Google’s Android Phones Challenge Apple iPhone For Smartphone Market Share

At a media forum on Thursday July 8, 2010 at the Allen & Co’s Sun Valley conference, Google executives Larry Page and Sergey Brin informed Journalists that Steve Jobs was re-writing Android’s history to align with Apple’s interests. They argued that contrary to Steve Jobs claims Google had been working on Android long before the iPhone was launched in 2007.

According to Mr. Page: “We had been working on Android for a very long time, with the notion of producing phones that are internet enabled and have good browsers and all that because that did not exist in the market place. I think that the characterization of us as entering after the iPhone was introduced is not really reasonable. ” Google co-founder Larry Page opined that that Mr. Jobs claim that Google went into the phone business in order to challenge Apple iPhone was false.

However, a review of smartphone history will show that Google acquired Android in 2005 and began making phone prototypes soon afterward. Informed sources say the model of the Android phones that Mr. Jobs saw at that time looked more like the Blackberry. This suggests that Google’s initial idea may not have been to make phones that look like the iPhone.
Now the question most industry watchers are asking is if Google had been working on an Android powered phone why they did wait until September 2008 a year after the iPhone was launched to introduce the G1 phone? In addition, the facts suggest that it was because of tensions over Google’s entry into the phone business that may contributed to the exit of Mr. Eric Schmidt from the Apple board. Analysts believe that Google may have been working on an android powered phone before the iPhone was introduced but the iPhone seemed to have given them better insights as to how to perfect their own smartphone. This is especially true given the resemblance of the Nexus one to the iPhone.

A further confirmation of Google’s motive for launching the Android phones could be gleaned from comments they made at the Google I/O conference held last May. At the event, Google explained that they introduced Android to consumers so that Apple would not acquire enormous influence that could become draconian.

In addition, the facts seem to suggest that Google went into the phone business following the realization that future of computing would be in portable devices like phones and tablet computers. As a result, they went into the phone business with the goal of dominating web search on that platform just like they had done on the desktop. This notion is supported by Eric Schmidt, CEO of Google in published comments he made in an interview with the UK Guardian newspaper on June 25th 2010. In that interview Mr. Schmidt suggested that he wants Android to be the Windows of Mobile.

Also in that same interview Mr. Schmidt made critical comments about Microsoft Windows and said: “You have to ask how on earth Windows Phone – which will have a paid-for licence – is ever going to attract any handset makers, but it must be loudest for developers considering whether the shrinking, forwards-incompatible pool of Windows Mobile phones is really worth bothering with”.

In contrast, Apple appears to have gone into the phone business as a re-positioning strategy and with a goal to make huge revenue from the sale of the smart phone hardware itself. Also with the advent of the smart phones, Apple realized that there was a huge potential in the area of mobile Advertising. This was why they sought to acquire Admob. While Apple was negotiating to buy Admob which is a mobile Advertising company Google quickly stepped in and acquired Admob. As a result Apple went ahead to acquire Quatro wireless which is Admob’s biggest competitor. In reaction to Google’s acquisition of Admob Apple has re-written the rules of its mobile Advertising platform called the iAd therefore shutting out Admob, which had been acquired by Google.

As the smart phone war rages on Bloomberg, news reports that Apple has sold more than 50 million iPhones since its introduction. According to Apple CEO, Steve Jobs the latest version, iPhone 4 has sold more than 3 million units since its June 24, 2010 debut. Analysts believe iPhones account for nearly 35 percent of Apples $42. 9 billion revenue. Also, the iPhone has over 200, 000 applications with over 5 billion downloads till date.

The rapid growth of applications on Apple’s ecosystem could be traced to the initial incentive the company offered to developers. For example at the beginning, in order to encourage Applications that will run on the iPhone, Apple made an indirect investment by virtue of a $100 million venture-capital fund set up by Kleiner Perkins Caufield & Byers. Today Apple has paid over one billion dollars to developers since inception.

