Daniel Eran Dilger in San Francisco
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Reality Check: NPD’s Android vs. iPhone sales headlines

Daniel Eran Dilger

Headlines tell such a sensationalized side of the story. Here’s the missing bits of recent tech media events that have been reported with a slant starting with:

NPD says Android has surpassed iPhone in US unit sales
.
The suggestion: the reign of iPhone is over because Google’s Android platform is taking over the market in terms of sales and installed base.

The reality: Android sales are certainly not eating up iPhone sales, which are higher than ever–especially in the first quarter, when Apple’s hardware sales have historically plateaued. Rather than taking on the iPhone, Android is really just replacing the plummeting sales of Windows Mobile and the old Palm OS (and even webOS) and the embedded software that formerly ran a lot of HTC and Motorola phones. Consumers are upgrading away from pseudo-smartphones from LG and Samsung, and buying more advanced smartphones, which looks good for Android.

Globally however, Android sales are still well below the iPhone. According to IDC, Apple took 16.1% share of smartphones in the quarter, while HTC and Motorola (the only Android makers, who also sell other non-Android smartphones) amassed a combined global share of 9%. Android’s total share is less than half that of second place RIM’s BlackBerry sales and less than a quarter of the smartphones sold by Nokia, but Android is getting a lot of press to suggest that it is taking over the market, at least in the US.

Why is Android doing so well in the US? It’s the same reason RIM’s BlackBerry sales have kept pace ahead of the iPhone, despite failing to best or even match Apple’s platform in terms of technology: most of those phones are being given away for free. That’s an easy way to claim market share, but not really a way to actually create sustainable growth. And if you look at RIM’s global sales in the last quarter, they’re only up 45% year over year compared to Apple’s 131% growth, despite all of RIM’s promotional free giveaways contrasted with Apple’s actual sales to customers.

Apple iPhone smartphone market share surges; RIM slips | ZDNet

NPD’s numbers aren’t a story of Android competing against iPhone as much as Verizon trying to keep up with AT&T’s iPhone trajectory by dumping a ton of free smartphones into the market, many of which happen to use some version of the Android OS. Even so, Verizon is still behind AT&T in terms of smartphone sales.

It’s also notable that only a third of the installed base of Android phones are running the modern Android 2.x. The majority are still running last year’s versions, meaning that Android as a platform is fractionalized to the point where sales (and free giveaways) are not creating a viable market for modern software.

Add in the technical issues that prevent Android apps from being sophisticated (they’re limited in size due to hardware architecture and operating system software issues that have not been resolved) and you have a platform that is smaller than it should be, and therefore less attractive to developers than it would appear it ought to be, given all those free phones that are being distributed.

Inside Google’s Android and Apple’s iPhone OS as business models

On the other hand, Apple’s other iPhone OS devices, the iPod touch and iPad, are not figured into these smartphone numbers but clearly have a huge impact on the market share and installed base that is driving iPhone OS apps. Statistics have long indicated that iPod touch users are buying more apps than even iPhone users, so Apple’s parallel efforts are bolstering the iPhone App Store by a huge amount (approaching a 100% increase over iPhone sales alone) even as Android’s fractionalization problems are deeply cutting away at the critical mass of the Android Market.

Apple’s iPod touch is also driving game development to the point where Apple’s mobile platform is encroaching upon dedicated game systems. Apple now has 20% of that market, nearly double the share taken by the Sony PSP and nearly three times what the iPhone OS claimed just last year. Android isn’t even represented on that pie chart, because there is no viable gaming market on Google’s platform. If Android were really outselling the iPhone OS in some meaningful way, that shouldn’t be the case at all.

Android 2.2 to do things we assumed it already did

Both Google and Apple are accomplishing exactly what they’re intending to do. The purpose of Android is to broaden the base of mobiles that are tied to Google’s adware-based services, rather than Microsoft (Windows Mobile) or perhaps Symbian, which could possibly ally with Microsoft given the deal between Nokia and Microsoft to bring mobile versions of Office to Symbian at some point.

The purpose of the iPhone is to sell new hardware at a profit and dramatically expand the market for Cocoa-based software development. Google doesn’t really care about the hardware margins of its partners, and can’t seem to really sell its own Nexus One branded phone. Google doesn’t care about hardware.

It also isn’t that excited about creating a mobile software platform. It hopes the open source community will accomplish most of that work for it. Google engineers have informed me that the company’s long term plan isn’t to do anything with Android’s Java-like VM or even the new C-based native platform; Google sees the future of mobile apps developed in the same code as it sees desktop apps: the web. The company is betting everything on HTML5. Talk about Android’s current VM, NDK, and Google’s support for Flash are all just efforts at covering the bases until mobile HTML5 apps can become a reality.

Apple sees HTML5 as a useful tool for developing web apps, but unlike Google, the company isn’t sold on the idea that the desktop and native mobile platforms are going to vanish anytime soon. Apple is putting significant efforts into developing Cocoa and Cocoa Touch as viable platforms well into the future, serving needs that web apps can’t serve now and many never really excel at.

That’s why Google’s apps are nearly all web based (Maps, Docs, Gmail, etc) and Apple’s are all native (iWorks, iLife, iPhone apps, Pro Apps). It should come as no surprise that Google’s support for cheap, low quality phones that can be given away for free is an extension of that adware/web-based strategy, while Apple’s sophisticated, premium iPhone market that exacts the world’s highest ASPs while still biting off a third place share of the global market is exactly what Apple is trying to do.

