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The Android step function

There is precious little data on Android units sold. There are estimates but no actual summary. Google themselves don’t seem to know as they don’t report sales, preferring to report “activations.”

Assuming that activations means “unique activations of new devices” then we can draw some equivalency between Google’s reports and the reported units of iOS sold. There is some uncertainty with respect to iPod touch units, but that is not very big (estimates are drawn from Apple’s reporting of overall iOS units at several points in time.)

To estimate Android, I took the download rates currently available and placed them in the month when they were published. I then interpolated the data monthly and quarterly.

To make the comparison more valuable, I chose to index the starting point at the launch of each respective platform and plot quarterly units (or activations). This way we can observe how the platforms ramped in growth and where they were at similar points in their lifetimes.

The following graph results.

There is likely to be more seasonality in Android data than is shown, but the impressive thing is that Android is running at three times the equivalent adoption rate for iOS at similar points in time. In fact Android is being “sold” as rapidly as iOS today even though iOS has been in the market about 15 months longer.

Overall, cumulative units sold for iOS are still about twice as many but if Android will continue to grow as rapidly as it does now, it will likely overtake iOS in installed base in less than a year.

One should be careful about drawing conclusions that this implies effective competition. Both platforms are growing very quickly. iOS is growing at at least 100%/yr and Android’s second year was 65x bigger than its first. iOS growth is limited by the ramp rates of a limited portfolio of products. Android growth is limited by how quickly vendors can bring out products. Neither platform is demand constrained and hence they are competing for share of growth not for share of a fixed pie.

Extrapolation is a dangerous game, but the chart above shows some predictability in Apple’s curve whereas Android has a “step function” or discontinuous feel to it and that’s a curious thing.

Not so much for its lack of predictability but because it’s so asymmetric to iOS.

A dictum of classical physics states that in nature everything is continuous. However, in quantum physics everything is discontinuous. Both models of the physical universe have their uses.

It should be noted that both business models represented above can also co-exist, at least for the foreseeable future.

  • http://twitter.com/_ChrisHarris @_ChrisHarris

    Does anybody know if an activation occurs every time a new device is unlocked or every time a new user joins? The former would imply that there is some level of device churn.

    • http://www.noisetech-software.com/Perspectives.html Steven Noyes

      And Android developer told me was an indication of device Activations and not user activations. He has had 5 Android phones in the past year and that counted as 5 activations.

  • davel

    I am not sure I would readily trust the definition of what Google declares an activation to be. I havent listened to the conference call yet to see what they say, but I read that Page did not stay long. So much for transparency.

    By all accounts Android is growing fantastically, but the lack of real numbers as you declare above makes it difficult to compare apples to apples so to speak.

  • Sue

    How can cumulative counts decline (as between 7..8, 11..12, 15..16 quarters for iOS)?

  • Waveney

    Horace, I'm having a struggle getting to "It should be noted that both business models represented above can also co-exist, at least for the foreseeable future." from what went before, or did you just throw that one in for perspective?

    • r00tabega

      I can answer that for you:
      Both platforms serve smartphones, but whereas iOS was a smartphone-disruptor, Android is turning out to be a feature-phone-disruptor.

      They are ends of the vice-grip that is squeezing profitability out of the market and into the coffers of Google (and other Android players) and Apple.

      At some point there will be no soft squishy center (either one or more big players like RIM/HPalm/Microsoft will toughen up or they will get squeezed out). But that point won't happen for the "foreseeable future".

      It is as likely that the above endgame happens as much as something else disrupts the market entirely (FacePhone?) and forces us to throw out any existing calculations/analysis worthless.

  • Rick

    But, Horace, didn't you tell us that the Verizon iPhone will stop Android's growth? Did you lie to us? :(

    • r.d

      Verizon only covers the US market so it would mean he was talking about
      Verizon #s which verizon will announce. Horace is not dumb enough
      to make that prediction unlike you.

    • FalKirk

      "Horace, didn't you tell us that the Verizon iPhone will stop Android's growth?"-Rick

      I doubt that Horace ever said any such thing. Do you have an actual quote instead of a mere straw man? I suspect what Horace actually said is very different from what you thought he said.

      By the way, the Verizon iPhone has now been on the market for all of two months. Let's wait a bit before we decide what effect it may be having on the U.S. markets.

