With Apple's U.S. dominance, smartphone race heads overseas

With Apple's U.S. dominance, smartphone race heads overseas

Summary: Collectively, four recent earnings reports from very large companies paint a clear picture of the global smartphone market. Who's in the lead? That depends on where you look. Who's in second? That spot's up for grabs, worldwide.

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The big four of the United States mobile phone industry all reported their 4th-quarter earnings in the past few days. Apple and Google (with its Android hardware partners) have the smartphone category locked up. Meanwhile the combo of AT&T and Verizon own a combined 70% or so of the U.S. mobile carrier market.

I've been reading through those reports, which tell a clear story about the current state of the U.S. market. But an offhand comment by Apple CEO Tim Cook suggests that big changes could be ahead:

"I wouldn't say it's a two-horse race. There's a horse in Redmond that always suits up and always runs, and will keep running, and there are other players we can't count out."

Is he serious? Yes. Remember, though, Cook's perspective is that of a jockey turning his head to see how far back the other runners are.

In the United States smartphone market, Apple has already won. Decisively. Here's how complete the domination is among this country's top two carriers:

With only three models, Apple sold more than twice as many units as all Android handset makers combined in that segment in Q4.

Apple is also dominating among enterprise customers. Survey results released last week by Good Technology, a maker of enterprise mobile software, show Apple with an impressive lead:

Despite Android's overall market share growth and steady absolute growth among Good's customers, just 35 percent of all Good smartphone activations were on Android, compared to iPhone's 65 percent.

That number wasn't an anomaly caused by the launch of the iPhone 4S. The Good Technology report notes that collectively, "iOS devices accounted for over 70 percent of all activations in Q4, roughly the same as Q3 2011."

And the win is even more staggering when measured in dollar terms. Apple has done as well as it has by capturing the hearts and minds of the most affluent. Those customers don't just pay a premium for hardware, they also pay a premium for monthly service, which puts more money in carriers' pockets. That's the reason Apple reported a staggering 44.7% gross profit margin (up from 38.5% a year ago) in its recent quarterly results.

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Google still has an edge in other parts of the developed world, but it's eroding. A report last week from Kantar Worldwide Tech said "Apple sales are now growing at a faster rate than Android across the nine countries we cover." The list includes Great Britain, where iPhone's share is up nearly 10% in a single year, to 30.9%. (Germany is a bedrock of Android strength at 61%.)

I suspect that Apple's success will continue in Japan and Western Europe and among the emerging well-to-do in China. Worldwide, the iPhone will continue to appeal to the top of the economic pyramid and to information workers who can bring their own devices to work. Android will be the phone of the huddled masses.

The Kantar Worldwide Tech study counted Windows Phone at less than 2% worldwide. This year, with the Nokia partnership finally taking off, Microsoft has an opportunity to compete against Android for market share outside the developed world, with a special emphasis on emerging markets. Nokia has deep supply chain and manufacturing advantages in those countries, not to mention great brand value and operator billing relationships with carriers worldwide that Google and Apple don't.

By this time next year, Windows Phone will probably have picked up a few percentage points in the U.S. market, but it could easily swing to double-digit shares in places like Russia, Brazil, and India, where Nokia has historically had strong market share. And China, of course, where it will face a head-on fight with Apple.

The other opportunity for Windows Phone to make inroads is in the enterprise. In a bring-your-own-device environment, Windows Phone could end up ahead of Android if Microsoft beefs up the enterprise capabilities of the Windows Phone OS. And RIM's ongoing troubles also create tremendous opportunity to reach disenchanted BlackBerry owners.

But make no mistake about it, in the high-margin markets that matter, the battle is for second place behind Apple's iPhone.

Topics: Windows, Telcos, Software, Smartphones, Operating Systems, Mobility, Microsoft, Hardware, Google, Apple, Android

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  • RE: With Apple's U.S. dominance, smartphone race heads overseas

    Yeah, and what's happening now? Check Craigslist, people are practically giving away these phones, for many that used their old phones for things like facebook, gps, hands-free driving, and the like, the iPhone has them wishing they had Android back! <br><br>I was talking to a guy tonight who's girlfriend bought my iPhone 4s and he pretty much said his friends that bought the 4s all agree, the phone is nothing special and they all want their old phones back! Now, I can relate because to me, I had all I could do not to throw the 4s! I swear, everytime I turned around there was something that it couldn't do that my Android phones could! Needless to say, I will never go back down this road again! iOS is flat out weak as an operating system and it really brings Down what is otherwise very strong hardware!
    slickjim
    • RE: With Apple's U.S. dominance, smartphone race heads overseas

