Despite Apple gains, Android rules smartphones

Even though Apple sold a record number of iPhones over the holidays, it’s still an Android world.

Last year, Android became the first operating system ever to ship on 1 billion phones, according to a new report from Strategy Analytics. That helped the operating system actually increase its already dominant market share to more than 80 percent. Android’s share gain came at the expense of both Apple’s iOS and Microsoft’s Windows Phone.

In 2014, Android was the operating system on 81.2 percent of all smartphones shipped, according to Strategy Analytics. That was up from 78.9 percent in 2013. By contrast, iOS’s market share fell from 15.5 percent in 2013 to 15 percent in 2014, and Windows Phone’s dropped from 3.6 percent to 3 percent.

Android’s success came despite Apple’s blockbuster iPhone sales in the fourth quarter. Apple sold 74.5 million iPhones in the period, which was up 46 percent from the same quarter a year earlier. The company’s sales were boosted by new larger screen models that helped give it a leg up in China.

While iOS lost ground to Android in 2014, Apple gained ground on arch-rival Samsung, the leading smartphone maker. Last year, Apple shipped 192.7 million iPhones, up from 153.4 million in 2013, according to IDC. Although that result allowed the company to retain its place as the no. 2 smartphone maker globally, its share slipped to 14.8 percent from 15.1 percent, according to the research firm, because the broader smartphone market grew even faster than Apple’s iPhone sales.

Still, Apple’s results were far better than Samsung’s. The Korean electronics giant shipped 318.2 million smartphones in 2014, only a slight change from the 316.4 million the year before, according to IDC. As a result, its share of the market slipped from 31 percent to 24.5 percent.

While Samsung and Apple saw their share of the market slip last year, Lenovo and Huawei both gained share. Lenovo, now that it has acquired Motorola, is now the third largest smartphone maker with 7.4 percent of the market, according to IDC.

Android image courtesy of Google.

 

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  • Johnimo

    Other phones are for people who want a cool, touchscreen phone, while iPhones are for people who want – primarily – a handheld computer that just happens to make phone calls.

  • RANDY WILHELM

    YEAH TROY, ITS LIKE PLAYING FOOTBALL 11 VS 1, OR 5 ON 1 IN BASKETBALL. ALL THE DROID PHONES SHOULD OUTSELL AAPL. BUT LOOKS LIKE PEOPLE WANT QUALITY AND THE BEST SO I THINK ITS PRETTY PATHETIC THAT DROID ISN’T OUTSELLING AAPL LIKE 90% – 10%.
    OH WELL, SO HOW IS GOOG STOCK DOING THEN? LOOKS LIKE AAPL BUSTING OUT TO NEW HIGH’S SOON AS AAPL GETS IT’S 18TH UPGRADE THE PAST 2 DAYS.AAPL GROWING 30% A YEAR FOR NEXT 2 YEARS, YET TRADES AT A 10 P.E. I’M BUYING AAPL PRODUCT’S AND STOCK

  • Ranchrfl

    So what’s your point? APPL has the largest Market Cap in the world; the highest asp; the highest gross margin and just about enough cash laying around to buy Samsung for cash. Bottom-line the ONLY comparison that matters is the BOTTOM-LINE.

    • gars

      Bottom line it’s android world…

  • James Johnson

    In what world does winning a war mean making ZERO profits?

    Samsung’s smartphone profits are down 60% this quarter.
    Apple’s is up 40%.

    HTC, Xiaomi, LG, Motorolla all make ZERO profit. Apple made 95% of the profits in the all important Dec Quarter and 80% for the entire year. So you call that LOSING? More like winning.

    The vast majority of Android phones sold are cheap $100 phones that do not bring profit to the seller. They are basically feature phones.

