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The third ecosystem. What are the odds?

The latest survey from ComScore breaks down the installed base of specific mobile platforms in the US. Tracing the data over time shows the following charts:



In the last month Android gained about 2.9 million users, iPhone 1.3 million, Blackberry lost 530k users and Windows held on with a gain of 132k. Other platforms had a net loss of 95k users.

In the last 12 months, Android gained 25 million users in the US. iPhone gained 9.5 million while Blackberry lost 3.2 million and Microsoft lost 1.6 million. Other platforms had a net loss of 1.2 million.

The total net gain of smartphones was about 29 million new users.

RIM switched from being a consistent net gainer of users to a consistent net loser of users in October 2010. Windows Phone is showing signs of holding the line on user base erosion but share remains below 5% (now at 4.7% vs. 4.6% last month). To put the mountain-sized hurdle in perspective, Android now has 7 times more users in the US while iPhone has about 5 times more. To become the largest mobile platform in the US, as some analysts are predicting, Microsoft has a 12:1 disadvantage that looks to continue to grow.

Those are some pretty tough odds.

  • http://blog.nextblitz.com gzino

    great presentation of data, as usual, thanks. and current may be even more in favor of android and iPhone (mostly at Blackberry’s expense) since likely the stats lag what users *really want* due to users waiting for two-year contracts to expire before switching?

    • http://twitter.com/cf_torchie Kyle Reynolds

      We’ve gone through enough cycles for people to:
      2G: Terminate their contracts or start new ones
      3G: Wait out their Windows Mobile/Palm/Symbian/Blackberry contracts
      3GS: Decide to renew their 2G contract
      4: Wait out their first generation android contracts.

      • http://blog.nextblitz.com gzino

        I’d be curious what the number are.

        On smartphone side, how many enterprise IT groups didn’t support anything other than Blackberry for corp mail synch until the last couple years, meaning their BB users did a new 2-year contract in last year or so?

        On non-smart side, how many people are only now ready to go to smartphone, but renewed at some point in past year?

      • Anonymous

        Let’s not forget that BlackBerrys continue to do the job they were originally hired to. If high-productivity text and email is what you want, they’re better, cheaper and lighter-weight, all in one.

        I recently chatted with an ex-BB user in the TSA line; she was unhappy that she got psyched into getting an iPhone, especially because of the missing keyboard. Two minutes later it reset, asking to be plugged into iTunes, effectively bricking it for her. Meguesses she’s using a BB today.

      • Anonymous

        Also how many people were on a carrier that didn’t have the iPhone, or any of the better android options. Or if it did have them, didn’t promote them.

        People don’t necessarily get the phone they want, all too many get the phone they’re sold.

  • Anonymous

    I’m guessing a 3rd ecosystem needs a killer feature on top of what the forerunners already have made standard. Apple’s was content, apps, ease and cuteness. Android added form factor and price choice… MS might get Windows/Office/Work in general integration, webOS might have gotten desktop integration and device synching.. I’m a bit at a loss about RIM and Bada.

    • http://aegisdesign.co.uk Shaun Murray

      RIM has always been BBM and push email. It’s oddly gaining users in Europe now because of BBM which is popular with kids and ‘tweens’.

      • Anonymous

        What kind of Europe are you referring to? From what I saw this trend is restricted to the UK.

    • Anonymous

      MS also stress the importance of breaking down the silos between the apps, ie. makink the apps communicating between themselves, and displaying information contiously using the live “tiles”.
      Somehow, they have delievered that by integrating Facebook deep in the OS.
      So to me they seems to name their Metro UI as their killer-app.

      • Anonymous

        I had my first experience with Metro in the Mall last weekend. From Home to People to a person to an SMS, I had to rotate the device twice, as I recall it. I suppose somebody who is used to typing 98333 on a dumb phone might forgive that; my thought was not “killer” but DOA.

    • http://wmilliken.livejournal.com/ Walter Milliken

      The need for a killer feature was my first thought, also. “Me too”-ing iOS and expanding into its distribution and pricing gaps isn’t going to work again, Android’s already taken that niche. I’m not a big Microsoft fan, but it looks like this time they actually have the right idea — what’s needed to drive a different platform in this market is a different UI model of some sort, one which has some compelling advantage to a significant market. I don’t know if WP7 is actually good enough to do that, but it does look like that’s their attack vector.

      At the moment, only the business market and the social interface model appear to me to be potential places to make inroads.

      RIM doesn’t seem to have held the business market, and I’m not sure Microsoft is going to capture it. I’m having vague thoughts that someone like SAP or Oracle could make a compelling business tablet, if they somehow found something beneficial in selling the hardware rather than just riding a platform like the iPad. Data exchange between apps *might* be the issue here, though they may be happy enough with an “all-in-one” app tied to their database ecosystems, or handling data exchange through their server products.

      WP7 seems to have gone the social interface route, and appears to be trying to organize data around shared indexing values (e.g. people) rather than by application data type/usage like iOS does. I think iOSes data-type stovepipes are a profitable line of attack for a new platform architecture, but breaking down the walls definitely raises privacy and security issues that seem to be driving Apple more and more into the data-type stovepipe model. iCloud, from what little I’ve seen, may be working to eliminate this stovepipe barrier weakness, however, so the opportunity may be small.

      The main thing is, to get a foothold, I think a new platform has to do something significantly differently architecturally than iOS, in a way that enables really useful new applications/services, ones that simply can’t be added easily to the iPhone/iPad as software or hardware upgrades.

      Android, due to its wide-open low-level architecture, might be positioned to copy any new architectural models, though. Here, the key disruptor might be some kind of cloud/mobile device power or performance tradeoff that would require duplicating both the mobile device hardware and software as well as building out a cloud service, or possibly reorganizing the guts of the OS to enable efficient operation of a key function (as Apple has done in several parts of iOS). Google seems to play in this cloud/device tradeoff space at times (e.g. Google Goggles, voice recognition), but it doesn’t seem to have become a compelling differentiator for Android, probably because Google’s business model is based on the cloud side, and they have a strong benefit to putting services on the iPhone as well as Android phones.

      • Anonymous

        The problem for people trying to build a 3rd platform is that not only do they need enough of a killer app to get consumer interest they need to convince the carriers of that consumer interest, and most likely they need to do so well in advance of the consumers actually being interested.

        Apple was able to do that because it launched the iPhone at a time when the competition was terrible. Android was able to do it because a lot of consumers couldn’t afford Apple and carriers needed an alternative.

        But for another player to come in and build both consumer and carrier interest in that way is going to take something really amazing.

    • Anonymous

      Apple’s killer app was App Store.

  • http://twitter.com/cf_torchie Kyle Reynolds

    It’s that third runner platform stink. Everybody says it’s so beautiful and it’s got potential and they grade it on a curve and once x or y happens they’ll reeeeally be in business this time for real I swear, and then they turn around and buy an Android.

    Either Microsoft and Apple legally dismantle Google’s platform, Google kills it of its own $12B folly, or all third platforms die, it seems.

    Shame we’re reverting to another duopoly instead of a rich landscape. I mean, there are five corporations aiming for “third place” and failing.

    • Anonymous

      But we have W3C HTML5 for universal Web apps, ISO MPEG4 for universal audio video, ePub for universal books, OpenPDF and OpenGL for universal graphics, TCP/IP for universal networking, C/C++ for universal native apps, Unix for universal plumbing. These things enable us to address the entire world of users. Mac, iPad, or Windows PC, they all run HTML5.

      And Apple or Microsoft is a profound choice. They could not be more opposite in every possible way. Why do we need more than one Apple and one generic ecosystem? Nobody but Apple is inventing anything anyway.

      • http://twitter.com/cf_torchie Kyle Reynolds

        Wouldn’t it be nice, though, for there to be more than one inventor?

  • Tomlawler

    MSFT might just be banking on litigations from itself, AAPL, and Oracle to dismantle the doubtfully legal android future. Then MSFT might hope to fill the vacuum…

  • r.d
    • http://aegisdesign.co.uk Shaun Murray

      Those are browsing habits worldwide, not USA only smartphone owner share. Very different stats. Interestingly though, 20% of browsing is done on Java ME phones?

      • Anonymous

        We’re not talking about market share, we are talking about ecosystems.

        In the first place, ecosystems don’t care about analyst terms like smartphone or media tablet, they are about activity. So the fact that the iOS installed base is double the Android installed base contributes to a much more active ecosystem on iOS.

        Secondly, if I buy an phone and use it only for voice calls and SMS, the only ecosystem I am participating in is the carrier ecosystem. Doesn’t matter if it is running Android or what. I don’t know or care. That is a lot of Android devices. iOS devices, on the other hand, are being used as computers, to run native iOS apps and HTML5 Web apps and to buy and enjoy music and movies and books. That activity is the thriving ecosystem, not the devices themselves.

      • Narayanan

        Even after discounting higher levels Apps usage in iOS, this chart clearly shows that iOS users are spending a lot of time in browser/search. I wouldn’t be surprised if Google makes more eyeball revenue off iOS that Androids.

        This also makes the above point about zombie Androids quite likely, further implying that this indifferent generic space is still up for grabs, by Windows, WebOS or iOS.

