Android to control half of smartphone market, say analysts

Android to control half of smartphone market, say analysts

Summary: A bevy of Android devices will ultimately mean that Google's mobile operating system will control largely half of the smartphone market, according to a Piper Jaffray report. Apple's iOS will probably top out with market share of 20 percent to 30 percent in the long run.

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A bevy of Android devices will ultimately mean that Google's mobile operating system will control largely half of the smartphone market, according to a Piper Jaffray report. Apple's iOS will probably top out with market share of 20 percent to 30 percent in the long run.

The big picture? Android and Apple will squeeze rivals such as Nokia and Research in Motion, according to the Piper Jaffray report. These also-rans will duke it out for the 20 percent share left on the table.

Android will grab half of the smartphone market ultimately just because of its product cycle and multiple partners. The HTC, Motorola and Samsung Android device barrage is impressive. In the end, RIM and Nokia will cave and adopt Android as an operating system and give the operating system a massive market share boost.

We've heard from reliable sources that RIM has at least pondered a move to Android. There was a power struggle within RIM management that led to the Android faction getting the boot for the most part. Piper Jaffray's team of analysts argue that ultimately RIM will regret making a wrong turn at the Android cross road.

An excerpt from the report:

We estimate Google will control 14.9% of the smartphone market through Android in 2010, growing to 23.2% in 2012. For Apple, we expect the iPhone 15.9% of the smartphone market in 2010, growing to 17.6% in 2012. However, we believe the question is where the two platforms top out in terms of market share. An important factor for Android is that we ultimately believe that Nokia and RIM do not have the core software competency to be competitive in the smartphone space and will eventually need to adopt Android or potentially Windows Mobile Phone 7. Ultimately, we believe Android is likely to control over half of the smartphone market in the next five years. Apple's essentially two phone focus (low price 3GS and higher price 4) will likely limit how much of the market Apple can control and we believe ultimately Apple's smartphone market share tops out between 20-30%, which still offers significant room to grow.

Now it's not all about market share. Apple will command half the profits of the smartphone industry. Piper Jaffray analysts estimate that Android will contribute $1.35 billion in revenue to Google in 2012. For comparison, Apple generated $1.5 billion in operating income in its first quarter.

For Piper Jaffray's projections to play out there is one significant wild card: Nokia and RIM have to cave and go to Android. How much pain would those two companies have to feel to abandon software?

Another excerpt:

We believe one reason major competitors are having difficulty competing with the smartphone market share gains posted by Android and the iPhone is a fundamental identity problem. Google is clearly a software company focused on making Android a great mobile OS. Apple is clearly a software company focused on making iOS a great mobile OS and take it a step further by providing integrated hardware. We view competitors like Research In Motion (despite its acquisition of QNX) and Nokia as hardware companies that are dabbling in software. While there have not been major changes in share from RIM and Nokia as Android popularity has ramped, which we believe is due to Android largely replacing a lot of lower tier proprietary smartphone OSes, we believe long term both RIM and Nokia will be share losers in the smartphone space because they do not have a core software competency.

"Over time, we do not see the benefit of RIM and Nokia continuing to push proprietary software that can't compete with the market and eventually expect one or both to capitulate and move to utilizing third party software," say the Piper Jaffray analysts.

Given this Android/Apple smartphone duopoly there are a few other items worth watching. To wit:

  • Apple will have to separate the iPhone from Google as Android becomes more competitive. For instance, Bing could be the default iPhone search engine. Maps would also be replaced with Poly9, a mapping company bought by Apple.
  • Carriers are more profitable with Android devices. That fact is going to push carriers to favor Android devices and bolster marketing support.
  • Microsoft has a window here. Microsoft is the only smartphone player with real software expertise. It's quite possible that Nokia, already a strong Microsoft partner, could adopt Windows Phone 7 at some juncture.

Topics: Apple, Android, Google, Hardware, Mobility, Nokia, BlackBerry, Smartphones, Software

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104 comments
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  • Small mistake, Poly9 bought by Apple, not Google :)

    Maps would also be replaced with Poly9, a mapping company bought by Google.

    Maps would also be replaced with Poly9, a mapping company bought by Apple.
    papyrus100
    • Good catch

      @papyrus100 Good catch of one of many errors in this piece--and I see it was corrected without crediting you.