95 comments

1 HCE { 05.10.10 at 11:27 am }

Where Android’s market share gains are coming from really doesn’t matter nor do its perceived shortcomings vis-a-vis iPhone. It is, for the most part, a pretty good smartphone OS – and companies like HTC, Motorola and Samsung know how to make pretty good hardware. The resulting phones may not be as good as the iPhone (in my opinion, at least) but they are not that far off. Adding to that the fact that with Android you have a choice of carriers, choice of form factors and potentially lower prices, is it at all surprising that a lot of people opt for Android?

You can question the methods used by NPD in compiling their data and you can question whether market share in a weaker quarter for Apple really means all that much but the fact remains that Android is growing – and that growth, in part, is because Apple is (for some strange reason) refusing to compete with them. I’m not saying that Apple discount heavily or that Apple start making phones with physical keyboards but at the very least, they should stop ignoring the nearly 70 percent of US smartphone users who are on a carrier other than AT&T.

- HCE

2 HCE { 05.10.10 at 11:40 am }

> HTC and Motorola (the only Android makers, who also sell other
> non-Android smartphones)

The list of Android phone makers is by no means limited to HTC and Motorola – Samsung also makes quite a few, LG makes a couple and there are also models from Acer and Huawei. The following website has a (supposedly) complete list.

http://www.googleandblog.com/faq-about-google-android/

Samsung, in particular, is focusing significantly on Android and expects something like half its smartphones this year to be Android based.

http://www.mobiledia.com/news/71712.html

So, I think, it can be estimated that Android does have around 9-10 percent of the smartphone market.

– HCE

[The reason why you've only seen those models in listing on blogs is because they're not actually selling yet. - Dan]

3 dallasmay { 05.10.10 at 11:44 am }

I just do not understand why so many Apple fans wish so dearly to see Android fall on it’s face. Maybe it’s just from the last two decades of fighting against Microsoft’s Windows dominance has blinded so many people to the concept that not all companies that are competing against Apple are like Microsoft? Microsoft did some bad things, acted decidedly uncompetitive, but some Apple fans are acting like they owe Apple their loyalty for carrying them through the dark ages of computing.

The fact is, Apple with 90%+ market share would be just as lazy as Microsoft. Look at the 3GS for example. They didn’t even bother changing it cosmetically. Apple just lightly updated the processor and added a compass. There wasn’t much real innovation there because they knew they had a year lead on everyone else. And now, after three full years of the iPhone, they finally add multi-tasking -copying Androids method of sleeping apps in the background.

AND they add advertisements to the foundation of the OS! And it’s completely defended in the Mac community. That was going to be the reason we were all supposed to fear Android. Google is an ad company, and their future plan for Android is to sell ads. Well, now Apple is an ad company too. And they are using your iPhone to send you ads. Kinda messes with your head doesn’t it.

Look, I want Android, BB, and the iPhone to succeed. I want lots of companies making new technology and spending huge amounts of money on R&D. Apple does that as well as anyone, but so does Google. Google != Microsoft. The Google hate is completely undeserved.

The Android is a good phone OS and the market is rewarding it. That is the truth of what is happening here.

4 HCE { 05.10.10 at 11:47 am }

> The reason why you’ve only seen those models in listing on blogs is
> because they’re not actually selling yet. – Dan

No – the ones that are being sold are in bold face. We haven’t seen a lot of those models in the US but they are being sold in other countries.

– HCE

5 stormj { 05.10.10 at 11:52 am }

While I fully agree that the iPhone is far from dead (it is clearly the leader in the market and will be for a long time yet), I am not convinced by your parsing of the data here. Also, you have never, to my recollection, presented any data on what percentage of the installed iPhone base still uses older versions of the OS, or what the breakdown by hardware there is. Unless something like 90% of iPhone users are on a 3G or above on 3.x, is this comparison valid?

I fully agree with @HCE above. The problem is that people really hate AT&T. You can explain to them that it’s because the iPhone is so popular, but *no.* *body.* *cares.* When you lose an important call, you don’t go, “gee, my phone is so cool it’s causing my network to break down, yay.” You go “F(*^&$#%^#$#ing AT&T!”

Perception matters when dealing with large numbers like this. Most users simply don’t care about the kinds of things that the Droidtards claim are advantages (65G of MicroSD, 7500×1200000 screen, multitask 80 apps in 6 windows!)—they just want to make calls first. But that works both ways. They won’t sacrifice the ability to make calls for the benefits of the iPhone. Not all the time. Some people, like me, are willing to do this because it works well enough and I do not make voice calls often.

Until iPhone is on Verizon (maybe this means a wait until 4G) or until AT&T does a lot better. The former, even if 2-3 years away, is in my experience more likely to come first.

What about a comparison from some other market where you can get iPhone and Android on the same carriers? What about the sales of Android and iPhone on AT&T?

Something tells me iPhone kicks its ass there.

6 dallasmay { 05.10.10 at 12:01 pm }

Stormj

When you move out of the US, the market gets weird real quick. Symbian’s OS jumps to 50%. BB falls to like 10%, and Windows Mobile matches the iPhone. Things are so different overseas, it’s really incomparable.

And it’s also not fair to compare ATT’s sales of the iPhone to Android. All of the Android phones on ATT are very weak and are more positioned as a step up from the basic dumb phone. They would be better positioned to compete with, say, MS’s new Kin phones than the iPhone.

The honest truth is, until Verizon gets the iPhone or AT&T starts pushing a high class Android phone, we’ll never know how the market would decide.

7 edster { 05.10.10 at 12:05 pm }

While I’m not quite sure of their reasoning for it, Samsung are developing their own smart phone OS. Therefore, anything stated around their Android plans is suspect at best.

