Without Verizon, iPhone on track to start eating Google's dust
Summary: Google is seeing such strong momentum with Android that it's on pace to overtake Apple's iPhone globally - unless Apple can kick it into gear and get the iPhone on multiple carriers worldwide.
Apple isn't playing catching up in the mobile space just yet but if things stay at the current tick - and all signs suggest that things will move even faster than expected - Google's Android will become an even bigger threat to the success of the iPhone.
That's the word from Bernstein Research analysts Toni Sacconagh and Pierre Ferragu, who say that Google is on pace to overtake Apple's share in the next five quarters unless... well, you know unless what. Yup, Apple needs Verizon in the U.S.
According to a report on Barron's Tech Trader Daily blog, the analysts say that one of the key reasons for Android's success is because the iPhone is still a one-carrier device in large market countries, notably the U.S. Sure, Apple's device may be available through nearly three times as many carriers as Android devices globally - but Apple needs deals with some of the world's largest carriers if it wants to keep from being run over by Android.
There have been rumors for longer than most people can remember that a Verizon version of the iPhone will come to market next month or next quarter or next year. Of course, those days never seem to arrive. And because of that, potential iPhone customers - myself included - grew tired of waiting and discovered Android. Many of us are now locked in among the Android faithful. Still, even if Apple releases a CDMA version of the iPhone early next year (the latest rumor), there's no guarantee that it will be with Verizon. Why? The answer is in this quote from the Bernstein report:
We believe Apple needs to strike distribution deals with these carriers, even if it has to sacrifice some pricing power since doing so would still be accretive to company gross margins, and take away the strong foothold it currently provides to a potentially formidable competitor.
Even if it has to sacrifice some pricing power? Apple? Steve Jobs? Ha!
It was widely suggested way back when that the iPhone wasn't on Verizon to begin with because Jobs and company couldn't cut a deal with Verizon over control over the iPhone's apps. Has that changed? Is Steve Jobs willing to cut that sort of a deal to get his mighty mobile device on the shelves at Verizon stores? Is Verizon willing to cut such a deal, considering the traction with a lineup of high-profile Android devices, such as the Droid, Droid Incredible, Droid X, Droid 2 and others?
The analysts note that the daily run-rate for Android phone sales has more than tripled in the last seven months, jumping from 60,000 phones per day to 200,000. The estimate is that 53 million Android phones will ship this year and that Android alone will drive the entire sector above its projected growth.
Oh, and the analysts also warn Symbian and RIMM to either step up their game - and fast - or risk "an accelerating erosion" of customers who will eventually migrate toward other platforms. No mention of Windows Mobile 7 or HP's WebOS, which it obtained when it purchased Palm.
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Talkback
Not because of Android
Maybe Apple will be perfectly happy with market share mirroring OSX
Mobile computing is not like pocket music players, a relatively simple niche marketplace where one company had a chance to dominate. The mobile communications and computing platform is just too gigantic and pervasive and vital and important to the world market for one company to have that kind of exclusive control and dominance.
Still, complete control of even 10% of the world mobile computing environment is more than enough to keep Apple handsomely profitable for many years. It's a good plan for profits. It's just not a good plan to control significant market share. Their main problem will be to maintain developer interest, in the same way that Mac OS and Linux have trouble attracting all the best apps with their limited market share.
I don't think we have an argument here.
But I'm curious, why do you NOT think that is what they had in mind? I mean, clearly, they could own the market if they wish, but they don't. Why?
Profitability or Market Share?
I think we all know that Apple is more interested in dominating the profitable segment of a market that it competes in than the entire market itself. Like you say, there are too many other big players out there and the great majority of the market needs the cheap low-margin commodity stuff. Apple is not interested in supplying $300 computers and free throwaway feature phones that come with a carrier contract.
Apple's global handset market share is only around 3% but the company rakes in nearly half of the operating profits. It's similar in the global PC market where Apple's share is only 4% (around 9% in the US) but Apple's profit share is estimated to be around 35%. It comes down to: would you rather sell 1 million units of something to make $100K or sell 100K units of something similar to earn $1 million. Apple chooses to do the latter because they can provide a unique user experience through the software/hardware integration and carefully crafted and maintained (i.e., "closed") ecosystem.
So it's obvious that Apple is not interested in scraping the bottom of the barrel in either the mobile or PC markets. Actually, all of Apple's competitors want a bigger piece of the high-end pie since that's where the high-margin profits are. After all, they're all in it to make money. They would *all* prefer to be in Apple's position of raking in such profits but they know they can't, so they have to provide more features for less money if they're going to sell their wares.