      Other errors: "Apple?s essentially two phone focus (low price 3GS and higher price 4) will likely limit how much of the market Apple can control" That foolishly assumes Apple, or any leading competitor, would change nothing in their market strategy over the next five years. That is so silly.

      Further: "Apple will command half the profits of the smartphone industry." That may be the case, but the next sentence compares Google revenue to Apple operating income, neither of which metric equals profit! It would sure be nice to have even a bit of business understanding on board when trying to discuss financials.
      frabjous
  • Stupid projections base on current trends

    They really aren't factoring in WindowsPhone7 (and beyond). In 5 years WindowsPhone will have more than half the market and android and apple will be fiighting for the other (less than) half. Both Nokia and RIM will adopt WindowsPhone as their platform once they see how the next two years WindowsPhone goes from catch up to leapfrog and offers features android and apple can not match no matter how much time they could take. Linux made the same mistakes in the netbook market. If you want an idea of how WindowsPhone will leapfrog android/ios look to how Silverlight leapfrogged flash in capabilities in just a couple years or how IE9 leapfrogged chrome/firefox/safari in just a couple years.
    Johnny Vegas
    • RE: Android to control half smartphone market, say analysts

      @Johnny Vegas

      Yeah you are right. Just look at how the current battle is between Apple and Microsoft over Silverlight on the iPhone. What is the saying? Without Silverlight you can't experience the full web? Oh wait .. no its not. Thats Adobe and flash.

      But I guess you're right with IE9 having leap frogged Webkit browsers. Oh wait.

      I understand the MS fans want want their say in everything, but I would wait until there's a shipping device. Oh wait, there was that Kin right? Thats doing well yah?

      But seriously, wait for a real device to ship. Then come back with your arguments.
      tk_77
      • Are you purposely missing the point?

        @tk_77 I'm not claiming that there are as many sites with SL as flash. even though 99.9% of flash is ads no one wants it's had a decade head start in gaining breath. What I said, and is true, is that SL has in just a couple years passed flash in capabilities. And it has a stellar security record and is taking new work away from flash hand over fist. It's an example of what ms can do when focused, which they are now on WindowsPhone.

        And yes IE9 has definately leapfrogged all the webkit based browser and is now the best browser. Do a side by side comparison against safari or chrome or firefox of a graphically intensive site and watch it fly where they crawl. Or a text intensive site where it renders properly (and beautifully) and they don't. It also has much better css2 and css3 where they have just hard coded to do well on the lame acid3.

        And the KIN was not a WindowsPhone 7 device nor even a smartphone so if you were trying to make a point there you missed.
        Johnny Vegas
      • RE: Android to control half smartphone market, say analysts

        @Johnny Vegas Dude are you for real? :O ....I mean YouTube alone serves up more FLASH Video Content, than there are other formats of video on the web alone. It used to be FLASH was mostly Ads and Games. Ads are still there most they are the category that's shrunk first. While Games and Video have grown exponentially!

        YouTube alone has grown so huge that it is now streams over 70% of all video on the web. Including linking to Facebook and about every single forum on the web. Even Bling has video content coming from Google YouTube.... fool!

        99.9% of Flash is Ads?!?!!! hahaha... How much funny stuff did you put in your Kool Aide??? :D
        i2fun@...
      • RE: Android to control half smartphone market, say analysts

        @Johnny Vegas..
        I like microsoft and windows and hope the new windows phones does well but it wont be running windows 7 but a different phone os based on ce more then windows 7...you also must not know but google doesnt charge for android its free they give it away source codes and all and its open source for developers and companys to adjust as they see fit.
        Fletchguy
      • RE: Android to control half smartphone market, say analysts

        @Johnny Vegas

        Where did you get a copy of IE9 that's not tech preview? IE9 is lagging behind FF4, and FF4 is already more feature rich and faster. The only thing IE9 is leapfrogging is IE8.

        Silverlight is alright... if you're an MS fanboi. If you prefer Linux or want to see something on your smartphone, it's usually still flash or bust.

        What did Linux do wrong in netbooks. I'm loving my netbook remix. The grandparents break their computers less. All in all, I'm pretty happy with Linux. Now if only they could play the games...
        tkejlboom
    • RE: Android to control half smartphone market, say analysts

      @Johnny Vegas WindowsPhone7 has not been gambled on because Microsoft's (now it's stable, now it's not) attitude towards software development isn't going to fly on phones. Pull something like Windows ME or Vista on a smart phone and the consumer will drop you and never come back. This is what RIM is finding out following a horrendously bad migration from the roll balls to touch display. Plus, let's not forget they got a really late start in the market.

