BY Kit Eaton
Statistics, arguments, sales figures, and passionate explanations claiming one or another smartphone platform has sold or will sell more than another in a specific market might litter the web for a while to come.
But, really, it's all over but the shoutin'.
"Android outselling iPhone by two to one in the UK," states one headline. "Android was the only OS whose sales grew in all markets it surveys," goes another. And remember this one from last year: "Android sales overtake iPhone in the US."
You could be forgiven for thinking that like a tide sweeping the world, Google's smartphone/erstwhile tablet OS has decisively won the smartphone wars and has been busy digging itself in, reinforcing its positions, and mopping up the entrails of survivors it's slain. After all, RIM's sales are in trouble, Nokia's future is in serious doubt, Microsoft's Windows Phone 7 plans haven't borne fruit yet, and HP/Palm's great webOS experiment is dead in the water. The only competitor to Android is Apple's iPhone, which started it all off, but Android fans love to point out Apple's outsold by Android handsets pretty much everywhere.
Android powers a huge list of phones, with different capabilities from different manufacturers, across a range of markets and nations, and with prices from zero to Apple-beating highs--such as the recent DROID handsets, and Samsung's premium range.
Go ahead. You may happily conlude from sales numbers that Android has won the smartphone war, stealing the market (and, as Steve Jobs would have it, the very design ideas) that Apple created with the iPhone.
Samsung is the usual poster child for Android success, but HTC is also among the top runners. The firm just posted results that, according to some analysis, place it as the leading phone maker in the U.S. Its third quarter $4.53 billion in revenues are impressive all by themselves, but when you learn that's a 79% rise on the previous year's figure, it's downright eye-popping. That figure was propelled by smartphone sales nearly doubling, and it also meant HTC achieved a 9% revenue rise on the previous quarter.
But HTC is also projecting that its fourth quarter results, which include the all-important holiday season, will decline versus this quarter's. Smartphone shipments for Q4 are projected to be 12 to 13 million, lower than Q3's. Simultaneously the average value of handset has slipped through this year--dropping from a high of $362 at the end of 2010 to $344. HTC blames this on the fact its local currency has appreciated.
You can also attribute the sliding average selling price on the Android market itself, which is incredibly crowded with offerings that are very similar in terms of design, specification, and OS. HTC's phones are distinctive, and sell well--evidently--but its peers have more iconic phones (Samsung's Galaxy line in particular) and newcomers ZTE and Huawei are achieving rapid market penetration for a number of reasons, including targeting lower-cost markets. The Android market, you may think from HTC's future sales, is already saturated.
HTC is actually an example that all of these firms, including Samsung, need to pay attention to because, as Android becomes commoditized, its market may become much like the dumbphone market is now ... a low-margin business where volume sales are everything and the battle for revenues and profit is based in refining margins and creating slightly unusual designs.
Then there's Apple.
"Apple's iPhone to make up more than half of Q4 smartphone sales across top-3 U.S. carriers," states one headline. Apple may have experienced a dip in iPhone sales in its last Q3 quarter, shifting 17 million units, but it's explained by buyers waiting for an updated device. The new iPhone 4S is selling like hotcakes (four million sales in the first three days--a record) and the expectation is that it will continue to do so into 2012 as Apple rolls out its international sales. Boosted by the fact Apple's selling the older iPhone 4 at reduced prices and the 3GS in some markets as a super-cheap entry level device (targeted at the lucrative pre-pay market) and Apple's iPhone future also looks promising.
And each iPhone is a vector for consumers to deliver a stream of money to Apple, in the form of its 30% take on every paid app sale--to say nothing of in-app purchases, newsstand subscriptions, and direct in-iPhone buys of music and other content from iTunes. Apple has maintained that iTunes merely helps sell hardware, on which it makes more money, but the arrival of the almost zero-price iPhone 3GS suggests that equation may now be changing.
And with Apple sitting on $80 billion in cash in the bank, confident predictions about its future sales figures, and hugely positive public reaction to its strong public image, it's hard to say that Apple has "lost" the smartphone war. Maybe, unbeknownst to Google, it was flanking the skirmish with a whole different army of customers.
There's another fly in the Android ointment: Android doesn't necessarily make Google much money, and sometimes not much for its maker partners. China is a great example of this, with a prominent venture capitalist noting this week that "chaotic" market conditions in China, typified by a lack of an official Android app market, mean that "almost nobody" is making money off Google's platform despite the fact it dominates the mid-range of smartphone markets there.
Although Android app downloads have recently surpassed Apple's, the fact that there are so many more Android handsets out there mean that on the whole each owner is downloading fewer apps. The notion that consumers also, on average, spend more on iOS apps still holds true, and this is a fantastic draw for app developers (as is iOS's non-fragmented status).
This week Business Insider tried to stir up fuss about the growth of Android, suggesting that "Samsung blowing past Apple to become the biggest smartphone vendor is not good news." But if you look at the context, dumbphones are giving way to smartphones, and the phone market itself is growing. Samsung targets the full width of this market, as it used to for dumbphones and feature phones, as do other makers. So of course Apple wasn't going to retain its position at the lead of the smartphone vendor list. The difference is that Samsung doesn't necessarily have the same chances of ongoing income from its Galaxy-buying customers as Apple does, and it wouldn't take much for a rival firm to out-innovate and slightly under-price Samsung and very quickly steal its sales thunder--after all, they're all making very similar Android phones.
Make no mistake, the Cold Smartphone War will go on.
Apple and Google have "won," but in different ways. Apple has huge consumer popularity, a strong and almost unassailable brand and business model, and will certainly continue to expand its sales (perhaps most in China). It delivers a tight, polished package of products and services that constantly updates. Google's partners sell more phones in aggregate than Apple but have created a vast and fragmented empire with different versions of the OS, cross-device app incompatibility issues, and a slight nagging sensation that Android lacks a cutting edge (with developments like Apple's Siri pushing this point).
So now we have a Cold War situation, with both brands locked in tense legal and commercial battles, and a cluster of competing smartphone brands jockeying for third place. Oddly enough, just as the real Cold War drove a massive amount of innovation, this new battle may actually see even more interesting developments being pursued by Apple, Google, and Google's partners as they compete to win the hearts and minds of the smartphone-buying public.