iPhone's Market Share Gains Cut Into Android's Smartphone Dominance

smartphone wars

Apple naysayers love to point out the growing presence of Android-powered smartphones. Apple fans counter with a reminder that no one Android phone outsells the iPhone. Apple, meanwhile, is quite happy just to be making more money than everyone else. It's true that there are more Android phones out there, but just last quarter Google's smartphone OS experienced its first loss of market share in one region since 2009, and industry analysts Needham & Co. suspect it's "just the beginning of Android's share loss in the U.S."

Google's U.S. smartphone market share slid from 52.4% at the end of 2010 to 49.5% at the end of the first quarter, Needham analyst Charlie Wolf noted. That may have a lot to do with the arrival of the iPhone from Verizon, the biggest carrier in the U.S., since Apple's U.S. market share jumped 9% in March, while globally its share remained flat.

If Apple actually has a radically overhauled iPhone 5 on the way, rather than a simple "feature bump," it could indeed give Apple further advantage over Android—especially since the mid-cycle launch of the Verizon version was out of step with regular iPhone updates, and a "substantial percentage" of would-be Verizon iPhone owners could be waiting for the arrival of the iPhone 5, according to Wolf. There are also rumors that a Sprint and T-Mobile edition of the iPhone will arrive to coincide with the iPhone 5 launch in fall, which would further goose its market share.

In fact, Wolf thinks that a late-year arrival for the iPhone 5 will zap Android's next-quarter results, and that Apple may expand its market share not only domestically, but also overseas, where featurephones usually are the best-sellers.

Apple could add to its momentum by launching a much cheaper version of the iPhone 5, the long-rumored iPhone "Lite," which Wolf thinks Apple COO Tim Cook has hinted at recently. There are tiny hints this may happen buried in some recent Apple developer code for iOS. The code specifically mentions several future iPhone and iPad IDs, but no iPod Touch. And remember Apple was said to be handing out an iPhone "4S" that had the same design as the current phone, but an upgraded A5 CPU inside.

Does Apple actually plan to drop the Touch and replacing it with a cheap iPhone? It's certainly possible: The Touch is essentially an iPhone without a 3G radio. Add the right chips and antenna, keep costs down with smaller memory (easy to do now that cloud systems have arrived) and a plastic rear case, and, voila: iPhone Lite.

Need more proof that the iPhone is dominating? Try this one: the iPhone has just become the number one camera used to submit pictures to Flickr, surpassing even the ubiquitous Nikon D70 and Canon's Digital Rebel DSLRs. If you limit the criteria to cameraphones alone, Apple's three previous iPhone editions occupy the top three slots.

So, we have evidence the market has a desire for a new iPhone, proof that Apple can encroach on Android's market share, and suggestions that a new iPhone Lite is en route to capture the cheaper market. Of course, Apple is enigmatic at the best of times, and it could choose not to launch a downmarket iPhone because it doesn't want to cheapen the experience. But the iPhone 5 alone could be a runaway success by itself, leaving plenty of room on the market for the iPhone Lite.

[Image: Flickr user nrkbeta]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

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