      What may hurt Android though that isn't mentioned in this article is when Google starts promoting Chrome OS. Now you have a single software company producing competing products with the less popular browser playing the favorite son.
      Socratesfoot
      • If they are judged on stability android will come in dead last

        @Socratesfoot and thats saying something with ios being pretty pathetic itself. Stabilty would be the most favorable measurement of all for MS. I'm sure theyd love to have purchases based solely on that...
        Johnny Vegas
      • RE: Android to control half smartphone market, say analysts

        @Socratesfoot and all you others...

        First and foremost... Windows Phone 7 is stable and runs on various different hardware setups... Sound familiar? Sort of how MS owns 90+% of the OS market on various different hardware setups... Yeah bout that.

        Google is not a software creator, it took Linux and tinkered with it as many do. They took what was free and now sell it, to idiots willing to pay for it. Chrome OS? Yeah so they can harness more of what you do and use it against you right? Selling you out so they make money, limiting you to what they want you to do... Yeah fail.

        There is huge momentum and development behind WP7. Between the standard functionality, email, docs, xbox, zune and more they also have hundreds of thousands of developers. It will take no time to play catch up with all the support so far. Google is a gamble and a privacy/security risk. Apple has done well and I believe will continue to do well. Microsoft in the market place will be the added bonus knowing your Windows 7 works with Windows Phone 7 and all other devices tied together.

        As for IE9 the beta has yet to come out but as far as platform previews go they have come a very long way over just several short months. IE9 does support HTML5 among other things where other browsers are falling short. They score 95 of 100 on acid3 as the remaining 5 tests are to be removed when acid4 comes out. You should get your facts strait before looking like an id10t with your comments.

        Microsoft, Apple and Linux... Google doesn't make anything they just sell what is already out there including you.
        audidiablo
      • RE: Android to control half smartphone market, say analysts

        @Audidiablo

        I am probably one of the biggest advocates for Microsoft technologies (Esp. Win7 and MSE); they have the money and expertise to make just about anything happen (READ: Kinect).

        However, I think there is a bit of embellishing for the sake of argument without tremendous fact involved...or at least current events...

        WP7 is very exciting, I agree. I will probably end up owning a WP7 phone as well as retain my Android phone that I use now... The mere fact that they took their own, full phone incorporation as opposed to separate, loosely connected applications and widgets, is intriguing--to say the least.

        I find it amusing when people throw Google under the bus for security or information gathering, as if every other company hasn't done this (either had a security breach or retained information about habits). It's a strategy to improve ROI (Return on Investment) ensuring that the people they service get what they want so that money isn't wasted providing people things that they don't want. You know: Ads cost money... This is why the information is gathered...why the information isn't personally identifiable--they don't care who you specifically are...just want to know what you like. The GOVERNMENT is in that business...not private corporations. Have we forgotten the illegal wiretapping committed by the government? The GOVERNMENT... So let's stop it with the Big Brother stuff. The government is the Big Bro... Period... EVERY company gathers information on you...I can't stress this enough. This is another reason that companies can't "share information" between each other without your consent. That's still the law.

        IE9-PP was very exciting, I admit. It almost hurt my feelings to see the PP smoke my Google Chrome 5. I love GC... However, IE9 takes advantage of Hardware acceleration (which GC5 does not) to accomplish the speed that you praise (and that I admittedly praised). Once the BETA is released, we'll see how it really functions with everything else built in (i.e. security, gui, etc.). The preliminary reviews (predictions, to be more exact) have said that the performance won't be as envisioned, but it WILL be a serious improvement over IE8, and I think that's all we want. I'll be happy to have IE9 as my secondary browser behind Chrome...

        In the end, if you don't like Google--very well. But there are millions of people who appreciate their offerings. As the saying goes, "One monkey don't stop no show"... Furthermore, to confuse a company's business practices with their software's practical performance, usability, and value, is nonsensical...

        Lastly, I find laughable that you find Apple--the Nazi of the IT community--to be great. They make interesting products, but hardly state of the art. Security is a joke on a Mac (leave your MacBook with me for five minutes and I'll have your passwords removed...five minutes because the damned thing is so slow), and performance is sorry (to say the least...and YES--I deal with Macs everyday at work). Software?? Ha... But everyone has their own preferences...mine? Performance/Dollar ratio. Why pay more for less?