  • Fredrik

    A Vast majority of the persons now buying Android products do it out of economic necessity. When and if they find themselves with better finances, they have not invested in the Android ecosystem and will covet the iPhone. That, I believe, is the grim truth. Then there are those that just don’t like apple or wish to not buy it for some symbolic reason. Those are the “geeks”..;-). But most android users hereabouts (Sweden) ogle the iPhone nore and more when getting a new phone, and a majority of my surroundings have now purchased iPhones. And are satisfied, investing in ecosystem and thus purchasing more etc.

  • Bill S

    Troy, your analysis is naive. While Android has the vast majority of the unit volume, it has very little profit. Apple just made about $12 Billion in profit from last quarter’s iPhone business. Meanwhile, Samsung made $1.92 billion and the rest of the smartphone market probably, in total, made less profit than Samsung.

    So, while Android may have 80% of the handsets, Apple has 75% of the profit.

    Given the choice between winning a number and winning a dollar, which would you pick?

    You can argue that Android’s ubiquity ensures eventual success, but the rise of China’s aspiring consumers suggests Android is something people hope to leave, not join.

    I’ve no idea how long Apple’s success will last, but your failure to recognize the elephant in the room casts doubt on your vision.

    • kapft

      China, India and emerging markets will ensure androids reign and will keep increasing it… Unless apple releases a sub $200 device, which is close to impossible. Apple products as good as they are, is not worth the price they are asking you to fork over.

  • Softeky

    Android did not ship any smartphones. A dozen separate manufacturers shipped smartphones that run Android.

    This article has somehow spun it as a negative that Apple has sold more smartphones in the last quarter than Samsung shipped to its channel. i.e. Apple actually sold more smartphones than the largest single manufacturer of the most populace Anderoid running phones in the world.

    The number one single manufacturer and seller of smartphones in the world.

    How can that be negative?

    Oh, right, excuse me. Apple is doomed.

    • You’re right — Android didn’t ship any phones; instead it was shipped on phones. I’ve fixed the wording in the sentence to make that more clear.

      I didn’t make any claim that Apple was “doomed” or that its performance was a “negative.” As I wrote above, Apple had “blockbuster” sales in the fourth quarter.

      • Ranchrfl

        Troy, you had to acknowledge the obvious but the rest of the article had a clearly pro-Android flavor, that somehow shipping more units was an achievement worthy of your time.

  • Benjamin

    No, the true King is Apple(yes, this is as meaningless as the article I’m replying to, I’m just having fun with it)… See Kings require the peasants to do most of the work while they reap most of the rewards. That’s how real monarchies(as opposed to titular monarchies) tend to work. Look at Apple’s profit share, versus their work share(market share), and it’s very clear who the royalty in this arena is. Android makers do over 80 percent of the work making smartphones and get less than 20 percent of the profits. That’s a peasant’s life right there. Apple does 15 percent of the work making smartphones and gets between 70 to 80 percent of the profit. THAT is how a King rolls.

  • JarJarThomas

    Android and ios are two different worlds.
    Not only os wise … especially feature wise.
    Android phones are sold with Android 2.3 with 512mb of ram. with 2gb memory, with 320*240 screens.

    The “worst” iphone is technically better than more than 60% of the phones sold with android.

    Another question … why is the market share important ?
    -> Means higher market share = more profits ? well with android clearly no.
    -> Means higher market share = more apps because it is more interesting for developers ? No. Android is always an afterthought … because in most situations it cost way more to port an application to android than you earn money with it. Especially if you think about the 90% pirate problem on android.

    So … means higher market share it is technologically more advanced ?
    Also no. Fastest device -> iPhone.
    Most secure device -> iPhone
    Most android phones (see above) are not even as fast as a 5C. Which is technically a three year old phone.

    So higher android market share is in all key metrics useless.

  • Larry

    Yes. Android wins the race…..to the bottom….
    Ultimately, companies are in business to be profitable. Apple clearly wins that. One could argue that market saturation could lead to market domination which would lead to domination of profits in the long run. That seems unlikely in the Android world, where there is too much fragmentation and too many players to ever lead to a unified strategy and monopoly.