    • asymco

      Although I don't remember every one of the 784 articles I've written, I very much doubt that I would suggest that Verizon iPhone would affect Android growth. I know the market's size quite well that that would be an innumerate suggestion.

      I may have written that Verizon was underperforming with Android and predicted they would adopt the iPhone but that has nothing to do with 5 billion consumers yearning for smartphones.

      If you do find a quote to that effect, you should offer a citation.

  • Sid

    Tim Cook hinted in January that Apple will be making a low cost iPhone. Am I correct and if so how does that affect future predictions.

    • http://twitter.com/davidchu @davidchu

      I don't know. How did the iPad change the netbook market?

  • poke

    Surely Android maintaining the dramatic growth it has seen over the last year depends on Android being able to add new manufacturers. That is, the growth figures reflect Samsung, Motorola, HTC and LG – all companies with wide distribution – switching to Android. Unless there are more companies of similar size who are going to adopt Android in the future I don't see how the growth can be sustained. None of these companies are themselves showing dramatic growth (although HTC has managed to bounce back from a lull). Future growth would be predicted by the rate at which these companies are moving dumb phone customers to smart phones and growth would be restricted by the number of mobile customers they have overall, since most of them are either not growing significantly or are actually losing market share.

    • unhinged

      I think it is perfectly possible for existing manufacturers to maintain Android growth rates. As has been said several times, Android is largely cannibalizing "feature" phone renewals – "smartphones" account for about 20% of the phone market. Once the smartphone portion of the market reaches saturation we will see slowing growth rates for all players.

      • Hamranhansenhansen

        It doesn't sound right to me that they can maintain the growth rate. Android sort of defined the high-end feature phone space but now Nokia, RIM, and Apple are all coming for them with phone specifically targeted at their core demographic. And there is a big part of the feature phone market that is purely low-end, the cheapest of the cheap, off limits even for Android.

        I think the reason that we don't see seasonality in the Android line in the chart is that it represents all of the current Android carriers waiting for a version that didn't suck. The earlier part is like a countdown, there is pent-up demand, and the later part is that demand being satisfied by Android v2.1 or v2.2 which is where Android came into its own a little bit. Now Google has laid an egg with Android v3, they did Windows Vista when what the handset makers wanted was Windows XP 2.

        Also, they don't get much return business. All the people I have known who had Android phones have iPhones now.

        And finally, we're going to lose an Android handset maker or 2 to bankruptcy. Motorola Mobility getting spun off was not because they were healthy.

        And there are the court proceedings as well.

  • r.d

    What about the apps installed metric that Google trotted out.
    instead of # of apps downloaded.
    They are probably counting all the apps that carriers install for the user.
    If Apple counted the system app then their number would even bigger.

    • http://www.noisetech-software.com/Home.html Steven Noyes

      Doubtful. Google only has insights to new phones being activate to the Android Market and the number of apps downloaded from the Android Market. No reason to think the numbers they "trotted" out are any different than those.

      Carrier crapware would not be counted.

  • http://twitter.com/davidchu @davidchu

    Horace,

    Can you overlay the web traffic share with your graph? The data only goes a year back to May 2010 where Android was at .11% and is currently at .56% for March 2011. That's a 5X growth during that period. As a reference, iOS grew from .81% to 1.87%.
    http://www.netmarketshare.com/report.aspx?qprid=9

  • http://twitter.com/gassee @gassee

    Regarding the "low-cost iPhone" see iPhone Nano or Onano: http://bit.ly/hlmLjr

    • http://twitter.com/davidchu @davidchu

      I agree that Apple is unlikely to change the screen size, but I do think a lower cost iPhone is doable in the future. Unfortunately, we are not likely going to see it in the near future (as in in the next 12 months)

      The two most expensive components for the iPhone is the memory and the screen. iSuppli estimates that these two components make up ~45% of the BOM. This is only theoretical, but once Apple has their datacenter up and running, they could lower the memory capacity and use a lower quality screen like the iPod Touch. Additionally, if they further leverage their scale and accept margins in the 30% range like their iMacs, they could lower the price significantly. http://www.isuppli.com/Teardowns/News/Pages/New-i

      In the end with all things Apple, who really knows? Apple usually leaves clues to what they are going to do in the future, but as for now, all we know is that they recognize that they need to fill this void in the market.