@dallasmay – you imply that Apple’s multitasking will essentially duplicate the Android model. However, it’s widely acknowledged by Android users themselves that leaving too many apps running is just murdering their battery. I bet iPhone 4.0 will not have the same problem. I admit, that’s just my opinion, so we’ll have to wait and see. I believe it might have some level of impact that will be offset by Apple’s improving battery tech.

8 exrabies { 05.10.10 at 12:21 pm }

As usual: lies, damn lies and statistics. I constructed some stats for the iTouch platform which (at least for the iTouch platform) tell a different story (http://www.ipodrepair.nl/nl/nl_blog_3.html). Hope you grok the Dutch ;-). As far as Europe is concerned the smartphone mindset is Apple’s. Almost every sales pitch is referenced to the iPhone. Business: want iPhone 3GS, buy Blackberry Bold/Nokia E72, ; middle class: want & buy iPhone 3GS; youth: want iPhone 3GS, buy LG Cookie/Samsung Star. We regularly receive requests to trade in week-old/month-old ‘touch-crap-phones’ for used/refurbished iPhones. Usually Android phones are not even on the radar! And if people own an Android phone, mostly they’re even not aware of it. It is just “a smartphone with a touchscreen, just like the iPhone”.

9 dallasmay { 05.10.10 at 12:23 pm }

edster,

I imagine the iPhone’s battery life will suffer a bit from multi-tasking as well. That is probably apparent from the massive battery that Gizmodo found in the iPhone 4. Apple probably needed the much larger battery to keep up their battery life specs with the added multi-tasking. And good for them, a bigger battery in the same space is always better, right? I’ve never jumped into the “OMG! No removable batter” band wagon. I don’t personally carry a bunch of extra batteries with me, and if you need it replaced take it to an Apple store, big deal. But, as you said, we’ll find out when the new OS comes out.

As for Samsung’s own OS, again I think that is to fill in the gap between a old dumb phone and a real Smartphone. The typical dumb phone hasn’t really be updated in 7 years. This is a way to differentiate their own phones from every other dumb phone. It’s not meant to compete with the iPhone or Android. Again, it’s more likely to compete with MS’s Kin for the teen market who’s parents won’t shell out for a full data plan.

10 John E { 05.10.10 at 12:44 pm }

i’m not really interested in the sales horse race. that’s mainly fodder for the blogsphere to get hits, and for people who are into bragging. or who attach their identities to their brands. just need Apple to have a healthy market share to ensure a full selection of apps and accessories, and to keep Apple adding great new products.

that said, it is fun to watch some well-deserved flops. the Kin duo is the latest debacle. MS took over Danger and turned it to crap. Endgadget’s review was brutal. can’t wait for Dan’s take.

11 worker201 { 05.10.10 at 1:14 pm }

I know a lot of people who had iPhones, and loved them, but got rid of them because AT&T was so awful. Interestingly, it was never because of dropped calls or limited service, but because of customer service complaints – payments not being posted right away, overage charges, poor technical support, etc. Pretty much all of them went to Verizon and ended up with an Android phone. Personally, I think all US cellular companies are equally evil. But the point is that carrier issues have just as much effect on the market as things like phone features and app libraries.

12 Thomas { 05.10.10 at 1:48 pm }

It’s the same with me, and a lot of other people, I imagine. The only reason a lot more of us don’t have iPhones is because of ATT. Pure and simple. If they were available for Verizon 2 years ago, how many Droids and Storms would have sold, or even come on the market, for that matter?

13 benlewis { 05.10.10 at 1:49 pm }

Thank you for the reality check Daniel, as per normal, the best thing I’ve seen written on this topic today. Now where did all the people complaining about Apple’s monopoly go?

14 adobephile { 05.10.10 at 1:56 pm }

It’s really too bloody bad that “so many” poor souls are displeased with AT&T. We’re not. We’ve been with them for two decades under one or another name or incarnation. We don’t mind the exclusivity arrangement, either, as both AT&T and Apple continue to be happy with the arrangement, which may have spawned the current iPad data rates. We’re going to start with the $15/mo one and upgrade as necessary. Steve said there are going to be more new products this year, too. So all in all, we know as we’ve known all along that we’re in the right place. Do Mercedes owners really give a tinker’s damn how Hyundai’s are selling? Nope.

15 roz { 05.10.10 at 2:10 pm }

The issue is ATT. Apple is arrogant to think that it can try to tell people what carrier to use – AND then when that carrier starts failing to do a good job not allow people to use other carriers.

People don’t want to use ATT.
People don’t want to use ATT.

As long as Apple only allows US consumers to pick ATT they are going to go to an alternative. The alternative they are picking is increasingly Android. And the truth is that Android is not that bad and once people start using it they won’t be coming back to iPhone.

So what we are seeing here is Apple giving away another HUGE market for the sake of getting slightly higher margins or a discount on iPad 3G plans, or who knows what. The point is, and I have made it over and over again here: IT IS DUMB TO ONLY SUPPORT ONE CARRIER IN THE US MARKET. ATT has 28% of the market and low customer satisfaction ratings. THE OTHER 72% of the market also wants smart phones.

Apple should support Sprint, Verizon, and TMobile with devices JUST LIKE ALL THE OTHER HANDSET MAKERS DO. Please spare me the talk of how it is not worth it to support other protocols, CDMA or any of that other rubbish. It is clearly worth it for all the other makers. Apple has to play ball like everyone else. These are the costs of doing business in the US market. And please don’t tell me that US does not matter because it is the US market that is now fueling Android sales.

And Daniel you were just plain wrong to be an apologist for this strategy.