        Either way, yeah, stop the emotional rants, and review the article.

        Android controlling half of the market in the foreseeable future makes sense since it's FREE for hardware developers. WP7 seems awesome, yet there's a licensing fee. Microsoft has the added burden of convincing someone to spend money while their competitor is selling theirs, for free... Not impossible to argue, but more difficult, for sure.

        If Nokia and RIM don't have a beef with Google, they'll deploy Android. If they have more loyalty to MS, they'll deploy WP7...or just stay as they are (Nokia in general has a much greater share of the phone market outside of the US, BTW, so the incentive may not be as great as the article would have you believe). If this [US] is a market they want to be more prevalent in, they'll do as mentioned...

        Happy Posting!!
        GSystems
    • Johny Vegas: They really ARE factoring in WindowsPhone7 (and beyond), AND,

      It does not look good at all. That is why there is not much mention. If MS could convince Nokia or Blackberry to go with WindowsPhone7, that would help, but, they will most likely go with the best they can: Android. Of course the best is iOS, but, Apple will NOT sell that to third parties.
      DonnieBoy
      • Nokia already has an Open Source OS

        @DonnieBoy

        In fact, it is by far the king of the Smartphone OSes. So why would they switch to Android?
        PlayFair
      • Once RIM and nokia realize that going it on their own isn't working out

        @DonnieBoy they will switch. RIM will look and see that for the enterprise WindowsPhone offers the best email, best office doc and sharepoint support, best management features, best application verification, etc. They will have the data showing them they're losing their enterprise accounts to WindowsPhone, not android, and they'll make that choice.

        Nokia looks at all that and the bigger consumer picture. this is why nokia is already moving to support Silverlight based apps. There is nothing "best" about android.
        Johnny Vegas
      • RE: Android to control half smartphone market, say analysts

        @DonnieBoy Yup. The key is OEM control. Nokia and RIM are used to building their own OS, and aren't likely to want to ceed that control entirely. But it's expensive, and the rise of Android and iOS have shown they're just not good at the whole big picture OS.

        But in adopting Android, either company could build their particular special sauce on top of the world already done (the work already done that's currently drinking their milkshake). Particularly RIM... no one has ever bought a Blackberry for the OS, they do it for the security services, enterprise servers, and other things RIM puts in for big business. Stuff that could easily be added into Android, since they have the open source access.

        And for RIM, Microsoft isn't even a likely option. It could be, but really, Microsoft never wants to stray past its own technologies. RIM's best stuff is in direct competition to what MS does, and they beat MS resoundingly in the Business Smartphone market. They won't have the source code access they might need, either.

        Nokia could go with MS if they wanted to, but, aside from the lackluster SymbianOS, they've been involved in two Linux-based Smartphone OSs. Maybe their thing with Intel, MeeGo, will have some potential, maybe not. But given the Linux background, Android would be their logical choice, if the others fail. Noika has a strong enough brand that, to an extent, the OS doesn't matter anyway. But for top-level Smartphone success, apps matter.
        Hazydave
    • RE: Android to control half smartphone market, say analysts

      @Johnny Vegas Can't see WindowsMobile 7 getting past previous versions' bloated, sluggish performance and IE9 does not support HTML5 and CSS3. Google then Apple are now the US technology innovators.
      Jtnhumble
      • Wow either pure FUD or you cant read.

        @jtoney3@... There is nothing bloated about WindowsPhone or even the older WindowsMobile. WindowsMobile has actually been running on much lesser hw and is much smaller.
        Also IE9 DOES support HTML5 and supports it MUCH better than and current webkit based browser. Same for CSS3.
        Johnny Vegas
      • RE: Android to control half smartphone market, say analysts

        @Johnny Vegas
        "Also IE9 DOES support HTML5 and supports it MUCH better than and current webkit based browser. Same for CSS3."

        Internet Explorer 9 has yet to pass the Acid3 test, whereas Webkit (Chrome, Safari) gets 100%.
        Theli
      • RE: Android to control half smartphone market, say analysts

        @jtoney3@...
        I'm not sure why HTML5 support is so important now since W3C hasn't even agreed on what HTML5 standard will be. However the previous versions of WM have been less than stellar. We'll have to wait and see with WM7.
        bmonsterman