Pressure is on Apple to maintain their position as being the innovative leader in the markets they compete in. Whether perceived or real, this position is absolutely vital for Apple to maintain their margins and the critical mass necessary to keep the developers working on the iOS/Mac platform. Apple isn't interested in majority market share. They'd have to completely change their business model to play that game and Apple just isn't built for that. It's about being perceived as a high-end alternative from the mass market mainstream, which is exactly where Apple sits in the PC market.
More so than gaining market share, Apple needs to stay one or two steps ahead of the competition for them to continue charging the premium that consumers are willing to pay for what Apple offers. Being a "leader" is much more important to Apple than being seen as the "biggest" or selling the "most." It's a fine line that Apple has to walk on since market share does matter in terms of maintaining developer interest but, ultimately, being on the cutting edge will be more vital for Apple to maintain its "cool" status and high margins.
What works in Apple's favor is that technology is relatively cheap to the consumer these days. Whatever you get now (whether that's a new iMac or an iPhone) will be so much better than what was available just few years ago. Sure, the same goes for the PC and all the other phones, but people are willing to pay a little more (relatively speaking) for something that provides a great value compared to, say, putting in a new wooden storage cabinet in your garage ($2K+).
RE: Without Verizon, iPhone on track to start eating Google's dust
RE: Without Verizon, iPhone on track to start eating Google's dust
that noise? oh it's just your hypocrisy.
options
But I thought the whole theory behind android...
I am not denying that Android isn't compelling platform, I myself am considering getting an Android phone, I just don't rule out a product because of the company that produces it or the CEO behind it.
Android and the iPhone are both great products, I would consider buying an iPhone, but the cost of the plans and data are too restrictive, where as I can get a Android based phone from Sprint and get the simply everything plan that is nearly half the cost of ATT and Verizon, and still get 3G service.
Won't Help
People are now talking about Android. iPhone buzz is evaporating. People are figuring out that iPhone = control and less freedom.
Sorry Apple. You'll always have a market with with your faithful subjects but there is no stopping Android. Having used both I can say that Android is superior in many ways.
RE: Without Verizon, iPhone on track to start eating Google's dust
And having used both, my Android Incredible is crap compared to an iPhone.
are you serious?
RE: Without Verizon, iPhone on track to start eating Google's dust
In short, you're talking a 95% decline just at my office... of course Jobs will try to blame everyone else for his failures as the Galaxy Tablet erodes the iPad market share through the holidays.
When Peter Perry
When people like this start grandstanding about the 20 people they know with iPhones, you can tell they are laying on the BS.
The reality is that the average consumer only change devices based on either cost, carrier, or some serious flaw in the device or service provider. Has little to do with brands and the iOS vs Android c*ck measuring.
Personally I love my iOS iPod Touch device, and would really like the iPhone, but as a consumer ATT is too pricey for me as is Verizon, where with Sprint I can save a quite a bit and still have a modern Android phone.
RE: Without Verizon, iPhone on track to start eating Google's dust
Android has no quality VNC applications, that allow full control for extended sessions. My server's backup software has a iphone app to do restores and start backups, no android one.
the unreal gaming engine is being ported to iOS, not froyo. If you think these software advantages aren't huge, than why are you commenting here?
http://mashable.com/2010/09/15/unreal-iphone-ipad/
RE: Without Verizon, iPhone on track to start eating Google's dust
Research before posting ignorant comments
Also learn from lipmonger
RE: Without Verizon, iPhone on track to start eating Google's dust
Free navigation, googles full suite of location apps, a real desktop on the phone that "I" can customize, a taskbar, I can go on.
Then there's the puritan crap apple plays with its users, if I want porn, jobs should have no say in it, period. end of story. Censorship is bad in any form.
I have a nexus one and my GF has an iphone, I am amazed at how crippled and limited the iphone is, it's like a toaster, it does a few things well but android does EVERYTHING well.
GIF
>> Android has no quality VNC applications
http://www.appbrain.com/search?q=vnc
>> the unreal gaming engine is being ported to iOS, not froyo.
http://www.droid-life.com/2010/09/15/unreal-engine-headed-to-android/
I could have replied to the rest, but lipmonger already did a good job of that.
RE: Without Verizon, iPhone on track to start eating Google's dust
RE: Without Verizon, iPhone on track to start eating Google's dust
Forget market share. It's profit share that Apple is after and usually gets. Android users can keep their $50 smartphones of the month. They're just wasted activations. The smartphone industry is a business and good businesses make money for shareholders. Android doesn't earn a thing for Google or developers. Android market share is growing in size, but it's hardly worth anything. It'll grow to a certain point and then just fizzle out when Google gets tired of maintaining it for free.