16 adobephile { 05.10.10 at 2:16 pm }

roz, I’m not an apologist, I’m not wrong–YOU are, and you’re an idiot to disregard the actual statistics which refute your stupid statement: “People don’t want to use ATT.” Saying it twice doesn’t make it right, it makes you more stupid.

17 Maniac { 05.10.10 at 2:19 pm }

@ John E
> Endgadget’s review was brutal.

Not as brutal as it should have been. Engadget has been pushed out of shape by the massive amount of Apple news these days. They’re desperately trying to avoid being labeled as Apple fanboys. IIRC there’s even an Apple-free version of their site just for the haters.

So instead of completely trashing the Kins from the start, as he should have, Topolsky soft-pedaled it until the end of his review. And even then he stopped short of delivering the appropriate killer blow.

Anyway, back on topic: I agree with Dan that dumping phones with 2-for-1 deals and/or free with contract is a cheesy way of building market share. And so what if Android’s overall slice of the smartphone pie is larger than Apple’s? That’s the way it is in the old world of PC makers: Apple against the horde of generic Wintel boxmakers.

And, of course, that gives Apple the advantage. They control the hardware and software and now the App store. So they can ensure that the overall user experience is the best. No other company can do that.

Google + HTC / LG / Samsung / Moto / whoever is roughly the same model that led to the current race to the bottom among PC makers. One OS maker that creates a generic product running on generic hardware.

In the end, the hardware makers end up differentiating themselves by low price. They all try to push each other over the low price cliff. Good riddance.

18 md5sum { 05.10.10 at 2:27 pm }

NPD doesn’t use any sales figures in their reports. From NPD’s Wireless Market Research page: “This market research information is derived from weekly surveys sent to nearly 40,000 members of our proprietary, online panel of more than 1.8 million consumers, and it is reported to clients monthly.” –http://npd.com/corpServlet?nextpage=wireless-categories_s.html

Now, I agree that the news reports have gotten all riled up about it, and most likely misrepresented the statistical data that NPD has gathered from surveys. However, this does seem to follow the trend that AdMob shows in web traffic.
http://metrics.admob.com/wp-content/uploads/2010/01/AdMob-Mobile-Metrics-Dec-09.pdf

The page of interest here is page 10, showing the North American statistical data. From Q1 to Q5, Apple gained only 3%, while Android gained 23%. In Q3, Apple lost 11% of the 14% they had gained in Q2. Android’s market share has nearly doubled every quarter, with no decrease. Most of their gain from Q2 to Q3 can be directly attributed to Apple. Yes, they’re eating a fair share of the other companies up, too, but Apple is losing some customers and a lot more potential customers to them as well.

Any time that a single competitor is eating up all of your competition, whilst holding you at or close to the same market share despite your best efforts to move forward, that’s a competitor that you should be wary of. It’s not just about sales and sales growth, but relative sales and sales growth is very important here as well. Fortunately for Apple, it’s economy depends on another company or companies out-selling them. Apple wouldn’t have the same feeling to it’s customers as being “elite” if they out-sold every competitor. Apple claims to sell a superior product, and a number of people believe it, and buy it. Others who want more freedom or don’t want to pay the “Apple Tax” find other alternatives, which, in their opinion works just as well.

19 md5sum { 05.10.10 at 2:27 pm }

NPD doesn’t use any sales figures in their reports. From NPD’s Wireless Market Research page: “This market research information is derived from weekly surveys sent to nearly 40,000 members of our proprietary, online panel of more than 1.8 million consumers, and it is reported to clients monthly.” –http://npd.com/corpServlet?nextpage=wireless-categories_s.html

Now, I agree that the news reports have gotten all riled up about it, and most likely misrepresented the statistical data that NPD has gathered from surveys. However, this does seem to follow the trend that AdMob shows in web traffic.
http://metrics.admob.com/wp-content/uploads/2010/01/AdMob-Mobile-Metrics-Dec-09.pdf

The page of interest here is page 10, showing the North American statistical data. From Q1 to Q5, Apple gained only 3%, while Android gained 23%. In Q3, Apple lost 11% of the 14% they had gained in Q2. Android’s market share has nearly doubled every quarter, with no decrease. Most of their gain from Q2 to Q3 can be directly attributed to Apple. Yes, they’re eating a fair share of the other companies up, too, but Apple is losing some customers and a lot more potential customers to them as well.

Any time that a single competitor is eating up all of your competition, whilst holding you at or close to the same market share despite your best efforts to move forward, that’s a competitor that you should be wary of. It’s not just about sales and sales growth, but relative sales and sales growth is very important here as well. Fortunately for Apple, it’s economy depends on another company or companies out-selling them. Apple wouldn’t have the same feeling to it’s customers as being “elite” if they out-sold every competitor. Apple claims to sell a superior product, and a number of people believe it, and buy it. Others who want more freedom or don’t want to pay the “Apple Tax” find other alternatives, which, in their opinion works just as well.

20 md5sum { 05.10.10 at 2:28 pm }

@md5sum —
In paragraph 3, “From Q1 to Q5, Apple gained only 3% [...]” should be “From Q1 to Q4, Apple gained only 3% [...]“.

21 roz { 05.10.10 at 3:02 pm }

@adobephile

First, I was not even talking to you.

Second, I did show a statistic – ATT’s marketshare – 28%

http://www.marketresearch.com/product/display.asp?productid=2265643

The fact that you like something does not mean that it works for other people. Clearly 72% of the wireless consumers are picking other carriers – so I am correct that people don’t want to use ATT – 72% of them don’t.

Many people work for companies that require them to use Verizon or they live in areas where ATT coverage is bad.