  • sconosciuto

    I would like to suggest that a more sensible way to look at this is NOT “Apple vs Samsung” but rather “Apple vs Google”. Who derives most of the benefit from Android on all those smartphones? It’s pretty clear by now that it is not any of the non-Samsung handset makers, and not even Samsung any longer. Despite Android’s market penetration, most of the profits from selling smartphones go to Apple and (despite the Chicken Little predictions of Android fundamentalists) that is not going to change anytime in the predictable future.

    This is a replay of the PC wars – Apple making the OS that runs exclusively on their hardware and making bank on the hardware, vs Microsoft making the OS and profiting greatly from it while a variety of hardware makers slug it out in a race to the bottom.

    Is it possible to figure out how much it’s worth to Google to have Android on all those devices?

  • JDSoCal

    What nonsense. Apple destroyed Samsung. I’d suggest the author Google
    Daniel Eran Dilger’s article on Apple Insider, “Samsung’s mobile profits plunge 64.2% after Apple’s iPhone 6 devastates premium Galaxy sales.”

    Here’s a money quote for you:

    “Samsung Mobile is now earning less than 7.5 percent of Apple’s profits while still shipping more phone units.”

    It’s an Android world? LOL! Android is dying. Samsung is going to dump it for Tizen, and even Google is moving away from it with Chrome!

    Please don’t give any of your friends or family investing advice.

    • I’m not sure what world you live in where an operating system with more than 80 percent market share in its primary market — smartphones — is “dying.” What’s more, Android is already starting to make inroads in wearables via smartwatches and in smart televisions.

      It is true that many of the Android phone makers are struggling to make a profit. And Samsung certainly has stumbled over the last year (as I wrote above). But the sheer market share numbers indicate that phone makers other than Apple continue to embrace Android, not shun it.

      And what choice do they have? They can’t license iOS. Windows Phone has never gotten off the ground. BlackBerry OS is all but dead. Symbian has long since died. Firefox OS may have some promise, but it has few adherents. And any homegrown operating system would take years of development and investment to even be considered to replace Android.

      So, don’t be so sure that Samsung is “going to dump” Android for Tizen. Samsung’s latest moves indicate it’s not at all ready to do anything of the kind. Read here: http://www.businessinsider.com/r-tizen-tv-no-substitute-for-samsungs-long-awaited-answer-to-android-2014-12

      Meanwhile, much of the buzz about Google replacing Android with Chrome seems to have faded. The company continues to update Android. And the number of users on Android dwarfs the number of Chrome users by a huge amount. Google would be crazy to throw away that advantage, and I think the company knows it.

      • JDSoCal

        You really quoted a Business Insider article as a source. Wow. Sorry, but a click-bait site run by an amoral dirtbag who was banned for life from the securities industry is not a source. It’s a scourge.

        Market share is IRRELEVANT. Profit share is what matters. Once the profit is sucked out of an industry, players leave it (like IBM and personal computers). Samsung might ultimately dump phones altogether if they can’t make profits on it, which they are getting close to after factoring in their enormous R&D and marketing costs. Then what happens to Android?

        And what “advantage” is Android for Google again? Google makes nothing on Android. It’s a loss leader. And every ad served on mobile is way less money than one served on the desktop. So every Android phone sold is a torpedo slamming into the hull of Google business model. Google makes far more ad revs on iOS, because Android users are either cheap, or Luddites who only call and text. Most major Android forks don’t even allow Google monetization, and Google has ZERO monetized presence in China. Other than that, Android is a huge advantage, LOL!

        Launching Android was a catastrophic error by Google. By betraying Apple, that little rat Schmidt sealed Google’s fate. Today’s earnings miss is a trend downward into the abyss. Just watch.

        Dude. put dowm the Kool-Aid, Google is so screwed.

        • Henry Blodget’s merits aside, if you had you bothered to look, you would have seen that the Business Insider article was actually written by Reuters. You may not consider the organization to be a credible source, but I generally do.

          Profit share is certainly important, but market share is hardly irrelevant. To take one example, there is a reason why most PC programmers developed their applications for Windows first and Macs only second — if at all.