      • Narayanan

        Even after discounting higher levels Apps usage in iOS, this chart clearly shows that iOS users are spending a lot of time in browser/search. I wouldn’t be surprised if Google makes more eyeball revenue off iOS that Androids.

        This also makes the above point about zombie Androids quite likely, further implying that this indifferent generic space is still up for grabs, by Windows, WebOS or iOS.

      • Drericl

        Personally, I am seeing johns point.

        I have had an I phone for three years but got an IPad this summer.
        Slowly but surely no longer use my iPhone for much more than calls and now whip out the pad for everything else.

        I am still only on the iOS system however.
        I could even see going back to a basic cell and having the pad with me at all times

    • Anonymous

      Using the geographic filter at that site, iOS has a 61% to 31% advantage over Android in the US (at least based on these Web-derived statistics).

    • John

      If we’re using the word “platform”, then the netmarketshare.com numbers are clearly more appropriate. There’s much more to the iOS platform than phones (and, conversely, there’s little more to Android than phones).

  • http://aegisdesign.co.uk Shaun Murray

    The ‘odds’ of Microsoft succeeding in becoming the third ecosystem are surely tied with Nokia selling lots of Nokia Windows phones.

    The problem there is that Nokia is perceived as being a dumphone brand in the USA, a tired brand in Europe and Nokia = Symbian/S40.

    It’ll be painful watching Nokia and Microsoft trying to change those perceptions in the USA and Europe.

    Personally, I hope they fail miserably and Nokia (or their successor) gets back to their open platform strategy instead of these stupid ecosystem turf wars.

    • Anon

      If it’s just NOK that MSFT is relying on, I’d agree.

      But it’s still early yet, as there are a few potentially game-changing events out on the horizon. Oracle v Google, Patent Trolls v Developers, MSFT, AAPL v OEMs etc, and the big one — GOOG+MMI — may cause a number of OEMs using Android to rethink their platform of choice. WP7 offers a number of the OEMs some benefits that Android lacks (patent protection, not licensing your OS from a competitor). NOK aside, MSFT is in the wing man’s position now and could swoop back into the fight.

      • Anonymous

        Another potential game-changer is the possible exits of LG, Sony and others from the Android ecosystem as their profitability gets clobbered. Once Google’s subsidy of Android goes into fattening profit margins of Samsung and HTC and a whole host of not-really-profiting-Google manufacturer that bundle Baidu, etc., why should Google continue to bear the costs?

        Still, even if several of the events you cite come true, they’re maybe a $10 – $25/handset cost increase on Android that can easily be passed on rather than destroy the Android system. Given that we’re talking a 2-year contract that can total $2000 or more, it’s hard to imagine that causing a major disruption.

        Oh, there IS another potential disrupter: Apple is currently sitting on $300 profit per handset; in the current economics Mr. Cook could, at the stroke of a pen, make iPhone “free” in the US. But that wouldn’t do Microsoft much good, either.

      • Anon

        Would patent trolling be considered a disruptive business model? It seems to be becoming so now that we’re seeing it done in scale. It resembles (to me) the corporate raiders of the 80s & 90s (still with us today) that exploited shortcomings in corporate management and financing, whereas patent trolling firms exploit IP gaps.

      • Anonymous

        Anon, this same thread has a history of some of the IP battles that have been status quo in this industry for many years now. Motorola, RIM, Nokia; more recently Microsoft and now Apple etc. Negotiations went on; often they turned to suits. Most were negotiated after the strength of the hands were shown, and business went on.

        For heaven’s sake, Google licensed the patent that allows it to auction AdWords. Without that patent, their genius search feature couldn’t make a penny. Of course they licensed somebody else’s work and went on to build an empire. Frankly, I think the Android thing got away from them and they have a tiger by the tail.

        So the innovation I see is that Google is trying its case in the court of public opinion, having declared that smartphone IP is now “bogus,” 19th century or something. They obviously can see that part of the deal with the iPod was that people didn’t have to worry about the RIAA knocking on their door because their 13-year-old was ripping off music; they don’t want Apple to repeat THAT!

        Beyond the obvious effort to keep customers from feeling unethical when they buy an Android phone, it has seemingly had the additional benefit of rallying supporters to deprecate IP generally — despite the history cited above that the industry, not excluding Motorola, has long felt it important to protect their honestly-developed property. Now you have the pirate’s flag flying over Mountain View.

        Especially as a prospective inventor myself, I find it insulting to suggest that intellectual work is undeserving of our society’s support or that professionals in the PTO are stupider than your average commenter on blogs, or that courts are corrupt and can’t be trusted with Americans’ property.

      • Anonymous

        Hmm, I think you’re a little off on the facts, they didn’t license ‘somebody elses work and went on to build an empire’, the patent which they’re built on is the page-rank patent which is by Page & Brin. However because they were at Stanford at the time they invented it, Stanford is the Assignee.

      • Anonymous

        I was referring to the Overture patent described in Wikipedia thusly: “Overture Services, Inc. sued Google for patent infringement in April 2002 in relation to the AdWords service. Following Yahoo!’s acquisition of Overture, the suit was settled in 2004 with Google agreeing to issue 2.7 million shares of common stock to Yahoo! in exchange for a perpetual license under the patent.”

        Many other stories to the effect that w/o the ability to “auction” ad words as covered by the Overture patent, Google would not be able to conduct business efficiently.

        Take a read or two & come back at me if this doesn’t seem like needing others’ patented work to succeed.

      • Anonymous

        I certainly wouldn’t say that Google is built on that patent, if they were then they’d have had to pay far more for that perpetual license. It’s like saying that Apple is built on Nokia IP, they may have infringed it but they’re hardly built on it – it isn’t their unique offering.

        This would seem more like an example of how overly broad software patents can be used to shake down companies, but that discussion is best kept off Asymco because it’s happening pretty much everywhere else and it’s nice to have at least one place where we don’t have to get depressed or angry thinking about the current state of software IP.

      • Anonymous

        Eduardo, it’s hard to have a discussion on this when you misquote me or reply to straw man arguments, and make up assumptions that are contradicted by facts.

        1. I never said that Google “is built on” anybody else’s work. I merely said that their profitability depends on a good way to auction ads, and somebody else patented it.

        2. The Overture patent, and the great results for Google from their astute negotiations to acquire it, are a story unto themselves.

        Net-net: Google’s financial success is hugely dependent on its licensing of others’ IP. And there’s exactly nothing wrong with that.

      • Anonymous

        I’m sorry if I mischaracterized what you were saying, but the statement they licensed somebody else’s work and went on to build an empire. seemed to be implying a causal relationship between the licensing and the empire. Obviously I misunderstood what you meant.

        At any rate Google didn’t acquire the Overture patent which remains assigned to Yahoo, they did not even receive an exclusive license, merely a regular license So the overture patent didn’t contribute to Google’s success as a patent. Had the ideas it encompassed never been patented Google would have been just as successful. More successful in fact because it wouldn’t have had to pay for that license.

        If you’re attempting to build a case that software patents are invariably a good thing and that Google has benefitted from software patents then the Overture patent is not the example that you want to use. If you’re not attempting to build that case then I’m clearly misunderstanding the thrust of your argument.

      • Anonymous

        “Had the ideas [Overture's patent] encompassed never been patented Google would have been just as successful. More successful in fact because it wouldn’t have had to pay for that license.”

        Of course, Google was NOT the first search firm and stories abound that their wonderful association ideas took a while to attach to search. And then, they also borrowed the idea of ads from several others.

        So your statements are correct from Google’s 2011 perspective, but arguably (we’ll never know, so argumentation’s the form), we’d all be worse off had Overture not been incented to commercialize its ad system, because Google might not have thought to invent it.

        And what’s so bad with Google having decided to pay Overture (Yahoo), and the actual, historical inventor, getting some money for their hard, insightful work, money that they didn’t make in their other efforts?

      • http://www.asymco.com Horace Dediu

        There is nothing novel or new about patent trolling. It’s been going on in every industry for over a century. Just because it’s new in smartphones does not make it remarkable.

    • Anonymous

      They are not turf wars. They are competing for customers. Microsoft and Nokia are just competing really poorly.

  • ayedee

    It seems lately that you’ve backed off from your mantra that [1] we are in a rapidly changing environment where nothing is a given, and [2] that this is a new era when multiple platforms can coexist.

    • http://www.asymco.com Horace Dediu

      I would not say that at all.

  • http://twitter.com/cdelrosso christian del rosso

    In this industry raising and falling happens relatively fast. iPhone came in 2007, Android in 2008.

    Nokia worldwide smartphone market share was 40% in Q4 2008 (Gartner) more than the other 4 followers combined (RIM, Apple, HTC, Samsung).
    http://www.gartner.com/it/page.jsp?id=910112

    But the point is, what does it need to happen for the status quo to change? If the competition is based on the same rules and no disruption comes, the incumbents are going to stay.

    • Anonymous

      Somebody has to invent a NEW device. Not just copy the last new device, which today is iPhone.

      All players in the phone market should be attempting to reinvent the phone. Instead, they are all trying to reinvent the iPhone. Totally different idea.