    • asymco

      This has been the biggest (no pun intended) question about the iPhone since it was first announced. I remember trying to plot out the portfolio growth in 2007 and asking if they will launch a nano and mini on the same time frames as they did the iPod variants. It may be inevitable, but timing is everything.

      • LTMP

        I may be looking at it wrong, but wouldn't you consider the iPhone 3Gs as Apples current "cheap" model?
        Since a large majority of the cost of ownership of a smartphone is the data plan, I don't expect to see an iPhone Nano.

        What I am hoping for is that Apple will once again be disruptive, and follow through with their patent for a service which would, effectively, allow an iPhone user to find the best rates available from local carriers.

        Commoditizing the carriers would make all smart phones less expensive. If Apple can pull this off, and keep it too themselves for a year or two, they could make huge gains anywhere they can implement it.

      • LTMP

        Here's an article about the patent. http://www.tuaw.com/2011/02/10/apple-patent-would

      • Addicted44

        iPhone 3GS are not cheap. It's ~500 without a contract. If apple really wants to corner the smartphone market they need to release a $200 iPhone without contract. T is absolutely possible because they already do this with the iPod touch.

        The question for apple is that this would certainly hurt their iPhone ASPs. Do they believe the increased sales would compensate for that? I think at some point if this kind of android growth continues apple might be forced to do that.

        I think one of the things tha migh really help apple is an ipad2 like strategy. Release a new phone with a different form, with a have 2 buy cover . The 50-70 bucks they can charge for that would help asps and margins tremendously.

      • LTMP

        point taken.

      • Iosweeky

        An obvious prediction would be an "iPhone Air" device: slimmer, smaller bezel, less storage (compared to iphone 5), smaller battery, no 4G, less powerful camera, lower clocked processor (to conserve the thinner battery) – Same screen size & resolution, same iOS, same great selection of apps & media. $399 unsubsidised, free on contract.

        Much like the MacBook air vs MacBook pro (lesser price, lesser specs, but actually more attractive to a particular market segment that would never have purchased the pro model.

  • Bill

    Keep in mind the Iphone was launched in a market that was still cold to this sort of 'smartphone'. It was unlike anything else at the time. Of course, adoption would be slower. When android came out, the market knew the 2 primary players were present and the waiting game was over to purchase. True, the iphone is the higher price option but it is still the leader in the us. So, price must not be that much of a factor. If a lower price iphone were to be released, I'd predict the spread between to greatly increase. Unfortunately, that's not apropos for Apple.

    I would prefer to see current numbers rather than post launch numbers. That would paint a more accurate picture as to which one is more popular.

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  • Guest

    Why is the obvious detail of the number of iOS vendors (1) and the number of Android vendors (20) not presented? How is this not relevant? How?

    • asymco

      It's more than 20 vendors and the number of devices might be a better indicator (several hundred). See pdadb.net.

      It's not a matter of relevance. I am not evaluating performance per device or economic value for vendors. I am highlighting the difference in growth. I think it's notable, perhaps it gives a clue to how the industry will change.

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  • relentlessfocus

    I continue to find the Android v iOS debate meaningless.
    1) Steve Jobs pointed out that there are 2 phases to the smartphone market. We're in phase 1 right now. The market itself is growing. It's not a zero sum game. There are at least 2 and possible more "winners". In phase 2 the smartphone market will be saturated and new phones will be bought to replace older phones. At this point it becomes a zero sum game.
    2) Even when we reach the zero-sum Phase 2 stage, the phase which the PC market is in, it doesn't signal the end of the fight. It signals the beginning of the zero sum game fight. Innovation, useful features wanted by the masses and user friendliness still will come into play. Just look at the PC market. Apple dominates the high revenue areas of the market while market share leaders like Asus are rethinking their strategy. Because you can't buy a cup of coffee with market share.
    3) Android doesn't actually have revenue, the handset makers using Android have revenue. Here we see a much different picture of the "power" of Android. Motorola Mobility is losing market share and revenue. LG keeps making reference to Android not being a good or healthy long term prospect for handset manufacturers and is now eyeing MeeGo (go figure). HTC, the one company doing really well with Android has just updated Sense to differentiate it from the other clones (differentiation = fragmentation). Sony is struggling and its phone division is in the red. And so it goes… Meanwhile Apple is making more in revenue from the iPhone than Google makes from all revenue sources (yes all, including advertising!).
    4) the future probably won't look like the past. There may be new OS entrants, there may be new innovations that allow one handset or os company to dramatically change its market/revenue share. Unfortunately there exists a kind of a sports team rooting mentality which looks at smartphone sales and which wants to declare "a winner" . Life isn't like that, business isn't like that. Just ask Compaq, Osborne, Commodore, Atari… If you put your money on a firm which has continually out innovated its rivals, you'd be putting your money on Apple long term.