Any the software/device market is not the same as the car industry. And even if it were – who would buy a Mercedes that could only get gas from one brand of service station? Or could not be driven in all 50 states?

Whatever interest Apple has in an exclusivity agreement with ATT – IT IS NOT WORTH IT.

22 stevelee { 05.10.10 at 3:08 pm }

Q5 sales are usually bad, so it makes more sense for the gain to be in Q4. Thanks for the correction.

23 luisd { 05.10.10 at 3:15 pm }

@Roz,
Your view is very intriguing indeed. How is it not worth it for Apple? The strategy they are using is giving them phenomenal results by any metric that matters. Why is market share so terribly important? Is it a “mine is bigger than yours” all that counts? I don’t get it. Sorry.

24 berult { 05.10.10 at 3:28 pm }

The issue is not with Service Providing maximization. The issue is with Platform development optimization.

The issue is not market share per se. The issue is market build up foray.

The issue is not ‘tip of the nose’ balance sheet veneration. The issue is ‘over the horizon’ added value generation.

The issue is not skin deep. The issue is not illusion. The issue is Nature on two feet. The issue is infusion.

25 roz { 05.10.10 at 3:30 pm }

@luisd

When you lose market share you lose developers.
When your lose developers your platform dies.

Apple was a very profitable company as it lost market share to Windows. People were willing to pay a higher margin to Apple than for a commodity PC. The problem was that less and less of them were willing to do it. Over time developers moved to Windows and there was less and less software available for the Mac. That nearly killed Apple. There is simply no reason to repeat this, though that is exactly what Apple seems to be doing.

26 macpeter { 05.10.10 at 3:31 pm }

Hi Daniel,
do you still think, that Apple will stay with the AT&T exclusive deal, if they have the right technical solution for the CDMA & LTE problem? What´s for example about Tensilicia softwarebased CommX baseband technology? If a company like Apple develop their own chip, wouldn´t they try to become some sort of futureproof?

[LTE doesn't seem to be widespread enough to use yet, while CDMA/UMTS hybrid chips do not seem to be available yet. It is possible that Apple could an LTE iPhone that doesn't work well enough on Verizon to be practical yet, or a hybrid phone that could work across all major US carriers, but that would need some advanced technology. By the time it gets here, it may be on the verge of being extinct, or obsolesced by AT&T network improvements.

Being in SF, I'd jump at the opportunity to have a more functional iPhone, but SF and NYC are small parts of the globe, and there's much greater opportunities globally than there are in solving a temporary problem in the US, and one that might cause more problems (losing AT&T as an ally, and gaining Verizon as a "partner") than it solves. Will be interesting to see what happens this summer. - Dan ]

27 Imapolicecar { 05.10.10 at 3:31 pm }

@dallasmay
“I just do not understand why so many Apple fans wish so dearly to see Android fall on it’s face.”

Weird, so weird! There are only two posts before you and none of them are fanbois. Where on earth are you coming from?

28 luisd { 05.10.10 at 3:43 pm }

@roz,

Good point, but… Developers will go where the money is. At the moment money is to be made with Apple, if Android changes that, then you are talking. But, as far as I know, Apple still calls the shots there, and with its centralised system, that makes life easier to purchase applications (not necessarily to developers), the money will stay at the App Store.

If Android markets gains enough traction, then the issue is different. And it will have to be in a global scale not the US alone. The world and Apples plans of world domination are much larger than the US alone.

Just my thoughts.

@berult
What ???

29 roz { 05.10.10 at 3:47 pm }

@dallasmay
“I just do not understand why so many Apple fans wish so dearly to see Android fall on it’s face.”

I don’t want Android to fall on it’s face. And even if I did, it won’t. I don’t hate Android, I’d rather use an iPhone but it’s not bad. The issue is that it is totally derivative of the iPhone and the market that it is scooping up really should have been Apple’s if not for Apple being so arrogant to think that they could tell everyone to switch to ATT.

You think I am wrong about Android being derivative? Look at the G1 – that is what Android would be if not for the example set by the iPhone. Everything after that has been the Android moving closer and closer to just being the same as an iPhone.

30 roz { 05.10.10 at 3:54 pm }

@luisd

Some developers go for money, others just to support their customers. A lot of apps are free or are supported by ads – or exist because a client wants them to exist. Also, some developers may not have the chops to make an iPhone app but they can turn out a Flash app with their eyes closed – and all of those developers have now been banned from the iPhone. Where do you think they are going?

The only hope Apple has to put the genie back into the bottle is to compete on every carrier, every protocol and do a bang up job at it. Even then, I think, Android is here to stay. All the hardware makers in the world want a play in the smartphone market and Apple just fucked up leaving them this opening. And all of you that don’t see this strategic mistake are just fooling yourselves.

Apple should stop fighting with Google. Support Flash in some limited form to end the holy war and support every carrier. All this fighting over stupid crap is not worth it. Then Apple can get back to the job of innovating.

31 luisd { 05.10.10 at 4:09 pm }

@roz
As money I mean, ads, costumer support, etc. Not only paid applications.

Have you seen the numbers for global sales? I don’t think Apple has to worry about bottles or genies. The US is one of the few countries where the iPhone has one only carrier. It is the exception not the rule. What’s more, iPod touch and iPad add enough momentum to keep the platform going on and on. Android lacks any of that, and it will for some time to come…

Flash? Not an issue… there are plenty of threads in this site to discuss it. I will not add to that here, would be totally off-topic. But go read those posts.

32 roz { 05.10.10 at 4:59 pm }

@luisd

Well if Android passes iPhone in the US market as it seems to threaten to then developers will follow and in time that will mean the money will go with them. A developer with a free app or that does not seek to collect money for purchase does not have as much incentive to be tied to iTunes.