      These days, 2007 is like 2 decades ago. These phone companies don’t realize that people under 25 can actually go into a boredom-induced coma from looking at their KIRF iPhones. If you want what Apple has, you have to earn it with a truly new device to show.

    • Anonymous

      I would claim that incumbents RIM and Microsoft continue to be disrupted.

      In RIM’s case, QNX is worse off than where iOS was in mid 2007: next to no native apps (or developer tools for them); little integration with Enterprise tools (BlackBerry’s flagship market); many others. I continue to be astonished that RIM hasn’t thrown every ounce of effort — software development; developer relations; marketing and fr’hevvins sake hardware — at strong bridges to hold current users with easy transition to QNX. Chasing after Android compatibility instead of BB6 compatibility? Really?

      In Microsoft’s case, the most shocking absence is the fire in the belly that Jobs instilled into every Apple employee. Every pronouncement sounds like “yeah, we need to get around to that, but there’s still time for this market to evolve.” Although they seem to think the synergy of all those Office desktops or Windows servers in the cloud will carry them, truth is that with their single-digit market share numbers, enterprises that care about employees’ access to data, but use the BYO or iPad models, will have to find ways to make Office and Windows servers compatible with whatever suits the employees’, executives’ and board members’ needs, not the other way around.

      • http://twitter.com/cdelrosso christian del rosso

        what I meant is that now Android and iOS are the incumbents. To change this status quo competitors have to change the rules of the game and/or inventing something really new.

      • Davel

        As you say, Apple is kore focused. Microsoft makes money on Windows and Office, why would they put the energy into mobile?

        The leader has no vision and the company makes money on the old standby’s they have no urgency. Everything is accretive.

      • Anonymous

        Microsoft clearly seems to believe that every Office user is a potential WP7 user, and that they will leverage that monopoly into success in the business-oriented mobile space, with enough user-friendliness to induce ordinary consumers to jump on the bandwagon.

        You really see that in the proposed Windows 8 tablets that are WP7 in the Mr Hyde incarnation and Full Compatible Windows ® when the user calls up Dr. Jekyll. Best of Both, No Compromise.

        And that seemingly blinds them to the fact that we’re soon to have more mobiles running Android and iOS than Windows Anything; users who want to review/edit documents on the plane or tweak the presentation before they give it, will necessarily look for other software than Microsoft’s.

        I don’t think Apple is interested in putting a full-court press with its iWork suite by putting it on Android and Windows, but when somebody with the resources and commitment does so, I would fear for the worst for MSFT.

      • davel

        Yes. That seems to be Microsoft’s thinking An office user is a WP7/8 user. Judging by the number of Office users who have Android or Apple phones I do not see how they can think that. But as we have seen in the past few years many companies can have irrational views of the marketplace based on misplaced assumptions.

      • http://www.asymco.com Horace Dediu

        Back when Windows Mobile was being launched I was very weary of Microsoft bundling it with various other properties they had. Why not give away a free WinMo phone with every Xbox? Why not do bundling with HP laptops? There were so many opportunities. But Microsoft did none of these things. I would guess that it was because of painful economics but we’ll never know.

      • http://aegisdesign.co.uk Shaun Murray

        Microsoft isn’t really an incumbent. It’s share of the smartphone market has always been tiny worldwide. It was only in the USA that they had a sizeable following but back then the USA’s smartphone usage was tiny compared to the rest of the world. I don’t think Microsoft have ever got into double digits market share.

  • Hossein

    What happened to the arguments that smartphones are not mature enough, and modular design and production does not work yet, and integration is the way to go?

    Projecting the current trends we are likely to end up in a situation similar to the PC industry. Apple will be selling premium/luxury to the niche 25% and the other software platform + all hardware makers will be supporting the rest of the population.

  • Hossein

    What happened to the arguments that smartphones are not mature enough, and modular design and production does not work yet, and integration is the way to go?

    Projecting the current trends we are likely to end up in a situation similar to the PC industry. Apple will be selling premium/luxury to the niche 25% and the other software platform + all hardware makers will be supporting the rest of the population.

    • http://www.asymco.com Horace Dediu

      Pay attention to the time scale.

      • Hossein

        Would you please elaborate?

      • http://www.asymco.com Horace Dediu

        The charts above cover a very short period of time. Very little can be concluded about the evolution of markets in such a short time.

    • Anonymous

      That is not what the PC industry looks like at all. At the high-end, the Mac has over 90% of the market. At the low-end, Apple has only just started competing in the last year, but last quarter they became the largest volume PC vendor, handed Acer (#3) their first loss, and chased HP (#2) out of the PC business altogether. If current trends hold, Apple will have the majority of the low-end PC market in a few years, and thus, the majority of the market, since they already have the high-end.

      The best-selling system in every PC category is an an Apple system. Half the home PC’s in the US are Apple-branded. There is one iOS device in the world right now for every 3 20th century PC’s. You have to update your information.

      And Apple has not even released a low-end phone yet. A low-end iPhone would be to the iPhone what the iPad is to the Mac. That is a game-changing product that we are waiting on in the phone market.

    • http://twitter.com/JLMoran JLMoran

      Hossein, three things to keep in mind here. First, this ComScore survey only measures OS penetration in the smart phone market, not all mobile devices (including tablets). There are other surveys, such as this one from Strategy Analytics cited by PC Mag, that show iOS has just over 60% worldwide penetration, while Android has just over 30%, as measured by OS penetration across all mobile devices (including tablets).

      Second, this survey is US smart phone penetration only, not global share. If you look at this report from GigaOm, you can see the numbers aren’t quite so overwhelming for Android: It has 43% share globally, while Symbian still has an impressive 22% share, and iOS is at 18%. Still a good lead for Android, but not yet at the “it’s the PC wars all over again” level.

      Third, while Android is getting the most share of the market, iOS continues to get the lion’s share of the software sales profits. As long as this keeps going on, developers will continue to write software for iOS and keep it alive, even if it does some day go down to Mac-like levels of just 10%.

      • Hossein

        First, Being able to give some profit back to developers is definitely good, but looking at the forces that are driving the smartphone market, it is clear that the investors are NOT app developers. App developers are piggybacking on the backs of smartphone platforms.
        Second, AT&T or Verizon or any other TelCo does not think about profitability of iOS or Android to app developers when they market and sell these smartphones. As long as a platform has “enough apps” it “good enough.”

        Thrid, the application usage distribution is known to be a highly skewed one. That is, for every user or all users together, 10% of the applications get 90% of the attention + profit (See Nielsen’s recent results). And those top 10% app vendors happen to be wealthy enough to release their app on every platform.

        On the tablets, I really think we should not mix them with smartphones. The potential market for tablets is tiny compared to smartphones, because as Horace has clearly shown they are NOT larger smartphones.

      • Anonymous

        You have no evidence that the potential market for tablets is much smaller than smartphones, and indeed there is considerable evidence that you’re wrong. Consider that the iPad is growing faster than any other product Apple has ever launched, perhaps faster than any product in history. It is growing faster than Android grew in the smartphone market.

        Tablets run the same OSes as smartphones, they have the same input paradigm, and share many use-cases. In terms of platforms it is absolutely correct to mix them with smartphones.

      • Davel

        If you use PC’s as proxies for tablets, the phone market is absolutely bigger than tablets. While it is rumored that Apple will sell 20m tablets this qtr, I don’t think the tablet market is as big as phones.

        Everyone has a phone not everyone wants a portable pc to take on trips or walk around the house with. A smartphone does many of the things a pc can do. The tablet just doesn’t have the phone, not as good a camera, and a bigger screen.

      • Davel

        If you use PC’s as proxies for tablets, the phone market is absolutely bigger than tablets. While it is rumored that Apple will sell 20m tablets this qtr, I don’t think the tablet market is as big as phones.

        Everyone has a phone not everyone wants a portable pc to take on trips or walk around the house with. A smartphone does many of the things a pc can do. The tablet just doesn’t have the phone, not as good a camera, and a bigger screen.

      • Anonymous

        But PCs are almost certainly a poor proxy for tablets, for any number of reasons.

        a) Consumers: Tablets are a simpler device than a PC and so will penetrate into markets where PCs never went – the elderly and the very young. For older consumers a smartphone may seem like a needless complication of a feature-phone while a tablet seems like a blessed simplification of the PC.

        b) Commerce: Tablets are rapidly entering the commercial space, and not solely as PC replacements. Instead they are used for Point-Of-Sales, for replacing static sales displays, for inventory management in warehouses.

        The smartphone is a one device per person object. Ultimately everybody will own one, but everybody will only want one.

        However we may end up in a situation where everybody owns a tablet, and also interacts with other tablets owned by businesses throughout the day. Consumers may even end up wanting multiple personal tablets as they switch between form-factors.

  • http://twitter.com/dicklacara dicklacara

    I think when considering ecosystems, you must take a broader and longer view — you must step back several steps and consider the interoperability of applications and exchange of data/content:

    1) among the devices within the class itself, e.g. smart phones

    2) within a broader class of mobile devices — including smartphones plus tablets, smart iPods, PGPs, cameras, etc.

    3) within the above plus non-portable devices — AppleTV, Car Navigation, [home] Control, security and automation, etc.

