As birthday presents go, learning you have a share of 75% of the smartphone market is not a bad gift. Last week, IDC revealed that three out of every four smartphones use the Android operating system, with 136 million devices shipped in the three months to the end of September. Google’s wildly popular operating system has just marked its fifth birthday. Bonfire Night 2007 was when the operating system was first unveiled by the Open Handset Alliance, a consortium of tech giants seeking to build an open platform. While its first device, the HTC Dream (aka the G1), did not go on sale until almost a year later, Android quickly established itself as the dominant OS player. ‘Its timing was perfect,’ says Geoff Blaber, director of devices and platforms at CCS Insight. ‘Operators and manufacturers needed a response to the iPhone and there was the fact that Symbian was ageing and failing to deliver.’
But with three out of every four smartphone owners using an Android device, where can it go from here? After the false start of Windows Phone 7, will Microsoft, bolstered by a huge marketing campaign and enthusiastic cross-manufacturer support, actually achieve its potential and make serious inroads into the smartphone market with Windows Phone 8? Will 2012 be seen as the year when Google never had it so good?
It is perhaps best to first look at why Android came to dominate in such a short period of time. As little as three years ago, Google had only a 4% share of the market. In the halcyon days of 2009, it was Symbian that ruled supreme, with a share of almost half of the smartphone market, a dominance that seems alien nowadays.
But the reason why Android caught on so quickly was because of the popularity of Apple. As is the case now, the iPhone was popular but prohibitively expensive to some parts of the market. Android capitalised on this by offering consumers an iPhone-esque smartphone experience without charging the consumer Apple prices. Francisco Jeronimo, research manager for European mobile devices at IDC, says: ‘They may not be as good as the high-end devices in terms of screens or the processing speed, but those users looking for a similar experience can find it with a much cheaper Android device.’
While HTC was very much the pioneer in initially driving Android sales, it is Samsung that has dominated the ecosystem in recent years. While it was hard to miss its high-profile marketing this year between the Olympics and X Factor (among others), it has also quietly been innovating in the smartphone space. ‘It has done things that other OEMs hadn’t yet thought of – look at the Galaxy Note and its screen,’ says IDC’s Jeronimo. ‘It is very good at understanding the forthcoming trends in the market.’
But that’s not to say its investment hasn’t helped. Jeronimo says: ‘It is also investing massively in point of sale and has great commissions for sales staff. Its huge investment on the operator channels has really driven momentum. If you go to any store in London, the staff there will likely advise you to buy Samsung, whether it’s the S III, S II, Note or any of its other devices. That’s the kind of investment that HTC, Sony or Motorola just can’t follow. They just don’t have the same sort of brand awareness that Apple does.’
Rise of the rivals
According to the latest figures from Kantar WorldpanelComTech, almost three out of every five smartphones in Britain run Android. But after this high point, is the only way down for Android? CCS’ Blaber says: ‘As much as volumes are incredibly impressive, with one million devices being activated each day, it’s a bit misleading because Android faces a number of significant challenges.’
Notwithstanding the patent rows between Apple and Android manufacturers the world over, top of this list is that very few manufacturers are making money from the operating system. Aside from Samsung and deep-pocketed Chinese manufacturers such as Huawei, the major Android smartphone makers are finding it incredibly difficult to keep up with Korea’s finest. Jeronimo says: ‘For the next couple of years it will be Samsung dominating growth, unless Google does something with Android and focuses more on Motorola. For the time being, I don’t see any other vendors with such strong investment and capacity to push Android.’
CCS’ Blaber argues Samsung’s dominance of Android could end up a problem, if the Korean manufacturer’s attention moves elsewhere. ‘Samsung accounts for around 40% of Android’s volume. There’s a huge reliance on one player and if you take the S III out of the equation, Android is not as strong at the top end as Google would want it to be. Apple still dominates the premium market. Should Samsung start to switch allegiances, it would have serious implications for Android.’
And manufacturers have definitely started to make serious eyes in Microsoft’s direction. Nokia is wedded to the Windows Phone platform, for better or for worse, and both HTC and Samsung are hoping for great things from their own WP8 devices. As Mobile revealed last week, Microsoft is targeting the mid-market with the operating system. The more techy viewers of the Windows Phone 8 event last month were somewhat bemused by the family focus, whether it was Windows Phone chief Joe Belfiore using his kids to show off the features, or the actress Jessica Alba speaking of how the devices work for ‘the busy mum’.
Android’s customisability is part of its appeal; with a bit of tweaking, the apps, widgets and home screens of no two Android devices will look alike. However, for some users the possibilities are too overwhelming and that’s where Microsoft is hoping its devices will be successful. As HTC UK chief Phil Roberson told Mobile last issue, Windows has the advantage of simplicity over Android: ‘Its ease of use is second to none. Customers do just get it and engage with the platform and they don’t have to read pages and pages online. A lot of customers really get Android and it’s an excellent experience in many respects, but some do have to work at it.’
However, opinion is split as to how successful Microsoft will be. Operators and retailers are keen for it to bite among consumers in order to move away from the Apple/Samsung duopoly that has dominated for so long, but CCS’ Blaber says the likelihood of its success is ‘chicken and egg’. ‘Manufacturers are supporting it as a tactical move in case its volumes kick off but they are perhaps not committing in a big way until they see big volumes.’
Windows 8 effect
IDC’s Jeronimo predicts Android’s market share will tumble by around a fifth by the end of next year, largely because of Windows Phone. He says this growth will not just come from Windows Phone 8 devices, but also with more mid-tier devices carrying the Windows Phone 7.8 OS, which will have a lot of similarities to its more mature brother.
But he says Windows Phone is unlikely to make an immediate impact on Android. ‘We are seeing very strong support for it from operators...there’s a lot of investment from Microsoft, and other OEMs will be putting more devices on point of sale for consumers to choose from. But at the moment, it is HTC and Nokia and that’s not enough. We will need around 20 to 30 devices with strong investment to promote the OS.’ Android’s explosive growth shows just how quickly fortunes can change in the mobile market. How it will attempt to stay the dominant player will be as interesting as how it came to be there.
Android's market share, according to IDC