Flash is an issue for Flash developers. My point is that it’s not a great time to be kicking devs off the platform.

33 calebcar { 05.10.10 at 5:04 pm }

Your assertion that Google wants apps to be web based, not ASP based, makes sense. Could someone explain what the pros and cons are of each to the consumer?

[The consumer is a bystander that doesn't even matter in this decision. Google likes web apps because they're simple and cheap to deploy, can't really be pirated, don't need to be supported (not up? check back later!) and can be used as a way to put ads up in front of eyeballs. That's all Google does. - Dan ]

34 stormj { 05.10.10 at 5:20 pm }

@dallasmay : What about Canada? I believe they have the iPhone on Rogers and Telus—or at least my iPhone will roam on those when I’m there. Does iPhone beat Droid there? Is there any good, comparable market?

I don’t think the sales figures matter as much as who is copying whom. Apple may have borrowed extensively form Google in its implementation of “multitasking,” but Android has a market and exists because it is an iPhone clone.

Until Apple cedes that design lead, it doesn’t really matter exactly how much they sell. They will make a ton of money.

Anyone not think I’m crazy that they should do an LBO of Microsoft, spin off the Windows and hardware divisions with the leveraged debt, and keep Office and the business software division? (=

35 adobephile { 05.10.10 at 5:34 pm }

@roz You are indeed a clueless twit. As if you know better how to run both Apple’s and AT&T’s business. If you had any perception at all beyond your precious fixed ideas you’d see that there is a definite strategy being executed WITH PRECISION. As long as both Apple’s and AT&T’s important statistics are rising, that’s verification far more valid than any of you armchair quarterbacks’ OPINIONS and prejudices.

It’s a bold move to have dumped Flash, but it’s the correct one. Time will tell, and the evidence will become apparent to all but the blindest in the near future.

36 The Lone Deranger { 05.10.10 at 5:40 pm }

In November I’m buying a new phone, and in my part of western Colorado the only network is Verizon’s. If Apple hooks up with Verizon between now and then I’ll buy an iPhone. If not, I’ll be stuck with whichever Android phone I like best.

The moral of the story: USA sales statistics will be skewed and meaningless until the iPhone is available on networks other than ATT.

37 roz { 05.10.10 at 5:47 pm }

@adobephile

That you resort to attacking me suggests that your arguments don’t hold up – even if you don’t want to admit it to yourself.

ATT sells the Android so I really would like to know what strategy you think is being executed.

Again, its just common sense that the iPhone should be available to other carriers. Why would you ever want to limit yourself to one carrier that only holds 28% of the market and has declining customer satisfaction levels in the markets it is in? That is just madness.

It is as if Apple made a deal with one ISP only to sell computers that could work with that ISP. Sales would go down because a lot of people who might otherwise use a Mac would walk to another solution.

iPhone is a great product. It can compete with anything out there even Android – but not if it asks consumers to change in ways they don’t want to.

[The problem of supporting a phone set across the all US carriers is a significant technical issue. Android is not one competitor, but a series of experienced phone makers with expertise and experience in the mobile industry that Apple lacks. It is quite amazing that Apple is being compared to all the other smartphone makers globally, and all Android makers globally selling in the US, when Apple is a brand new competitor acting on its own.

Apple's partnership with AT&T has significant advantages over trying to please a variety of US makers on 2-3 different networks. The problems of AT&T are greatly outweighed by not having to develop and perfect two different handsets using different technologies. Apple doesn't have to do that in any other country. The fact that established smartphone makers like HTC can and do does not mean Apple could, nor could as easily. Even Motorola only has one US partner for its Android phones: Verizon.

Whether Apple is going to bridge the CDMA gap this summer, or simply wait while AT&T improves (its US network is great in most markets outside of NYC, SF, and some rural areas) is still a tossup, but it makes sense that Apple would avoid wasting the efforts to develop a CDMA handset just to get a year or two out of it before Verizon moves to LTE and Sprint jumps to Clearwire 4G. - Dan]

38 adobephile { 05.10.10 at 5:49 pm }

@ The Lone Deranger
You know, it’s interesting how people in remote areas with commensurately low populations yet consider themselves entitled to have not only ANY cellular service at all, but to also be able to choose between carriers. One obviously chooses to live in such areas for most likely very good reasons. So if one yet decides to live in a remote area knowing there is one or no cellular carriers then that MUST not be a very important factor one way or the other.

39 KenC { 05.10.10 at 5:54 pm }

In Korea, after the iPhone launch in November, Samsung and LG rushed out announcements of smartphone launches to counter the iPhone’s success.

For Samsung, they announced a shift from 90% WinMo offerings to only 50% this year, and 20% by next year. Filling the void would be Android and Bada OS phones. Of course, Bada was in development so the first phones would be Android based. Expect more of Samsung’s resources to be put into developing Bada. Who knows how it’ll turn out for them, but I guess Android is their fallback position.

40 adobephile { 05.10.10 at 5:54 pm }

@roz I’m not attacking you. I’m just calling a spade a spade. One big factor in the iPhone’s success is it “Visual Voicemail”. That is made possible by BOTH AT&T and Apple working together. Such an arrangement would be made viable and workable with an exclusivity agreement. Again, how can you presume to second-guess these companies at to their reasons for exclusivity? Answer: you are indeed a twit.

41 roz { 05.10.10 at 6:29 pm }

@adobephile
Verizon also offers visual voicemail now. Your point is?

Again, why don’t you refute the points I am making rather than trying to attack me? It only shows that you don’t have a good argument to make.