    4) within the above plus portable computers

    5) add to this the desktop computer / Local Networks

    6) finally, include Cloud Storage and services

    One question that arises is: Can any single company provide an ecosystem that embraces and encompasses all these devices, applications, data/content and services?

    • Anonymous

      Sure. Apple has already done that because they enabled such massive 3rd party software support. Home automation or car navigation is an iPad app. And where there would otherwise have been holes in Apple’s ecosystem, you fall through to the Web and Unix by design. So Apple’s Web server software is the best in the world because it is Apache. This makes their ecosystem much larger even than Apple itself.

      Microsoft, on the other hand, is very hostile to 3rd party software development, because those are its competitors in the software business. That is why most Windows apps of any consequence at all are either Microsoft’s own in-house apps or the Mac apps Adobe brought over to Windows in the mid-90′s. And Microsoft does not use Unix or the Web, it has to copy both of them and invert all the slashes and so on to make them appear at first glance to be original work. So they have to do so much more work than Apple to achieve the same goals. And plus, Microsoft is incompetently managed, that is not even controversial to say that, while people are saying the last 10 years at Apple may be the best-managed ever, of any company, of all time.

      • Jb

        Microsoft hostile to 3rd party software? They own the largest and most open software ecosystem in the world. What on earth are you talking about?

      • David Emery

        True -only- for products that Microsoft itself does not want to produce. When Microsoft decides to produce a product, 3rd parties have a very hard time competing. Firefox is I think the only example of a product that successfully challenged a Microsoft product on Windows, and that’s as much due to Microsoft’s poor implementation and support of IE as anything.

  • http://www.affenstunde.com James Barnes

    This might be a dumb question but how heavily would MSFT (and their Carrier partners) need to subsidise devices in order to gain significant market share? Could such a strategy work?

    • Anonymous

      No. That is magical thinking.

    • Anonymous

      No. That is magical thinking.

    • http://www.asymco.com Horace Dediu

      Microsoft can’t directly subsidize the phones. What they will do is marketing co-spend. The budget is in the billions. Mostly commissions to sales people who sell in the shops.

  • http://twitter.com/munsun Mason

    I wonder if there really is room for new ecosystems. Not that there aren’t plenty of non-smartphone owners out there to be converted, but I see two things holding back new ecosystems:

    1 You’re going to be sued. Thats a huge, mostly unknown expense.
    2 Attracting devs will be hard and expensive. You can probably get the big developers (Zynga, EA, who-ever-else) to port there apps to your platform, but the small shops are already doing well with the existing ecosystems. Supporting anything new is going to be an exercise is porting existing projects for <5% of the market instead of developing new projects for the other 95%. Where would you invest your time? So a new ecosystem would have to provide a lot of incentive to build their developer network (see MSFT).
    1+2. Your devs are afraid of being sued, too. Are you going to provide air cover?

    • Anonymous

      You are only going to be sued if you make a KIRF device. Samsung gets sued; RIM does not.

      • Anonymous

        Not by Apple, but RIM have absolutely been sued, and for considerable sums. They paid NTP $600mil over push emails. They were sued by Moto, They are being sued by Kodak. More recently Openwave, another troll, has emerged to sue them along with Apple.

        The only way to currently make a smartphone and not be sued is to make a WP7 device because MS unlike Google indemnify their licensees against 3rd party infringement claims.

        If WebOS ever looks like making serious money you can be sure they’ll get sued too.

      • http://aegisdesign.co.uk Shaun Murray

        We haven’t got to suing companies for copying services…. yet.

        It’ll happen though once differentiating on hardware is next to impossible.

  • Anonymous

    There are always 2 ecosystems: Apple and Generic. Until another tech company raises their standards above generic, then that is how it will be. Neither Microsoft nor Google has a complete ecosystem. They are both just part of Generic.

    Android is just as much Microsoft’s as Google’s because of the unprofessional way Google ran the Android software project, with a “steal now, worry later” philosophy. The way Microsoft gets more paint in the above charts is not to take sales from Android … they just have to displace it on the next version of the same devices. The vast majority of the users of generic devices won’t notice, because Android is not sticky. Metro is just another TouchWiz to the generic phone user. They don’t know Angry Birds has changed from Dalvik to .NET or whatever and don’t care. There is also Facebook and Skype and Twitter. Soon, the generic devices may get functioning HTML5 app platforms (currently, only Apple platforms and Google Chrome qualify) and the switch from Android to Microsoft is even easier.

    So it isn’t that Microsoft has to create a 3rd ecosystem. They are just trying to regain their past dominance of the Generic ecosystem. They won’t, but neither will Google achieve that kind of dominance. That is why standards like W3C HTML5 and ISO MPEG4 are important to provide a common ground between the users of Apple and all generic devices at once. You can’t ship an IE page or a QuickTime movie anymore … you have to use the international engineering standards like a real grown-up.

    • Canucker

      Nice analysis. There are two races taking place but only one runner on one track and the rest on another. The multi-competitor race is to the bottom and as its hard to beat free its fairly predictable where the profits are going to derive from. A similar scenario is transpiring in tablets and there is nothing the players can do about it except try not to lose money.

    • http://aegisdesign.co.uk Shaun Murray

      Microsoft’s ecosystem is far from generic. It’s as open as Apple’s. You won’t see iPhone or Android users on Windows Phone XBOX Live or using Office 365.

      Google might let other platforms in on Maps, Mail and some of their other services but that’s more an accident of their previous existence on the Web.

      A generic ecosystem doesn’t belong to one company.

  • Canucker

    Rogers Canada is running adverts today that discount the PlayBook and the new Torch 9810 by $100 each. The market for RIM is slipping away. They are getting undercut by the cheap Android phones and losing business share due to lacklustre product refreshes.

    • Anonymous

      Methinks the PlayBook is a special case of mismanagement, if not quite up to HP’s standards.

      The PlayBook could’ve been used to show off the power of the QNX system, and to excite developers and The Faithful about RIM’s direction for BlackBerry. They instead positioned it as a finished, full-quality competitor to the iPad, and left developers with no way to port older BB apps, nor anything resembling a coherent story about how to develop first-class, made-for-Playbook, apps.

      That $100 discount on the Torch? Should’ve been made a $200-off discount coupon for Torch customers, against upgrading to any BB8 phone in its first 2 years. Don’t pretend that the Torch is fully competitive, nor discourage customers from an end-of-lifed OS.

  • Jeffrey Hamilton

    I am excited for the HTC Titan Windows phone.

    • http://www.asymco.com Horace Dediu

      And the price?

      • Dink

        Probably $99 or $50 on release day. In 4 to 6 months, likely 1 cent with contract deal like all the other WP7 phones. Of course, about half of the Android phones out there were free second phones. Apple is going to have to shave their prices a lot – $99 into for iPhone 5, $50 for iPhone 4 and the 3 is free?

      • http://aegisdesign.co.uk Shaun Murray

        Subsidised prices are meaningless.

      • http://www.asymco.com Horace Dediu

        The price quoted on launch is about $690 without subsidy or taxes. It’s certainly more expensive than the iPhone 4.

      • Anonymous

        “Probably $99 or $50” versus “about $690 without subsidy.”

        Either carrier economics are shifting dramatically — those data caps beginning to do the job? — or the $690 unsubsidized price is meaningless in the US, merely meant to signal “We da baddest!”

        Or HTC has found a new way to segment the market and pick up hard-core Microsoft faithful who are willing to pay up to get a high-end phone, versus the need to generate volume.

        Or sumpin.

  • http://pulse.yahoo.com/_5BHLNE6HC75ETNMNDKEEKLMF3M Steve Pederson

    The wildcard I see is that there AREN’T really two ecosystems for tablets yet. The MS of the 1990s would seize this opportunity and fill that void. I have no such faith in MS’ current leadership.

    There may be more “phones” than “PCs” but PCs are all about ecosystem where phones are more centered on utilitarian needs.

    The iPad seems to fit Horace’s classic pattern of disruption… note how much focus is on the phone market share battle. But the most lucrative platform for content providers (including apps) is the iPad. That profitability has profound implications.

  • Anonymous

    Horace, do you buy the lie that Android phones vs iPhones is the ecosystem/platform metric? Why are phones and tablets always separated when they breathe the same oxygen? Is there a ‘all iOS devices’ vs ‘all Android devices’ graph out there? If not will you make one?

    • Secular Investor

      oases, you’ve hit the nail on the head.

      The real metric is all iOS devices v all Android devices v all RIM devices etc.

      Just using Smartphones is meaningless when it comes to really comparing ecosystems.

      Please Horace do the Charts,

      Thanks

      • Secular Investor

        This Chart of mobile Operating Systems gives a completely different picture!

        http://netmarketshare.com/operating-system-market-share.aspx?qprid=8&qpcustomd=1#

      • Anonymous

        The problem with that graphic is that the use cases of phones and tablets are different, so mixing them up gives you a number that tells nothing. I find this one is more illuminating.

        http://www.tuaw.com/2011/07/04/ipad-grabs-1-of-global-browser-share-25-of-us-mobile-browsing/

      • http://www.asymco.com Horace Dediu

        Consumption which is measured by proxy with browsing stats is very different than possession. They are not necessarily contradictory.