          (And, yes, I’m quite aware that the smartphone market is different from the PC market. Thus far, Apple has been able to nurture a more thriving ecosystem than that for Android; developers are generally making more money from iOS apps than Android ones, and so they are developing for iOS first. But that might not always be the case; Google is putting more and more effort into improving its own ecosystem.)

          For Google, Android retains its purpose, which is to ensure that the company is able to deliver its ads and applications in the mobile world. The company saw pretty far in advance that Internet usage was going to move from the PC to the smartphone. Android was its way of ensuring that it wouldn’t be locked out of the mobile world. In that way, its analogous to the effort Google put into making sure that there were rivals to Internet Explorer, first by backing Mozilla and Firefox and then by developing Chrome.

          With rumors circulating that Apple might replace Google search with Yahoo, do you think that makes Google more or less likely to continue developing and pushing Android? And does that make Android more or less critical to Google? I think the answers to those questions are pretty obvious.

          It’s quite possible that players will drop out of the market if they can’t make money. Tat certainly did happen in the PC space. What typically happens when profit margins are narrow is that you see consolidation in the market. The players that succeed are those that can produce — and turn a profit in — volume. Samsung may decide it doesn’t want to be in that business, although given that its still the no. 1 player in smartphones by a long shot, I can’t see that happening any time soon. And even if it does, Lenovo seems more than willing and ready to pick up the Android baton.

          It’s funny that you accuse me of drinking the Kool-Aid. It’s pretty clear to me that many folks here have been hanging too long around Apple’s punch bowl.

  • upgrade

    But tons and tons and tons of Android phones *can’t* be upgraded to current software… ever…

  • AlfieJr

    well, Troy, your bias has always been clear, but this post really does take the cake. now you have totally come out of the closet as a ‘droid booster, congratulations! we’re #1! we’re #1!

    never mind that the majority of those cheap ‘droid phones worldwide now are small “a” android – functionally outside of the Google capital “A” first-world Android ecosystem and ad network, or that “a/Android” is splitting in to so many fragments globally that it will soon not be a single fully compatible OS at all. all that matter is the nominal brand, right?

    as if Apple cares. i suspect just becoming The Biggest Company In The World Making The Most Money Ever is probably good enough.

    • I’m such an Android booster that I wrote this post on my late-model iMac with my iPhone 5s at my side.

  • Michael

    Thank you Troy. Your report was well-balanced and informative. I get so sick of the hype from Apple cheerleaders. I’m glad their company is doing well but their propaganda is so insulting to those that value truth telling.

    When I heard Apple’s news I immediately saw they would have missed estimates had it not been for China and I suspect China was bought off somehow because that is how Apple does business. China is not that rich per capita that they can buy smart phones and the 16 billion that Apple reports they sold China including Taiwan translates roughly to 16 million Chinese buying iphones. Shanghai doesn’t even have that kind of population.

    I suspect Apple cit a sweetheart deal with the Beijing government who facilitated the buying.

    Apple is all about their narrative rather than reality. It’s foolish to believe everything they say. Their products are great but they are not so good that they offer so much more than Android. Nokia is great too at a better price. Apple doesn’t hold a candle to Nokia’s camera capabilities. As for all the other features that people enjoy with smartphones, Apple is Ok in features but not so overwhelming to grab people away from Android Apps and features.

    As for profit share, Apple is doing great but maybe it’s just a blip in the time series. If they can’t translate those profits to market share, then where will the profits go? Smart watches? I still can’t see the utility of such a small device with my large fingers trying to navigate such a small screen or voice recognition that can’t function against a background of street noise.

    I really believe ‘price’ is the driver for the future whereas ‘profit’ is a temporary touchdown that brings a roar from the crowd. I could be wrong but unless Apple develops a Star Trek teletransporter there just another smartphone maker.

    Troy, if you could break the real story of Apple and China, I would push for you to be nominated for a tech journalism award.

 
 
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