42 roz { 05.10.10 at 6:41 pm }

@daniel

“The problem of supporting a phone set across the all US carriers is a significant technical issue.”

Is it? The device needed for TMobile just uses a different frequency for 3G.

The CDMA devices are different but there are tons and tons of experts who could help Apple with this problem. Verizon probably have a ton of people to deal with this – every handset maker is in the same boat with them. Qualcom would jump at it. I don’t see this as a technical issue if Apple decided to do it. I mean Palm has the Pre on CDMA and GSM, they don’t seem to have a technical problem with it and they are tiny. And while Palm has been doing phones longer, it’s not like Apple does not have the resources to get the talent they need to deliver a CDMA phone.

43 roz { 05.10.10 at 6:50 pm }

@daniel

“Apple’s partnership with AT&T has significant advantages over trying to please a variety of US makers on 2-3 different networks.”

Not if it means losing significant market share to Android. I am not sure it is that much trouble keeping all those carriers happy. They just need to deliver the devices – but Apple is very good at that if they want to be.

Part of the issue is that Apple has made a fetish out of delivering just the minimal number of products to the market. That aesthetic is nice but until we get a more unified market under LTE or whatever, it needs to change.

Maybe the US market just needs special consideration. The alternative is leaving it as a breeding ground for competitors. That is not a good approach. Better to have something at each of these carriers than nothing.

44 adobephile { 05.10.10 at 6:52 pm }

hey roz, howsabout you go git yerself hired at Apple. And then. . and then git promoted to the CEO, then you can call the shots and make all your delusions come true. And then. . . and then. . .

45 roz { 05.10.10 at 7:10 pm }

@adobephile

Sounds great except I am not deluded. And again, deal with the message, it’s not about me.

46 cy_starkman { 05.10.10 at 7:52 pm }

@ y’all American Commenters

Um, guess what, there is actually this teeny market outside the AT&T / Verizon tantrum.

It’s called Earth and you’d be surprised how things are quite different out here.

Someone suggested people want Android to fail, or whatever. Probably some do, but the same sort of people want whatever isn’t the thing they like to fail. It’s age old and boring, means nothing.

It concerns me more that people are wanting to champion spam and feel loyalty to an advertising company. It is a very strange turn of events. What will people do for a free lunch? Too much it would seem, they have lost so much sense for their own value, they will trade it away for a bit of plastic and metal. That is not a good canary for the social well being.

Android has no $ value, it’s a vector for advertising and gathering metrics. It’s development and the development of apps for it by Google will be focused on that.

Apple might end up with 25% market share with Android at 50% and with it many flame wars will be had and flags raised. Even in such a situation will Moto, or HTC, or LG, or Samsung or whoever be pushing out more handsets, or making more money (to spur more development) on each handset sold than Apple, no.

What is always missed is that you don’t actually have to have 100% of a market to be the best, to make the most or even be the most influential. It actually isn’t even really in Apple’s interest, it will just attract legal troubles and worse.

I’ll never get why people can’t understand you can be totally successful with only a 10% share. Apple has been proving it for decades

47 shadash { 05.10.10 at 9:56 pm }

Dan wrote:
“Android is really just replacing the plummeting sales of Windows Mobile and the old Palm OS (and even webOS) and the embedded software that formerly ran a lot of HTC and Motorola phones.”

While this is part of it, there is the real likelihood that Andoid is also eating into potential sales of iPhones.

[Why? There is no encroachment upon the iPhone at AT&T. Verizon is selling the majority of those Android phones (well selling half and giving the other half away). And outside the US, Android isn't doing very well at all. So it's a matter of Verizon desperately working to push volumes of smartphones to its user base to hook them on that $350 early termination fee. How long do you imagine that is going to fly before exploding? Hint: iPhone 4 comes out in June.]

Dan wrote:
“Globally however, Android sales are still well below the iPhone.”

This isn’t what the NPD measures, so it doesn’t seem especially relevant. In almost all other markets the iPhone is on multiple carriers and is not tied down to a third rate carrier. Isn’t this fact a strong argument that Apple has to end its exclusive relationship with AT&T?

[Apple's success with multiple carriers in markets outside the US is largely due to the fact that most countries have standardized on UMTS. The US is unique in being split between two technologies, which prevents direct competition. Be careful about recommending "obvious" solutions to problems, as they often result in unintended consequences. That's one of the points I try to make on a regular basis. ]

Dan wrote:
“most of those phones are being given away for free.”

Even if every single person bought two Android phones instead of one, that still would be 50% – not most. This is not the only reason people choose Android. Many people, probably most people, choose the carrier first and then the phone. While the iPhone is desirable – current surveys show 53% of Verizon customers want one – they are not willing to switch, so they get the next best thing on their network.

[A massive number of Verizon users have switched; that's why AT&T's fortunes turned around with the iPhone. Those who are remaining are more difficult to switch, so trying to win them over would be harder. It's the law of diminishing returns. Also, AT&T has a far higher concentration of smartphone users. Verizon customers are more likely to be non-smartphone stragglers. They're all going to buy an iPhone? Don't count on it.]

Dan wrote:
“Add in the technical issues that prevent Android apps from being sophisticated (they’re limited in size due to hardware architecture and operating system software issues that have not been resolved) and you have a platform that is smaller than it should be, and therefore less attractive to developers than it would appear it ought to be, given all those free phones that are being distributed.”

This sounds too much like the late 80s, early 90s cant about how much better the Mac was than the DOS/Windows offerings of Microsoft. Unfortunately for Apple, Microsoft kept plugging away and eventually became “good enough.” If Apple lets them, Google will replicate Microsoft’s feat.