      • Catalin

        I was (maybe I still am) a big Java fun, but please JavaMe 21% percent from OS market … that chart is a joke.
        I think that we all have to admit Android explosion … and yes, I have an Android smartphone and I have to admit it is a very smart “toy”: you can do whatever you want with it (even Windows RDC) with acceptable performance. Google-apps integration and … whatever else social-net integration (I have all social-net and messaging spaces on it) … is great. iPhone showed the way, and Android is, right now, ahead. We have to admit it. It will continue so IF the producers will remain as close as they can to THE QUALITY EDGE RAISED BY APPLE …

    • Anonymous

      There are 2 iOS users for every Android user, and each iOS user is responsible for much more activity than each Android user. Google makes more money from each iPhone user than from each Android user.

    • http://www.asymco.com Horace Dediu

      I look at all the data. iOS vs Android has been a part of the material on this site for some time. You can look at this for example: http://www.asymco.com/2011/07/16/the-frontiers-of-platform-adoption/

  • Vincent Rice

    As I follow this market (hats off Horace for your usual fine job) I find myself thinking – I know where Apple will be in 3 years time but what will happen in Android world? I have absolutely no clue or instinct. Should be fun.

  • Vincent Rice

    As I follow this market (hats off Horace for your usual fine job) I find myself thinking – I know where Apple will be in 3 years time but what will happen in Android world? I have absolutely no clue or instinct. Should be fun.

  • Edwin

    Android continues to grow it’s lead in phones and shrink Apple’s lead in tablets while Jobs tragically rides off into the sunset. The amazing Apple renaissance is over.

    • Dink

      Yup – and they just killed themselves by buying the least competitive mobile phone producer left. Who will make and market Android phones now that Google is competing with them? Only fools.

    • Dink

      Yup – and they just killed themselves by buying the least competitive mobile phone producer left. Who will make and market Android phones now that Google is competing with them? Only fools.

    • Anonymous

      Google makes zero profit from the huge sales of Android phones – not a sustainable business model. Also recent stats show that the leading mobile device browser not Android but iOS (iPhone, iPod touch and iPad). So Google’s hoped for advantage in mobile web searching doesn’t correlate with its lead in handset sales. Google has more problems than Apple right now, and investors know it (check return on stock in last year, AAPL vs. GOOG).

      • Anonymous

        Not zero profit. They profit from the web traffic and ad $s generated to Google sites (and adwords). The issue there is, is spending lots of $ on Android the best way to get that revenue. Would they still get it with a better Apple relationship? Some… but they would be blocked from the MS ecosystem which they have effectively killed (for the moment at least) but was a potentially dominant platform, pre-iphone (and could be again perhaps). That was the initial rationale for buying and developing Android before iPhone arrived.

  • Petteri

    Somehow I have a feeling that the platform ecosystem (vis-à-vis applications) will become actually less important success factor; the hype around application stores has deflated as pointed above in the comments.

    Successful applications are in any way already developed for at least two mobile platforms – which causes the app developers to develep the bulk of the applications with maximum portability in mind. Adding one additional platform to support is not a linear increase in their cost.

    Brand image value of the platform however of course persists, as does the value of the user experience of the platform. But the value or importance of the ‘ecosystem’ in the purchase decision of the customer, that I actually doubt a bit.

  • rombe3jr

    I don’t think we’re that close to a revolutionary new cell phone design so soon. And if it’s true that techology has not evolved enough to take us to the next frontier, everyone HAS to catch up to Apple to stay in business. The short time frame graphs are relavent because the odds are that the biggest market share holders will stay big and get bigger. There are a lot of cell phone users without smartphones yet, and as communication evolves into greater use of text, IM, facebook, etc. and prices fall, cell phones will soon just be smartphones. Microsoft created a pretty darn innovative platform with WP7 and look how much they are still struggling… partnering with Nokia was no less than an act of complete desperation. I’d bet they will grow market share in 2012, but have certainly been caught sitting on their laurels. Until we see technology bring us responsive voice command, glasses free 3D that doesn’t suck, holographic projection, miniaturization of all componants – there will be no disruption to current trends.

  • Davel

    Horace

    Off topic here.

    I see you have changed your site

    Something about the new site is blocked at work.

    The comments come out as one flat section.
    The user’s comments come as one page. No differentiation. No way to reply. I have tried it on Mozilla and ie. Ie is worse as there is a script error that gets flagged and makes the ie window inoperable.

    I use the same version of Mozilla at home and it shows up fine.

  • http://www.smartphoneconsumer.com Jason

    There most likely is going to be a continued consolidation in the smartphone arena where there will only be 2 to 3 major platforms available to U.S. consumers. Specifically, Apple, Android and Windows. I know many individuals are happy with Research in Motion, but the numbers simply don’t bode well for them in the United States. Also the fact that Blackberry has begun to integrate Android into future devices illustrates the point further. Consumers will still have access to Blackberry devices but the problem will be that their OS will only be Android powered going forward.
    One of the major issues which has not been resolved for smartphone users is the data and other charges which the carriers continue to raise on their customers. As we become more dependent on our smartphones to do everything for us this is going to have major implications where many people may begin to idly standby as the wireless carriers invoke more tiered pricing plans and throttle data usage.
    http://www.smartphoneconsumer.com

  • Secular Investor

    Horace, You say “Consumption which is measured by proxy with browsing stats is very different than possession. They are not necessarily contradictory.”

    Your article discusses the odds of a third ecosystem based on possession data limited just to smartphones, which is not a good proxy for the strength of an ecosystem.

    Surely the strength and viability of an ecosystem and the potential of a third ecosystem being able to compete, requires a more holistic approach which takes into account, amongst other things:

    a) Consumption/Usage measured by proxy with browsing stats which is different from possession. This is valuable for example to measure mobile advertising potential.

    b) The total number of different devices sold using each OS. Limiting the possession number just to smartphones flatters Android and other OSs while greatly underestimating the strength of iOS. Unlike any of its competitors Apple have three market leading devices, each of which have different browsing and usage patters.

    c) Consumption/Usage measured by the amount of software available in each ecosystem (i.e. number of Apps, songs, movies, TV programs available) and the numbers of downloads and the amount of revenue generated

    d) The Number of account holders in each ecosystem. Only Apple gives this data i.e. 225 million credit card account holders

    e) “stickiness” probably best measured by user satisfaction and buying intentions.

    The above holistic approach shows

    i) the iOS ecosystem totally dominates Android (probably by a factor of more than 2:1) notwithstanding Android’s rapid growth of smartphone sales. Other OSs are almost nowhere with barely measurable, low single digit market share.

    ii) By investing billions in Android to compete against Apple, Google may have made a historic strategic mistake comparable to that of IBM who let Microsoft and Intel keep the IP which led to the Wintel alliance which buried IBM’s PC business. Google sacrificed a potentially highly profitable special relationship with Apple with former CEO Schmidt on the Apple board and Apple using Google maps and probably willing to enter a revenue sharing agreement for mobile advertising. Now Android is perhaps fatally mired in countless patent disputes.

    iii) The iOS ecosystem’s competitive position is likely to be greatly enhanced by iCloud and a new low cost iPhone (free from carriers with a 2 year contract?) which will probably provide fierce competition for Android as well as other OS ecosystem. Apple’s great advantage is that they are the only vertically integrated hardware/software which means they act faster to outsmart the competition with an ecosystem which “just works” across all their mobile devices. Apple may take this one step further by introducing a PC working on iOS based on an advanced ARM chip, to go with their TV products.

    If we compare the date in Horace’s blog (H’s data) with those in the link below the provided by EduardoPellegrino (EP’s data)

    http://www.tuaw.com/2011/07/04/ipad-grabs-1-of-global-browser-share-25-of-us-mobile-browsing/

    we find that H’s data shows that Android have around 40% of the US user base (possession) compared to Apple’s around 20%. However EP’s browsing data shows that the iPhone has 35.2% of the US browsing market share compared to Android’s 31.6%. In other words iOS users browse more than twice as much as Android users. However, the iPad ‘s US browsing market share is an additional 25.5% the iPad users browse even more than iPhone by a big margin. The total iOS US browsing market share is 60.7% compared to Android’s 31.6% even though Android has a much larger user base. This auger’s very badly for the long term viability of Google’s strategy of giving Android away to secure advertising position because iOS has a nearly double the browsing market share.

    Note the above iOS US browsing does not include iTouch data. Add this i and iOS probably has a 2:1 browsing advantage over Android – a very significant advertising revenue potential advantage to iOS

    As for third party ecosystems, EP’s data shows that the Blackbery is in a very distant third place with just 6.9% US Browsing Market share. Symbian (0.4%) Java ME (0.2%) and Windows Mobile (0.2%) have a huge mountain to climb to compete with either iOS or Android.

    If we look at consumption/Usage measured by the amount of software available in each ecosystem, Apple enjoys a similarly huge advantage over Android, with the others barely registering on the radar.