      @Peter Perry
      What absolute and utter garbage. I don't believe a word of what you wrote.
      Wakemewhentrollsgone
      • Even Craig had his doubts

        Yeah, that was a howler, wasn't it? Sounded like one of those spams about how my sister's boyfriend's cousin just bought an iPad for twenty bucks.
        Robert Hahn
      • RE: With Apple's U.S. dominance, smartphone race heads overseas

        @Habiloso of course not, why would you? You're in denial! <br><br>Check the Craigslist, you will find them for like $325 and $350! Honestly, some of those scared me because I thought for sure at those prices mine wasn't going to sell for $425 (I got $400 for it)! I confirmed the 360 trade and the $350 were legit but I didn't chase the others down. <br><br>But anyway, why is it hard to believe that people are used to Android and iOS is Culture Shock to them? <br><br>As for me, the first thing was not being able to change the default mapping software so things like siri wouldn't work with Mapquest and neither would tapping an address in the web browser.<br><br>Second was when I tuned all my music in iTunes with custom preset equalizer settings only to have the phone not sync nor support those... of course what does it do with a song that has a preset? Shuts the EQ off! So I try to buy an EQ so I can use it with my sound bar! Nope, can't do that either because nothing is allowed to integrate with Apple Software so you have to buy a whole music App and the phone once again will not set it as the default app so the sound bar remote is useless! Did I mention these things are much easier on Android??? I guess I should just not have tried to use My Sennheiser HD518 Headphones and then I wouldn't have noticed this right???<br><br>Oh and the Wonderful Siri! Yes, refused to read messages from the lock screen and I followed everyones advice but still it didn't work! I know, Siri is Beta and they still don't say that in commercials.<br><br>So then I want to change things like ISO in the camera, nope, can't do that either! Talk about Point and shoot!<br><br>Oh and Group Messaging is handing out people's contact information to everyone else! Yeah, this is a wonderful feature and very secure!<br><br>Spell checking? Right, I always want confirmation that I spelled something correctly when I only have one letter left to go!<br><br>Oh and the final straw!!! The mobile hotspot refused to broadcast the SSID! This would be okay if Apple listed the encryption they were using in the settings and you don't think about it until it isn't working (which was often!)...<br><br>Is that enough for you? I didn't even touch Battery Life, lack of true handsfree mode with Siri, or average black level of the 4s! <br><br>Now if you don't believe me, do a little research and you will see, all of these things are very real with iOS!
        slickjim
      • RE: With Apple's U.S. dominance, smartphone race heads overseas

        @Robert Hahn That's the funny thing about Sheep! They follow without thinking! Baaaa!
        slickjim
      • RE: With Apple's U.S. dominance, smartphone race heads overseas

        @Habiloso

        Have to agree, I love it when people argue facts with stories. A sure sign of a failed point of view.

        By the way I have an Android and can't wait to get back to an iPhone. Though I will miss the Android's buggyness, unpolished interface, system hesitations and slow downs:) see I have a story too.
        KBabcock75
      • RE: With Apple's U.S. dominance, smartphone race heads overseas

        @Peter Perry [i]But anyway, why is it hard to believe that people are used to Android and iOS is Culture Shock to them? [/i]
        That is not what is hard to believe. It's not only hard it's actually illogical to believe, based on your post history, to believe anything you post in regard to anything Apple.

        So let's talk about craigslist. You mention what you claim iPhones are going for and consider it cheap but don't mention that the beloved Android phones are going to what $0.10 on the dollar? I looked at our local craigslist and there were no 4Ss, the 4s were going for $350+ and 3GSs were going for $200+. On the flip side there was on Android phone listed for $300 and the rest were in the $50-$80 range.
        non-biased
    • Changewave survey : 96% of iP 4S Satisfied with their phone

      @Peter Perry

      do i believe you or polls of thousands of users by companies like Changewave that show 4S satisfaction rates sky high: 96% satisfied with the phone

      http://www.changewaveresearch.com/articles/2011/iphone4s_20111201.html

      even the iPhone 4 at the peak of antennagate had a return rate of only 1.6%. The iPhone has won JD Powers customer satisfaction award (poll of users) 6 times in a row beating all the androids, wp7 etc
      Davewrite
      • RE: With Apple's U.S. dominance, smartphone race heads overseas

