iPhone vs. Android: The battle of Manhattan

All the big smartphone trends indicate that the iPhone is losing dominance. It may still be the norm in San Francisco and New York, but these places are probably a lagging indicator of market trends.
Written by Larry Seltzer, Contributor

Analyst reports yesterday confirm a trend that has been long-recognized: Android phones are gaining smartphone market share rapidly. The days of this gain coming at the expense of BlackBerry and other lesser brands are over, since they're all small potatoes, so it's coming at the expense of the iPhone.

We know a few things about these market trends: The iPhone still seems to be dominant in wealthier areas, while Android is the new norm among the more common folk, and especially in emerging markets where BlackBerry was once the norm.


But there's more to it than income. This past Sunday I made a trip by train into Manhattan and visited the Lower East Side. I always look at the phones people are using. Counting Penn Station, the Lower East Side and the subways in-between, I saw about 10 iPhones for every one of something else. You can't really tell just by looking, but few of these people appeared wealthy. It's my experience that San Francisco is similarly iPhone-heavy.

There are plenty of high-end, expensive Android phones that cost as much as an iPhone, but in macro sense what sticks out about Android is that you can get dirt-cheap phones running it. And yet, there's something in the local culture (or maybe the water?) of Manhattan that drives even starving artists to the iPhone.

There can't be any better word for it than 'fashion'. Let's face it: Residents in Manhattan and San Francisco are used to overpaying for things for the privilege of being where it's at. The iPhone is just part of the uniform.

Another mobile phone trend we've heard recently is that the high-end of the market is running into resistance. Users aren't upgrading to the newest, best thing out there with the same gusto they had in recent years.

I can relate to this. A few months ago I bought a Samsung Galaxy S4, and I'm not using any of the new fancy stuff like its ability to follow your eyes and scroll appropriately. I may as well have bought a Galaxy S3 and saved $100. In my town I know a lot of iPhone users, and even those who recently bought them bought a 4 or 4S to save the $100 or $200. It's good enough, even if (as I would argue) the iPhone 5 is a much better smartphone than the 4S.

All this just confirms some more conventional wisdom: the iPhone is a luxury item, like a Mercedes Benz. Such products can be very successful, even if they're up against Lexus and other luxury brands, but that doesn't help them against the vast majority of users who can't even think about spending that much.

Apple is responding with a lower-cost iPhone, due in the Fall, but this is treading on dangerous ground. Luxury brands run the risk of cheapening their image if anyone can afford them.



And yet they have to do something. As my Editor in Chief Larry Dignan pointed out recently, about half of Apple's revenue comes from the iPhone. They can't afford to be shy about protecting that.

Based on what I've seen so far from iOS 7 and the rumor mill, I don't see them being able to protect the iPhone in the long term. They're going to need to come up with something new and different again, like the iPhone and iPad were when they were new. What can they possibly do in the iPhone 6 to grab the attention of people outside of Manhattan and San Francisco? It's hard to imagine.

The real turning point will be when some other brand becomes acceptable in the polite societies of our great coastal cities. When I start seeing a lot of Samsungs on the subway in New York, then I'll know it's all over.

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