    In terms of numbers of Apps the iOS dominates Android by even more than 2:1. The iPhone and iTouch have over 450,000 Apps compared to less than half for Android, and a tiny fraction of that for the other ecosystems. The iPad now has nearly 118,000 Apps compared a few hundred, perhaps 2,000 to 3,000 for Android tablets, with a tiny fraction of these for the other tablet OSs. (does anybody have reliable figures for Android tablet Apps? DES estimated around 1,245 on 30 June 2011 http://tech.fortune.cnn.com/2011/06/30/apple-ipad-apps-100000-android-tablet-apps-1300/)

    However, when it comes to Apps revenue iOS paid downloads massively exceed those for Android by perhaps as much as a factor of 10:1. Also iOS downloads are accelerating at a phenomenal rate – around 14 billion download and already overtaking the iTunes downloads by June 2011 see Horace’s http://www.asymco.com/2011/06/07/songs-books-and-apps-what-do-the-three-media-types-tell-us-about-the-future-of-consumption/

    When it comes to content download market share (music, movies, TV programs ebooks, etc.) iOS again enjoys a 2:1 advantage over all the other competition combined with 65.8% market share in 1H2011 up from 64.9% in the same period in 2010 http://www.fool.com/investing/fiercemarkets/2011/09/01/vudu-market-share-soars-in-h1-2011-itunes-regains-.aspx

    Where is the real completion to establish viable competition for iOS?
    Forrester Analyst Rotman Epps, has issued another wild report speculating that if Amazon subsidize tablets to sell at $300 dollars a unit they can sell 3-5 million tablets in Q4 alone. This is absolute drivel!

    Quite apart from asking asking where Amazon can source 5 million Tablets in their first Quarter of production/sales when Apple, despite a powerful, well oiled and experienced supply machine struggled for a year to reach that number per Quarter, simple back of the envelope calculations show that Epp’s speculation would lead to financial ruin for Amazon.

    According to iSupply the iPad 2’s BOM (Bill Of Materials) is around $330. It is unlikely that Amazon can match Apple’s massive purchasing power and supply deals advantages and Amazon’s BOM would be more likely to be $350. Add to this R&D to develop an entirely new product. This would take Amazon;s purchase/development cost to $360 plus.

    Amazon ‘s cost of Selling, General & Administration last Quarter was 29.5% of Cost of Revenue. That takes total cost to $466.

    If Amazon sells their tablets for $300 each that means a loss of $166 per unit. 3 to 5 million units means a total loss of $498 to $830 million in the Quarter. Amazon only made $191 million net operating income last quarter which means Amazon would run up a operating total loss of $307 to $639 million for the Quarter.

    Forrester’s thesis is that Amazon would make up this loss by increasing other sales through their subsidized tablet. However this is utter hogwash. Amazon makes a razor thin net operating profit margin on sales of less than 2%. To make up for the losses subsidizing their tablet Amazon would have to increase their revenue from other sales by $24.9 to $41.5 billion.

    To put this into perspective Amazons total sales revenue last Quarter was just $9.9 billion. So in order to just break even on subsidizing Tablets would require Amazon to increase other sales by 2.5 to 4.2 times in a single quarter. Utterly absurd.

    To make matters worse the above is a best case scenario because it makes the assumption that all 3 to 5 million tablets a Quarter will be sold online directly by Amazon. This is highly unlikely because most buyers would want to touch and feel and try a new tablet. Therefore to achieve Forester’s sales target of 3 to 5 million units a quarter Amazon would have to sell around at least 50% through retailers. Retailers’ margin would cost around $100 dollars a unit increasing Amazon’s loss per unit to an average of $216 dollars a unit. This would increase Amazon’s total Quarterly losses on tablets to $648 to $1080 million.

    To just break even on their tablet losses Amazon would have to increase other sales by $32.4 to $54 billion or 3.3 to 5.5 times. Even more utterly absurd.

    In conclusion, it is difficult to see Android, let alone any other ecosystem, being able to compete effectively with the iOS ecosystem, Meanwhile iCloud and a cheap (free) entry level iPhone could lead to iOS stretching its lead against all competitors.

    • Anonymous

      Overall, I agree directionally with many of your points which are a comprehensive summary of the “why Apple is undercounted” arguments. However, my gut says you are being overly aggressive with all your evidence for the pro-Apple case. For instance,
      App revenue – you can’t compare purchase revenue when most of the Android dev rev is from advertising. Angry birds reportedly was creating strong ongoing revenues on free apps with ad revenue.
      Amazon – they would not spec their device to iPad2 levels and source it from an OEM who would probably offer them strong pricing so your numbers are probably overly pessimistic. Also, Amazon’s overall margins are slim but vary by product, category, etc. I agree that Movies and tunes are not high margin but given Amazon’s economies of scale in the cloud (S3 is very big), they will probably make more money on these than Apple does (barely break-even). Other things like books, Amazon seems to do much better (stronger vs. the publishers than the other categories).
      You don’t think that Amazon can sell a lot of tablets or even make them, but you can’t compare Amazon’s position on the learning curve to Apple’s in early 2010. Amazon has the experience of the Kindle, the OEM/ODM’s are way up the learning curve compared to Apple/Foxconn last year and they won’t design it to be so complex either.

      Overall, Apple is constantly underestimated by many top line analyses and metrics, but that only means that we should be careful not to do the same to the competition.

      • davel

        My counter to your Amazon argument is Apple sells many tablets by itself. Why would Amazon sell many tablets at a loss when it can accomplish the same thing by building an HTML5 app to offer its wares in a pleasing way and still sell the products.

        I think Amazon customers will go to Amazon for precisely the reason that they are the best sales portal available.They don’t need to build a tablet to make a tablet platform.

      • Anonymous

        I think you are replying to Secular Investor, not me?

        Either way, I agree with you…

      • Secular Investor

        I agree. There is no need for Amazon to attempt to build and sell a tablet to sell its wares, especially at a huge loss. I have a full house of iOS kit, but I still buy a lot of stuff from Amazon and expect to continue to do so

        What I was addressing was Forrester’s ridiculous report that Amazon could produce the much sought after iPad “killer” by selling its own tablet at a massive loss, which simply does not work as a business model

    • Anonymous

      Impressive and data-rich comment Secular Investor.

      Horace, your always fantastic analysis of the smartphone market does however fail badly to tell the whole story when it comes to overall OS share and ecosystem. Apart from Apple’s dark horse of the iPod touch (sells as much as a third of the entire quarterly total of Android devices) which is always ignored, there is the iPad which completely blows these share figures out of the water.

      The disproportionately large share that iOS captures of web traffic, app sales, advertising, content and media sales shows how much Android phones appear to only be replacing dumb phones and not actually be used as smartphones.

      This has profound implications when comparing ecosystems.

      • http://www.asymco.com Horace Dediu
      • Anonymous

        Horace, my apologies for sounding critical as your analysis is always much valued as I mentioned.  

        You have indeed covered the other members of the iOS family at times in the past, but my comment was aimed at the times such as this post when the terms “platform” and “ecosystem” are used but only the smartphone subset considered.

        These words describe the operating system bases (or platforms) on which apps, media and other content run, so to not include all devices that run these OSes when specifically comparing platforms and ecosystems is what always troubles me.  

        I know we have the problem that analytical firms seem to always only concentrate on smartphones, but at least we have the likes of comScore now covering entire mobile platforms with their MobiLens reports on Mobile Phones, Tablets and Other Connected Media Devices.

        Also, as Secular Investor points out in his detailed comment above, ecosystems and platforms live or die not purely based on bums on seats, but on the actual health of the app and browsing ecosystem.  

        Symbian is exhibit number one where despite having by far the largest installed base and quarterly sales figures – far lower app downloads, web browsing marketshare, third party accessories and ad income per capita than iOS in particular were several signs of the burning platform that eventuated.

        For the record, I agree with the gist of your post Horace, so please forgive me for being picky regarding what constitutes a platform and an ecosystem.  :-)

      • http://aegisdesign.co.uk Shaun Murray

        Symbian didn’t do well against iOS but Ovi store is more profitable than the Android Marketplace and gets over 9 million downloads a day still. If Elop hadn’t killed Symbian it might even be relatively healthy.

      • Anonymous

        Indeed that is an ominous sign regarding the health of the Android platform and ecosystem isn’t it.

      • Secular Investor

        Horace,

        I’m sorry to say but it is you who needs to “pay attention” (and perhaps be a little less short tempered and rude!)

        What I and others are saying is that in this article you have based your discussions and arguments about the odds of a third (viable?) OS ecosystem on Charts relating to data about units of smartphones sold, which in fact is both irrelevant and misleading.

        Despite Android’s rapid unit sales growth, so that their US installed base is around twice that of iPhones’, Apple’s iOS ecosystem dominates Android’s by a ratio of 2:1 or more (i.e. an inverse ratio to units sold) when measured by relevant factors such as internet browsing, number of Apps, and other software/content downloads such as music, movies, books, TV programs and related iTunes revenue, numbers of credit card account holders, and profits (as you have previously pointed out, Apple generates around two thirds of profits of the all mobile phone manufacturers combined).

        You have of course discussed most if not all the above factors in many of your excellent earlier articles, but in this article your arguments are based on Charts of numbers of units sales of smartphones alone which are demonstrably irrelevant to the relative strengths of OS ecosystems.