        @Davewrite depends on the way the data was captured! The iPhone is ab anomoly because it wasn't returned but, that doesn't mean they kept them either! Think about it, if you could get $750 for the iPhone 4 why return it? You can easily sell that phone and buy one without an antenna issue... the point being, marketing is running the iPhone train!
        slickjim
      • RE: With Apple's U.S. dominance, smartphone race heads overseas

        @Davewrite
        http://en.wikipedia.org/wiki/Lies,_damned_lies,_and_statistics
        K6H
      • Perry, K6H those Polls also surveyed OTHER phones with SAME questions

        @Davewrite <br><br>so if the polls are flawed i.e exaggerating numbers etc why didn't it also exaggerate Android, WP etc phones as well (the same JD Power poll covered many different phones) ?<br><br>fictional example: <br>Question:<br>-- what phone do you use?<br>-- list down from one to ten how satisfied you are with it. <br><br>asked of different phone users. Apple comes up on top by a wide margin. So how can you all say "depends on the way the data was captured!"?<br><br>and don't say 'Apple fanboys' skew the data either because iPhones sell 30 million plus a quarter, apple used to sell only about 2 million macs a year in the old 'fanboy' days so most users are new to apple. Unless of course a new user who uses an Apple device instantly becomes a 'fell in love' fanboy... in which case it proves the 'satisfaction' theory as well.
        Davewrite
    • RE: With Apple's U.S. dominance, smartphone race heads overseas

      I would say that Android and iOS appeal to different people. Personally I will never buy an iPhone because I don't want to be locked in to Apple's walled garden. Clearly Apple's approach appeals to a great many people, however.
      TV John
      • RE: With Apple's U.S. dominance, smartphone race heads overseas

        @TV John
        Too many people buy what is advertised, not what they really need.
        rhonin
      • RE: With Apple's U.S. dominance, smartphone race heads overseas

        @TV John And that's different from the way Google is beginning to reshape Android how? I'm willing to bet that within a year's time, to be able to use subscription media on an Android device is going to require a locked bootloader and an official carrier (or manufacturer, in the case of Wifi-only devices) build of Android updated to the latest release within 3 months, whether it's buggy or not.
        Champ_Kind
      • RE: With Apple's U.S. dominance, smartphone race heads overseas

        @rhonin And a very large number get the cheapest smartphone they can skewing the number one way so what is your point?
        non-biased
    • RE: With Apple's U.S. dominance, smartphone race heads overseas

      @Peter Perry I thought you had an Android phone?
      murving
    • I'm calling BS

      @Peter Perry I just sold my 2 year old 3GS (16 GB) on eBay for $183, and my wife's for $166 (hers was missing the headphones and charger). You have no clue what you are talking about.
      lumpy_blumpkin
      • You might want to retract that...

        @lumpy_blumpkin
        I just looked and there are a lot of them for sale.....
        rhonin
    • RE: With Apple's U.S. dominance, smartphone race heads overseas

      @Peter Perry<br>Total crap.<br><br>Don;t know anyone in the UK with a Nokia Lumia phone, and only ever came across one person in the 12 months or so it has been out with a WP7 phone (a HTC), who junked it for a Samsung Galaxy S 2.<br><br>Smartphone-wise "In the hand", people have iPhone, Android (mainly Samsung), and Blackberry's.<br><br>Windows Phone is no-where, and Nokia's 1 million sales (to retailers) Q4/2011 blows.<br><br>It's a race to bankrupcy between Nokia and RIM, and a vulture patent-fest.<br><br>My wife loves her iPhone 4S (64gb), effectively cost of GBP50 on contract after trading in her 32Gb iPhone 3GS in mint condition for GBP175
      neil.postlethwaite
    • RE: With Apple's U.S. dominance, smartphone race heads overseas

      @Peter Perry
      Thanks for putting into words what the rest of us, who have open eyes and can think for ourselves, acknowledge is the difference between an iPhone and and Android phone.
      All I care about is the quality of the product that I can buy and what I can do with it. I can't understand how people fanatically pay more cash for an inferior product. Although maybe that is the point. No one who has real product knowledge and buys an iPhone wants to admit that their emperor is naked and not wearing fancy clothes after all.
      K6H