Android Roars to Smartphone OS Dominance

by Mercator Advisory Group 0

In case you were wondering how the Android mobile operating system has been faring in its battle with Apple’s iOS, RIM, Symbian and others, this week’s news from Gartner tells the story. Android is a roaring success with a 25.5% global market share. It’s hard to argue with its price to the handset maker and mobile operator: free. In terms of market share, even iOS has dropped less than half a percentage point in a year to 16.7%. The real losers have been Research in Motion, maker of the Blackberry, and Microsoft.

Next year’s numbers will likely reflect a few changes. Apple might drop a bit further but don’t cry for Steve Jobs as the iPhone will remain the leader in the high end of the smartphone market and still contribute a whopping 30% or more to Apple’s revenues. RIM’s fortunes are looking grim as no products to galvanize consumer interest have emerged from the firm. And Microsoft can only go up from its 2.8% share – and it will. Windows Phone 7 was just released and with a $1B marketing campaign in the works and a very good mobile operating system, Microsoft should start gaining real momentum. And it will be just in time.

Finally, Android will face its own issues, the largest of which is its variability. Because it is open source, every handset maker and mobile operator can tweak the operating system to better support its business needs. That makes for different user interface standards, potential pre-installation of bloatware and its cousin craplets, and other sins that create incompatibility, increase consumer confusion and application developer frustration. To forestall chaos, Google is going to need to step up and make some standard profiles it isn’t too late to do so.

Mercator’s forecast for smartphone penetration in the USA is less optimistic than Nielsen’s recent numbers showing that 50% will have smartphone by 2011. We add another two years to that figure. But the smartphone sea change is well underway and it’s going to touch merchants, consumers, financial institutions and the payments industry in unexpected ways.

Gartner also said that global mobile phone sales totaled 417 million units in the third quarter of 2010, a 35 percent increase from the third quarter of 2009. Smartphone sales grew 96 percent from the third quarter last year, and smartphones accounted for 19.3 percent of overall mobile phone sales in the third quarter of 2010.

In terms of North America stats, Apple’s share surged past Research In Motion (RIM) but it still falls behind Android. Gartner estimated that Android phones accounted for 75 percent to 80 percent of Verizon Wireless’s smartphone trade in the third quarter of 2010.

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