      • Anonymous

        It dominates by 2:1 only in terms of consumption of the web, which isn’t the only metric – in fact arguably it’s the least important metric because it’s the least sticky one.

        You also are getting hung up on a single data-set, when the market is global, and there are different browser side data sets which don’t show the same trends, because of different choices as to how to segment the data.

        North America: http://gs.statcounter.com/#mobile_browser-na-monthly-201008-201108
        Europe: http://gs.statcounter.com/#mobile_browser-eu-monthly-201008-201108
        Asia: http://gs.statcounter.com/#mobile_browser-as-monthly-201008-201108
        South America: http://gs.statcounter.com/#mobile_browser-sa-monthly-201008-201108
        Australia: http://gs.statcounter.com/#mobile_browser-oc-monthly-201008-201108

        This data gives a different view on how handheld browser share breaks out, though iPad has been categorized as non-mobile – which given usage patterns may be logical. It’s even questionable whether iPod touch browsing figures should be considered mobile, since the device is WiFi only.

        Suggesting that units sold is irrelevant is ridiculous. It isn’t the only metric, but it is nevertheless an important one.

      • Anonymous

        Eduardo, as you mention, Statcounter does not count the iPad and splits iOS up into iPhone and iPod touch. However, we are talking platforms and ecosystems so all devices that run these platforms and support these ecosystems need to be counted together for each OS if we are comparing these very same platforms and ecosystems.

        Wikipedia’s OS usage share page reports operating system web browsing stats from StatOwl, Global Counter, W3Counter, WebMasterPro, Net Market Share, Clicky Web Analytics, AT Internet and WikiMedia:

        All of these analytic sources report that iOS has between 2.22% and 5.15% of global web traffic compared to Android which only has between 0.5% and 1.84%.

        ComScore’s May 2011 Device Essentials Report gives an excellent break-down by country:

        iOS captured 53.1% of all non-computer web traffic in the USA versus only 35.6% for Android.
        In Canada and Australia, iOS captured an enormous 83% versus 8.6% and 11% respectively for Android.
        In the UK iOS captured 60% versus 15.4% for Android.

        Brazil: iOS= 83% Android= 8.6%
        Singapore: iOS= 82.9% Android= 11.4%
        Chile: iOS= 64.1% Android= 14.5%
        Argentina: iOS= 31.6% Android= 23.6%
        Japan: iOS= 65.5% Android= 30.6%
        India: iOS= 7.4% Android= 6.5%

        In addition, considering the overwhelming dominance iOS has in app downloads (71% share in 2010), app numbers, developer income (82%), music downloads (70%), etc, one has to wonder if a large proportion of Android phones are actually only being used as dumb phones for voice calls and SMS?

        This all has enormous implications regarding the true size and health of the Android ecosystem.

        -Mart

      • Anonymous

        But usage of the device for web browsing and web apps is in fact completely irrelevant to platform health unless it shows that Android phones are not being used as smartphones at all – because the iOS browser has no particular advantage over the Android browser.

        As such when considering browsing the relevant comparison is between iPhone and Android smartphones only. The wider iOS device population is only relevant when considering native application development.

        The contention that net usage figures show the Android handset platform in trouble is flat out wrong.

      • Secular Investor

        Eduardo,

        You are right if you were say that ON ITS OWN usage device web browsing may not be relevant to platform health. However as PART of the overall vitality of a mobile OS ecosystems it does add to the overall picture. It is clear from mrrtmrrt’s and other data that iOS users do a lot more web browsing than Android.

        However, I think using Apps to access the Internet is significant, because Apps can be used as a vehicle for controlling and profiting from advertising. It would be very useful if mobile web browsing stats differentiated between using browsers and using Apps. Is there such data available? I suspect that iOS browsing via Apps far exceeds, by a large multiple, that of Android and other OS Apps, because there are far more iOS Apps and iOS Apps downloads.

        In any event it appears that Google’s strategy of investing many billions in giving away Android as a means to create a captive mobile advertising market is a massive waste of money and mistake. Web browsing by mobile devices using browsers does not provide a captive advertising vehicle. Only Apps do this and Android is a very distant second to iOS when it comes to Apps.

      • Anonymous

        That’s the entire point, the data doesn’t show that iOS users browse far more than Android users – it only shows that tablet users browse far more than smartphone users. By the way all of these web usage stats are entirely browser based and do not include net traffic from non browser apps ( though they do potentially include 3rd party browsers)

        As for Apps, iOS users do use a few more per head, but it’s not 2:1

        http://www.marketingcharts.com/direct/apple-ios-users-have-most-apps-use-most-frequently-17301/nielsen-apps-android-ios-may-2011jpg/

      • Anonymous

        The point is not whether a subset of each platform browses more or less than the other, it is how the platforms as a whole compare to each other. This is the important point you refuse to entertain.

        iOS users use apps 27% more than Android users according to those figures from Nielsen, but more importantly for the ecosystem actually pay for apps10x more.

      • deV

        They only reason to lump them together is to support your bias.

        In reality, iPad is dominating tablets only. Android is dominating smartphones only.

        Web browsing is done more often on tablets, therefore the winner in tablets is also the winner in web browsing.

        Seriously, do you guys sit around all day coming up with stats just to support your predetermined beliefs?

      • Anonymous

        You don’t segregate laptops and desktop PCs when you compare the web browser share of Windows versus Macs vs Linux so there is no reason to segregate smartphones from mini tablets like the iPod touch or larger tablets like the iPad.

        We are comparing overall operating systems and ecosystems, not smaller sub-segments.

      • Anonymous

        Eduardo, why do you insist on trying to exclude half of Apple’s iOS platform and ecosystem when this discussion is all about comparing platforms and ecosystems? 

        The fact is that even excluding the larger-screened iPad, the iPhone and iPod touch together still have larger web browser shares worldwide than all Android devices combined as the data from comScore’s Device Essentials report in particular demonstrates.

        The fact that Android manufacturers have been completely unable to field any viable challengers to the iPod touch which has been out for 4 years now is an important indicator that is ignored at our peril.  

        And yes, there are plenty of Android competitors such as Archos’s mini-tablets which are available in 2.7″, 3.2″ and 4.3″ sizes, the Samsung Galaxy One (basically the Galaxy S smartphone minus the phone) and other mini tablets from the likes of Dell and many smaller brands. All have completely failed to gain any traction against the iPod touch which after all these years retains a massive share of the mini-tablet market and each quarter sells between a quarter and a third the number of units as all Android smartphones and other devices from all manufacturers combined.

        This scenario has now been mirrored for the last year and a half in the larger iPad tablet form factor which casts serious doubt on the competitiveness of the Android platform model beyond the protections afforded by carrier exclusives, baseband incompatibilities, subsidies, family and corporate bundle deals, BOGOF offers etc.

        Again, just because Android has failed to gain traction beyond smartphones does not mean you should put on blinkers and only look at that segment when comparing platforms and ecosystems.

      • Anonymous

        I’m not ignoring the Touch, or the iPad, I’m simply saying that those devices don’t have any immediate relevance to the discussion of whether Android is succeeding in the smartphone segment or any 3rd platforms chance of success.

        There’s no dispute that Android is nowhere in PMP and is very limited in tablets, but that’s not sufficient to make claims about the overall platform health.

      • Anonymous

        Again, the discussion is not about smartphones, it is about platforms and ecosystems which means the whole kit and caboodle. I don’t understand why you can’t see this?

      • Anonymous

        Your contention was that Android smartphones are only used as dumbphones because of web browser figures – I explained why that was wrong.

      • Anonymous

        We’ll have to agree to disagree on that small point.

        However, I am demonstrating that “claims about overall platform health” are absolutely dependent on seeing the whole picture.

      • Secular Investor

        mrtmrt

        Good stuff!

      • Secular Investor

        Edwardo

        You say “Suggesting that units sold is irrelevant is ridiculous. It isn’t the only metric, but it is nevertheless an important one.”

        Firstly, Horace used ONLY smartphone unit sales and user base data to discuss the relative health, strengths and merits of OS ecosytems, which is ridiculous.

        The whole point of my comment was that this data ON ITS OWN is misleading. e.g. Android has twice the user base (measured by smartphones alone) compared to iOS, but by almost every other metric iOS dominates Android by a factor of 2:1 or more.

        Secondly, if one is discussing iOS ecosystems why limit device unit numbers only to smartphones? It flatters to deceive about the success and competitive strength of Android and other OS ecosystems. Apple’s iOS enjoys a massive advantage over other OSs because, unlike all the others, they have three different categories of successful, market leading devices: the iTouch, the iPad as well as the iPhone.

      • Anonymous

        No, iOS only dominates by 2:1 if you are talking web consumption, or perhaps profit share.

        The platforms have roughly equivalent ecosystems when measured by App numbers, there may be a quality difference but it’s hard to quantify.

        This article was about the prospect of a third ecosystem, so logically the first place to look is smartphones because only in smartphones are there even any viable candidates for a third ecosystem.

