Android, Apple iOS, and Blackberry in a Close Race for 2011 US PDAPhone Share

As we start the new year, we find a much different US market share position for the PDAPhone / Smartphone market than what we saw a year ago. At the beginning of 2010, Apple had a solid position having established the iPhone market and was gaining share, primarily at the expense of RIM, Microsoft, and Palm. At that time, Google had Android on its feet and it was starting to show rapid growth on a trajectory to overtake everyone eventually. And RIM, had a large traditional market that was being eroded by two competitors that they hadn't probably considered a few years earlier. But a year later, and we find the three in a near dead heat going into 2011.


This Nielsen Company report shows a clear picture of the momentum swing that is occurring between RIM and Google, with Apple sitting comfortably on a stable position. While Apple has taken the lead (28.6%), it will certainly be passed in market share very quickly in 2011 based on the current Android growth. Based on this report, RIM's Blackberry platform has dropped in share from 33.9% to 26.1%, while Google's Android has risen from 15.0% to 25.8%.



But there is more to this race than the numbers would indicate. If we look at the three companies, RIM and Apple both develop hardware/software solutions and measure their revenue mostly by units of hardware sold. Google, on the other hand, is a company that gives away a lot of their products for free and generates most of their revenue from advertising. In the PC market, Apple has done quite well with a much smaller Mac market share than its competitor, but at much better margins. In the music player market, Apple has dominated in market share with the iPod family. So they have proven that they can succeed in either position, and they have a major ace in the hole that is sure to drop soon... Verizon Wireless beginning to sell the iPhone. This will create a big battle between the two largest wireless carriers... AT&T trying to hang on to the iPhone customers... and Verizon feeding on the many current iPhone customers who love the device but are unhappy with the carrier. The networks are not compatible, so every one of those switchers will have to buy a new iPhone.

While Apple has proven it can win in both market share positions, RIM has traditionally dominated the PDAPhone / Smartphone corporate market. There have been some minor wins from Windows Mobile and Palm over the years to take a small chunk of the corporate mobile email space, but RIM has largely been unchallenged in a serious manner. But today, many corporate executives have bought iPhones and are demanding that their IT departments get them connected. The ball is in Apple's court to really take advantage of this, because there are still some significant challenges that are preventing some large corporations from making the switch. RIM's platform is very stable, very secure, and still is the master of the corporate email domain. But they are dropping in share, and will need to prove that they can manage that position. We can't forget, however that the overall market is growing rapidly also.

That brings us to Google and Android. Unlike the other two, Google is in this race for entirely different reasons. They want the mobile advertising space. Apple has been challenging them in that arena much more than RIM. But Google is going to have challenges with fragmentation of the market and security of the platform. These are very new challenges in a space that they've not proven themselves fully in yet. Time will tell if they can maintain control and order as their user base continues to rapidly expand on many different handsets from many different OEMs.

In 2011, I believe that all three will be winners. The market is growing and they all have significant positions. Android will definitely take over the market share leadership position (if they haven't already). Apple will continue to lead in profit margin. RIM will have a challenge to keep up with the consumer side, but will continue to lead in the corporate space. All three face challenges, but Apple I think is best positioned if the rumors prove true on Verizon getting the iPhone in the next couple of months.

It should be an interesting year for sure.






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