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Yesterday the Nielsen Company reported that for the months of November 2010 to January 2011 Google's Android operating system’s market share has pulled ahead of Apple and RIM with 29% of the smartphone sales in the U.S.

As with most things, when you look behind the curtain there is more than meets the eye — and in this case we don't find a happy, content Android family, but one fighting for its smartphone life.

Android Family Worries

1. The Android Developers Union - It’s not often that unions are found in the tech world, but this is no ordinary union. It is Android developers uniting against Google concerning conditions in the Android Marketplace. They make seven specific demands against Google. While Apple iOS developers have complained from time to time about the approval process, we have never seen this kind of uproar. At least Apple iOS developers are making money! If Google is truly treating their developers like sharecroppers on an 18th century southern plantation, then one can see the financial health of the Android platform is erratic at best.
2. Android’s 29% market share is splintered - HTC is the "winner at 12%" and Motorola is a close second with 10%. The question is can either of these handset manufacturers make enough money with such relatively small market shares? In addition, we know that market share is only one piece of the puzzle. If HTC and Motorola are acquiring this market share with "Buy One, Get One Free", the gimmicks or $49 fire sales, then they are paying a steep price to build market share with no other revenue stream until the next smartphone purchase. This is not a strong business model.
3. Serious competition looms around the corner - The Android platform is like Daniel's dream of a Nation made from Iron and Clay — strong but very brittle. Microsoft with Nokia and HP's webOS will soon enter the ring and we have to wonder whether such an odd duck as the "Android Family" will be able to survive the punching of either of these two tech giants.
4. This data is BEFORE the Verizon iPhone launch — It will be very interesting to check back in three months to see how this chart looks then. The iPhone-Verizon combo is going to really hit Android hard. I know of several people now sporting a new iPhone with the Verizon network. Before they were Nokia or Android owners. I don't see many iPhone customers going the other direction.

While Apple is not immune from competition, it has a financially sound 27% market share — and is sharing it with no one. Moreover, Apple makes money at the point of the smartphone purchase, with each AppStore purchase (movies, books, apps, whatever), with AppleCare warranties, and of course, when selling their hardware cases and add-ons. Apple has multiple opportunities over the life of the two-year contract to continue generate revenue. Google and its Android partners can only dream about such a wonderful world of abundant revenue.

2 Comments

1. WikedWinnah ~ March 4, 2011 21:49
   This is a very good article which shows a truthful breakdown. However, I think it bears mentioning that the "Overall Market Share Percentage" for HTC, Motorola, and, Samsung would be 3.48%, 2.9%, and, 1.45%, respectively. This reiterates your whole point. Why do people group all Androids together? That's similar to grouping all Unix systems together. Unix systems are similar but not the same. Why Androids? Stocks trade on earnings so I wouldn't buy HTC or Motorola stock at this time. It's obvious they aren't making any money. Now if Google took ownership like they were suppose to, perhaps this would look very different.
2. J Graham ~ March 7, 2011 20:10
   What exactly is being compared here, phone manufactures share or OS share? If comparing OS to OS then that's welcome, but it's more than obvious that "Apple Wins" when comparing broken down by manufacturer. Please backup point #2 one or two facts instead of just speculation. I agree with the point about Verizon, we'll see where that goes. In the end I don't think Android has anything to worry about.

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