      • Anonymous

        iOS and Android are far from equivalent when comparing app platforms:

        - 71% of all free and paid app downloads in 2010 were to iOS devices (IHS Screen Digest)
        - 82% of developer profits are to iOS developers, 5% to Android developers (ABI Research)
        - iOS users each worth up to twice as much to advertisers as Android users (Mobclix)
        - Total number of Apps: 500,000 iOS Apps vs 250,000 Android apps
        - Total Tablet Apps: 125,000 iPad apps vs 1-2,000 tablet-specific Android apps
        - Number of developers: 43,185 iOS devs vs 10,199 Android devs
        - 45,000+ Android spamware apps vs zero for iOS (AppBrain)
        - 720 Android malware apps vs zero for iOS (McAfee 2011 Q2 Threat Report)
        - Android has only 10% of the game titles from top tier games publishers like Gameloft, EA, ID, PopCap, NgMoco, Pangea.

      • Anonymous

        A lot of what you are saying is correct, such as the numbers regarding paid apps, and the higher levels of Android malware. However other statistics are wrong.

        The idea that Ad revenue is higher from iOS users is wrong. The fill rate on iAd is known to be terrible, because advertisers do not like the system.

        Your numbers for developers are over a year old which you should realize makes them worthless.

        As for number of apps, you have to compare like with like. Yes Apple is miles ahead on tablet apps, but on phone apps the gap is much closer and narrowing – going from the last independent survey

        http://maypalo.com/2011/04/29/android-market-beats-apple-app-market-in-free-app-numbers/

      • Anonymous

        You do realize iAd is only one of many ad services on iOS?  If you are going to dispute Moclix’s findings that each iOS user is worth twice as much as Android please provide evidence.

        In terms of more recent developer numbers, a Feb 2011 report from the App Genome Project reports there were 4.2 apps per iOS developer vs 6.4 apps per Android dev making the totals 86,000 iOS devs vs 39,000 Android devs.

        Since then, Flurry reports that new Android app project starts dropped from 36% in Q1 2011 to 28% in Q2 2011 as compared to iOS growing from 64% to 72%.  

        In terms of app numbers, your maypalo.com link shows Distimo’s very misleading March 2011 report that separates out iPad apps from iPhone apps.  Considering that 61% of iPad apps are universal and run on iPhones as well as iPads, this is fraught with problems. Even so, they still report that “iPhone” apps outnumber all Android apps 333,241 to 206,143.  Of course counting all iOS apps gave 409,000.

        However, considering that Google accepts any spamware, malware, pirate app, copyright-infringing app, badly coded app, test app or anything anyone wants to throw up there, what is more surprising is that the number of apps in the Android Market hasn’t surpassed the iOS app store a long time ago.  

        I think a far more useful comparison would be how many apps are in the curated Amazon store where like Apple, they actually sift the wheat from the chaff.

        In a nutshell, Android is still far behind iOS in terms of app platform and ecosystem and not catching up anytime soon.

      • http://aegisdesign.co.uk Shaun Murray

        A perfect example of why unit sales or Market share isn’t a good measure of ecosystem success would be Nokia but Horace is only using USA figures here.

  • Erinclark2000

    I have to raise the question of bigger importance: Will ecosystems matter or even survive as clouds and virtualization really take over? I cannot imagine how Apple will retain control AND market share simultaneously as apps get developed for smartphones that are really just web clients. I’m loosely in the industry and specifically know of projects underway for smartphones developed to be basically web clients. If your email, facebook, skype etc are all exactly the same instantly upon logging in on your phone, what’s the difference in what the OS is?

    • http://www.asymco.com Horace Dediu

      Belief in Web clients and non-native apps has been like listening to a chimera singing a siren’s song while drinking from a holy grail. A twenty year odyssey to nowhere.

      • http://aegisdesign.co.uk Shaun Murray

        I think Erinclark2000 was talking about neither web clients nor non-native apps. There are a lot of apps being developed which ARE native but are mostly just embedded HTML views and stub applications around them.

        Just a few days ago Nokia published an article on their developer forum on how to create cross platform hybrid apps that have a C# stub on Windows Phone and a Qt stub on Symbian/MeeGo. It’s not an uncommon development practice these days for some classes of app.

      • http://twitter.com/cf_torchie Kyle Reynolds

        It’s usually the people backing the platforms with few native apps that follow this pipe dream.

        Note that all the “revolutionary” work in web applications has been going towards either emulating things that are at least 10 years old native (2D platformers, Microsoft Office), or running native code in a browser.

        Wherever web apps are going now, native apps will leap over soon.

      • deV

        Meh. A good example of the use of the cloud is syncing music. Why hook your phone up to your computer through USB to sync when you can use WiFi? And why bother with that when you can just sync with the cloud, and it keeps track of your listening history, your ratings, and gives you recommendations?

        So cloud is almost certain to dominate that use case, whether it be Spotify, Google Music, or Amazon Cloud Player.

        Unless you’re doing something like video editing, there’s no reason you can’t move most apps to the cloud, losing very little in return for better features.

      • russell

        Additional thought to my comment above. The fact that a company actually holds the physical hardware/OS that is on your body almost 24/7 has still got to hold some significance in the future. Can’t say how, but its gotta be more of an advantage than a disadvantage. I only need to thing of facebook in its current state but with a relevant hardware platform in your pocket to see the value this would add to the equation.

        Horace, is there any significance in this as the cloud takes on more relevance?

    • Russell

      It is perhaps true that Apple will be challenged once the cloud is in full force. But, for the fact that they are embracing this change instead of fighting it, tells me that they are not going to get hurt to the degree many consider likely. Also, none of the significant players at the table are necessarily optimized for this transition. Google w/index search does not get any unique advantages in a new mobile/cloud environment. Facebook and Microsoft have their own challenges here too. They must all fight to stay relevant once this change gets underway.

  • Bing_crosby_whitexmas

    Horace, as usual incredible research. I see no way that Apple doesn’t get to 50% market share by 2015 worldwide. I have run a host of models and see Apple growing EPS at least 32% in FY 12, 13,14,15 which will give us a EPS of around $85 for Fiscal 2015. Put a simple multiple of 12 on the TTM in October of 2015 and the share price will be north of $1,000 and that gives a $-0- discount factor to the cash position that will be on the balance sheet which by that time will probably be around $300-$350 per share. This company will make many many many millionaires to those who follow a simple long term strategy employing near the money call leaps when they print each October.. For example in October I expect the Jan 2014 leaps to print. The stock will probably be around $400, so buy the Jan 2014 $450 and the cost will probably be in the $60 range… By Jan 2014 the stock will be around $750 so the leap will have a value of $300 minimum or a nice 5 bagger for your 2 year hold period! :)

  • http://aegisdesign.co.uk Shaun Murray

    Last I checked, the UK is in Europe.

  • Info

    @mrrtmrrt Do you have any data where type of users are compared to platform. For instance, Blackberry have a higher percentage in business people than students. Thanks!

    • Anonymous

      Nielsen reports that 40% of iPhone users have incomes above $100K versus Android with only 28%.
      6% of iPhone users are over 55 vs 4% of Android users.
      4% of iPhone users are under 18 vs 6% of Android users.

      Comparing smartphone OS ownership, 29% of whites have iPhones vs 27% Android.
      15% of Blacks have iPhones vs 31% Android
      36% of Asians have iPhones vs 20% Android
      29% of Hispanics have iPhones vs 27% Android

      Lots of other stats on the web

    • Anonymous

      Nielsen reports that 40% of iPhone users have incomes above $100K versus Android with only 28%.
      6% of iPhone users are over 55 vs 4% of Android users.
      4% of iPhone users are under 18 vs 6% of Android users.

      Comparing smartphone OS ownership, 29% of whites have iPhones vs 27% Android.
      15% of Blacks have iPhones vs 31% Android
      36% of Asians have iPhones vs 20% Android
      29% of Hispanics have iPhones vs 27% Android

      Lots of other stats on the web

      • http://deano.com Deano

        So, not too far-fetched to theorize that android users are less educated and make less money… I’m guessing a fair bit of android market share is in “dumbsmart” phones that vary widely in battery life, user experience, and capabilities.

      • deV

        Perhaps percentage wise, but considering one platform has double the number of users…in raw numbers, more rich, well-educated people use Android. And then on top of that group of rich people, many more poor people do as well (though probably different models than the rich group). All depends on how you choose to view the world, I suppose.

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  • Shenzheke

    智能手机在未来的普及已经不必多言,未来的智能手机领域技术上都应该差异不大。我想,中国人是聪明的。生产厂家也不笨,但是用户在选择产品时肯定会比较,这就需要生产商格外注意细节啦!!!

  • 浩 雷

    智能手机在未来的普及已经不必多言,未来的智能手机领域技术上都应该差异不大。我想,中国人是聪明的。生产厂家也不笨,但是用户在选择产品时肯定会比较,这就需要生产商格外注意细节啦!!!

  • Adam

    Does the third graph indicate that the US phone platform install base has held steady at a constant ~240m since 2009? Am I interpreting that correctly?

    • http://www.asymco.com Horace Dediu

      Yes. That is what comScore reports.

      • Alan

        Is there any way to show the share by carrier? iPhone is still on just 2 carriers in the US, so it would be interesting to see a graph like that for each carrier.

      • http://www.asymco.com Horace Dediu

        comScore has this data but they don’t publish it freely.

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