    There are many reasons which *could* point at Android growth slowing including a bevy of lawsuits (see Foss Patents), the introduction of the iPhone on Verizon, Android fragmentation, the difficulty that handset makers have with differentiating their products and not being sucked into the race for the bottom which may yield Android high market share numbers but kill any profit making firm which touches it, and the introduction of new competition into the market place (WebOS and WinPhone7 come to mind, MeeGo is a potential free alternative if it gains traction+.

  • unhinged

    What I find interesting is that it took ~6 months for Android to hit explosive growth. I think there are a number of things that can be drawn from this:

    1. The explosive growth took off after the hardware manufacturers went completely touch-screen. The initial Android phones were much more like Blackberries than the iPhone; after about 6 months of lukewarm sales they started making copies of the iPhone.

    2. Android in and of itself is not desirable, nor is iOS. The hardware is desirable, but the overriding factor in the purchasing decision is the perceived utility (ease of use, app availability, etc).

    • Hamranhansenhansen

      No, the hardware is not desirable. The device is desirable.

      Consumers don't know what operating systems their phones run. Not just consumers with Android phones, but consumers with iPhones. The hardware is not the platform; the device is the platform. Consumers do not buy an iPhone to run iOS, they buy an iPhone to run Angry Birds. Consumers don't buy a Samsung phone to run Android, they buy it because it was free and the guy at the carrier store told them it is just like an iPhone.

  • sciwiz

    It looks like a step function because for the first six months of it's life, the only reputable phone that had Android was the TMobile G1. Then came November 2009 and Verizon got on board with the Motorola Droid and then activations skyrocketed. Check out this video made by Google to see the correleation between device launches and activation rate.
    http://www.engadget.com/2011/02/24/visualized-and

    • XZX

      And in addition Apple's first iPhone iteration could benefit from Apple's historical market reputation and trust in the company, while Android had to start building its reputation from scratch. The Droid as well as other 2.1 hits like the HTC Desire and some key apps ensured Android's credibility and then the rocket took off.

  • http://www.noisetech-software.com/Home.html Steven Noyes

    Does not change what is counted as an "Activation". Based on someone working closely within the eco-system, it is a count of unique device with access to the Android Market and not the count of users with access to the Android Market.

    Being a bridge device has little to do with the OP's question. That said, this is not a guarantee that it is no the number of users with access to the Android Market resulting a slightly different answer. Each is interesting in its own way. NOTE: Oddly, well over 1/2 of my friends with Android phones are on at least phone #2.

    • http://twitter.com/davidchu @davidchu

      Sorry for diverging on the original post. I think we can all agree that Google's method of reporting Android metrics leaves a lot of gray area. In the past few weeks we've been reminded by the Flip of how fast a product can rise and fall in the consumer space.

  • relentlessfocus

    Of course I've been giving a lot of thought to an argument that I find to be meaningless.
    A) I hear it from others and see headlines about it every place I turn, it's even headlines in the NYTimes regularly
    B) to determine that the argument is meaningless I had to think about it to understand it.

    How do you arrive at conclusions?

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  • Addicted44

    Horace do you really thing the discontinuity is curious? I cannot be sure, but I wouldn't be closeto HR died if the discontinuity did not occur exactly when veerizon started it's droid campaign.

    Android isn't going to be stopped because it will do very well internationally (ESP china, where android sells, but is probably nothing like the android phones we see here) but the Verizon iPhone will hurt android sales in the us at least. Although this has been tempered by its mid iPhone cycle release. The floodgates are really gonna break with the release of iPhone 5 (this assumes that iOS 5 is the big step forward I expect it to be)

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  • gctwnl

    In quantum physics 'measurement' (for want of a better name) is discontinuous. Reality is just weird (i.e. degenerate, like stuff being in two places at the same time) and so probably even less discontinuous than in classical physics.

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  • martin

    wouldn't it be useful to account for when Android appeared on the curve of smartphone penetration of allphones. they must have had tailwinds from the accelerating info and hype around smartphones. Look forward to your thinking

    Marty