Apple’s success has spurred other players in the smartphone market like HP, LG, RIM, Google, Palm, Nokia, and Microsoft to develop mobile stores where customers with mobile platforms can pay and download applications.

Just like Apple, Google has been, achieving success with its Android powered smartphones as sales have continued to rise dramatically. A confirmation of Android’s growth could be gleaned from the positive comments made by Google’s Senior VP of Product Management, Jonathan Rosenberg in July 2010. According to Mr. Rosenberg there are 160, 000 Android-based devices being activated daily. He stated that Android search grew by 300 percent in the first half of 2010, with strong growth expected to continue in the second half.

Mr. Rosenberg added that overall revenue jumped by 24 percent year-on-year and profit increased by 19 percent, as well. Informed reports show that as at May 2010, there were 50, 000 Android Apps but today they are over 70, 000 and by the end of the year they should reach 100, 000. In addition, Google has tried to encourage developers of applications for the Android operating system through a contest. Also according to data made available by Andro Lib, Android users have downloaded more than one billion application till date.

Interestingly, another measure of the success of Google Android phone could be seen from positive figures posted by HTC the Taiwanese smartphone manufacturer in the second quarter of 2010. The company in July 2010 announced that its net income rose by 33 percent for the second quarter, and total revenue was 58 percent more than last years figures. According to the Wall Street Journal for the second quarter of 2010, HTC made a profit of $268 million.

The rise in the profit of HTC is a reflection of the success of Google because analysts believe that it is Android phones that are driving the company’s growth. The wide acceptance HTC’s Google Android powered phones like Evo 4G, the Droid Incredible, the Google Nexus One, and T-Mobile-My Touch 3 are helping to position HTC as a leading smartphone manufacturer.

A pointer to the rapid growth of Google’s Android could be discerned from the fact that Comscore reported on July 8 2010 that Google’s Android platform grew by 44 percent from February to May. According Comscore in the three three-month time frame from December to February, Android had a mean market share of about 9 percent of smartphone’s in the United States. However, in the following three-month time frame, from March to May, Android market share grew to about 13 percent.

Remarkably inspite of the increase in Android’s market share Comscore report showed that as at July, 2010 that RIM was number one with 41. 7 percent share of U. S. smartphone subscribers, followed by Apple with 24.4 percent share. Microsoft was 3rd with a 13.2 percent share; Google’s Android was 4th with 13 percent and Palm was 5th with 4.8 percent market share. Market analysts say a review of the totality of the Market will tend to suggest that Android is growing at a rate that will see it outpace all its competitors.

The Google -Apple face off in the smart phone market is turning out to be like Apple -Microsoft war of the 80’s and 90’s. In the Apple-Microsoft war of the 90’s Microsoft gained competitive advantage over Apple because while Microsoft was forming partnerships with PC vendors, Apple kept its operating system closed for use in only its own computer systems. In that kind of arrangement Microsoft Windows soared in market share while Apple stagnated.

In the present case Google’s Android platform is growing rapidly because it is free so many handset manufacturers are showing a preference for it. Also and is available on multiple-carriers like AT&T, Sprint, Verizon and T-Mobile. However, the Apple iPhone Os runs only on a single device -the Apple iPhone and on one carrier ATT. Experts believe if this trend continues it that may lead to slow growth for the iPhone in future.

Industry sources say, it may only be fair to make comparisons between Apple iPhone and other smartphones running on Android on an individual basis to determine how well each one stacks up against the iPhone. Experts believe that collectively the smartphones running on Android may eventually have more market share than the Apple iPhone smartphone which is a single device, but individually none of the Android phones would likely outsell the iPhone which is regarded as the fastest selling smart phone in history.

A pointer to what the future of the smartphone market will look like is contained in recent report published by IDC, a Market intelligence company. According to IDC’s analysis by 2013 Symbian will be number one mobile OS worldwide, while Android will be the No. 2. IDC predicts that Android may likely achieve the fastest growth of any mobile operating system ever.