apple briefly captured a majority of U.S. smartphone market share in late 2012. And earlier this month, ComScore said that Apple is growing overall iPhone sales and iOS market share, while Android share is dropping.

Interestingly, Tim Cook said in Apple’s quarterly earnings call earlier this week that a lot of that was due to Apple’ old phones.

“Market share is important, and unit share is important,” he said, adding that the company had reduced prices on the previous-generation iPhone 4 in order to make the phone more affordable to a wider range of people.

The iOS ecosystem is one reason, the Yankee Group report says, that 91 percent of iPhone users plan to buy another iPhone with their next phone purchase, compared to a still-high but clearly lower 76 percent of Android users who plan to switch away from the Android platform. And, in fact, 18 percent of Android owners plan to switch to Apple’s phones.

What that adds up to is the “black hole ecosystem,” as Howe puts it, that grows Apple’s market share slowly but surely.

The question for Apple is whether it can translate that stateside advantage into an international one, where it’s having a much more difficult time capturing huge swaths of market share.

photo credit: NASA Goddard Photo and Video via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Half of Americans planning to buy a smartphone in the next 90 days are planning to buy iPhones, according to a new survey from 451 Research.

But while that’s down from the 71 percent who wanted iPhones in September 2012′s survey, buying intent for Samsung smartphones has jumped from 13 percent to 21 percent, meaning that Samsung has made its mark as the premier Android smartphone manufacturer in the American consumer psyche.

Samsung is benefitting from a massive surge in demand not just for its flagship Galaxy S III, but also for its “phablets,” those unfortunate offspring of mixed marriages between tablets and smartphones, with screens greater than 5″.

In 451′s research, a full 27 percent of people who are interested in buying a smartphone wanted a screen size of 5″ or larger. And while almost 70 percent of people who were planning on purchasing a Samsung device wanted the Galaxy S III, 23 percent wanted the Galaxy Note II, Samsung’s stylus-carrying 5.5″-screen, 6.5-ounce pocket monster.

Perhaps even more interesting, and potentially indicative of Windows Phone market share opportunities in 2013, is the fact that while Apple reigns the customer satisfaction sweepstakes, with a stellar 71 percent rating, Windows Phone has pulled ahead of both Android and BlackBerry. Windows Phones clocked a 53 percent “very satisfied” rating, compared to Android’s 48 percent and BlackBerry’s 26 percent.

That’s helping Nokia jump up the manufacturer standings to a 56 percent “very satisfied” rating, while Samsung is basically neck-and-neck at 55 percent.

The slowdown in number of people who are planning to purchase Apple devices is not a shock. Of the 71 percent who had that intent last month, some have undoubtedly already bought, and others may have gotten lucky on Christmas Day. Apple’s U.S. market share late last year soared over 50 percent — a historic high — and while the intent-to-buy stats are down a little, iPhone 5 still ranks as the most-desired device.

451′s survey questioned 4,061 people, 88 percent of whom are U.S.-based.

photo credit: LoKan Sardari via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

AT&T took a moment to toot its own horn this morning, announcing that it sold more than 10 million smartphones in the last quarter.

And while the company didn’t announce a product-level breakdown, thanks to Kantar Worldpanel data released last week we can guesstimate that this translates to 7.2 million iPhones, 2.2 million Android phones, and some small number of BlackBerry and Windows phones. Those numbers are interesting, as Apple’s Q1 2013 financials are coming in just a couple of weeks, with estimates as high as 55 million iPhones sold.

“During the quarter, we averaged more than 110,000 smartphone sales a day as customers flocked to our leading portfolio of the latest Android, Apple, and Windows devices,” AT&T President and CEO Ralph de la Vega said in a statement.

Significantly, de la Vega did not mention BlackBerry in his statement. Windows Phone has become the third contender in the U.S. mobile market — because, according to that same Kantar data, Microsoft surged into third place with 2.7 percent of the U.S market, while RIM free-fell from seven percent the previous quarter to just 1.4 percent in the Christmas quarter.

The numbers are big, there’s no question.

AT&T’s huge quarter undoubtedly helped Apple push above 50 percent market share for the first time ever in the U.S. market, as the massive mobile carrier was, of course, the first (and for years the only) iPhone-carrying telecom, giving it an advantage in high-end wireless customers that continues to this day. And, perhaps, something of a bias toward iPhone.

Humility is, of course, a key AT&T virtue, which explains the next part of de la Vega’s statement:

“Combine that with the nation’s largest 4G network and lightning-fast LTE network that now reaches more than 170 million people and you’ll understand why customers continue to choose AT&T in record numbers.”

AT&T’s full financial results for the quarter will be released the same day as Apple’s: January 24.

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