[But Apple isn't standing still today as it was with System 7 88-98. It is the iPhone OS that is rapidly progressing, and Android that is struggling to advance, picking up more and more compatibility issues while failing to upgrade early & entry level buyers. Google also exercises no real control over the Android experience, so it's not really much like Windows 95 at all.]

Dan wrote:
“Android isn’t even represented on that pie chart, because there is no viable gaming market on Google’s platform. If Android were really outselling the iPhone OS in some meaningful way, that shouldn’t be the case at all.”

A fractured Google platform that doesn’t show up on video game charts can still be fixed, and is in fact “outselling the iPhone OS in some meaningful way.” As far as apps, it is clear that many consumers are choosing the better network on which to use their expensive smart phone, not the one with the most apps.

What if the story I saw today is accurate – that Apple actually tied the iPhone down to AT&T until 2012? If true, Apple is going to give Android two more years to further catch up and entrench itself in the US market. That is just not worth a cheap iPad data plan.

[Read that report again. It appears that Apple will have some strategy for expanding the iPhone in the US this year. It's just that nobody knows what that will be yet. I'm pretty sure Apple has hired enough thinkers to the point that they're not going to fail to grasp obvious problems. Does the general launch success of every Apple product since 2001 give you an confidence in Apple's ability to build and market it products? Perhaps it should. - Dan]

48 shadash { 05.10.10 at 10:05 pm }

Dan wrote:
“Apple’s partnership with AT&T has significant advantages over trying to please a variety of US makers on 2-3 different networks. The problems of AT&T are greatly outweighed by not having to develop and perfect two different handsets using different technologies. Apple doesn’t have to do that in any other country.”

Apple was prepared to do that in 2007, but got rebuffed by Verizon. A company with $40 billion in the bank can’t do what Palm and HTC can do? Give me a break.

Dan wrote:
“(its US network is great in most markets outside of NYC, SF, and some rural areas)”

I live in the suburbs of Phoenix, and AT&T’s network is garbage here.

Dan wrote
“but it makes sense that Apple would avoid wasting the efforts to develop a CDMA handset just to get a year or two out of it before Verizon moves to LTE”

It is my understanding that Verizon will be using CDMA as a backup for quite a bit longer than “a year or two.”

[It was pretty clear Apple needed to partner with one maker. Verizon was approached, but nobody really knows the extent of those discussions, so you're basing your arguments on suppositions. And those discussions occurred long before 2007. Apple was exploring the phone business in 2005, a year + before Palm said "those guys aren't going to walk right in." And Palm has not successfully launched CDMA + UMTS phones. It nearly died trying to get to launch. That's failure.

You can throw Phoenix burbs into the rural bin.

The point is that CDMA won't be a competitive technology in a year or two, so having a phone that runs on Verizon's backup while Verizon sells competing phones that use LTE isn't much of a winner strategy, is it? - Dan]

49 ChuckO { 05.11.10 at 9:30 am }

I think the important things here are that.
1. Android isn’t “outselling” the iPhone it’s out give awaying the iPhone. For this to matter they would have to send iPhone sales into a tailspin and so far that’s not happening.
2. The Nexus sales model so far is a train wreck. Where Google goes with Nexus from here will be interesting. This is the real Android iPhone competitor and it seems like a bust.
3. Regardless of what you think about AT&T for Apple it’s more about selling a “world phone”. This is very smart.

I suspect Apple will keep their eye on the prize: domination of the mobile market (iPhone, iTouch,iPad, new stuff) not trying to compete with giveaway phones.

So far it doesn’t look like Apple needs to worry about Android much more than they do about dumb phones. There will always be a low cost competitor to the iPhone Apple just needs to make sure they keep ahead of them so the iPhone is the clear value proposition in smartphones.

50 roz { 05.11.10 at 11:00 am }

@daniel

“Verizon customers are more likely to be non-smartphone stragglers. They’re all going to buy an iPhone? Don’t count on it.”

I really don’t think this is true. Many many of them are probably still on Blackberries. Some got the POS Droid. I am starting to know a few people who have ditched the iPhone for Verizon because of call drops. In SF it is really bad. It’s not that big a deal with friends but if you are on an important business call it is just unprofessional. I have lost calls after waiting a long time in a que – it is not a joke that these things don’t work that well in cities. In burbs I don’t get as many dropped calls but in SF it is close to intolerable. I also know people who have switched to Verizon for the Incredible. I played with it and while I would rather have an iPhone it seems like a more and more reasonable option. And that’s my biased Apple fan opinion. Objectively it has some great features like built-in FM radio, really good universally integrated speech recognition, nav view of google maps, better integration with google – that is just to name a few. Also , the back button is handy. If someone adopts that device and then tries to use an iPhone he will be confused by the lack of back button. Third party apps on the Android are weak, second rate versions of the iPhone ones.

For a business there are pluses to the Android. It is offered by more than one maker or carrier so there is no dependance to the whims of Apple or ATT. Some companies have info systems in Flash that will work on it, they don’t need to find a Cocoa developer or deal with iTunes to make custom apps for them.

“The point is that CDMA won’t be a competitive technology in a year or two, so having a phone that runs on Verizon’s backup while Verizon sells competing phones that use LTE isn’t much of a winner strategy, is it? ”

CDMA will be in use for years. It will take Verizon a long time to have LTE in place and then even longer before they can move over all their existing customers. Figure at least 3 years for the completed change over. All of that time Apple can sell the CDMA version and eventually the CDMA/LTE version. Is it a world phone? No. Is as leverage-able as GSM? No. Still it needs to be done if only to kill the Verizon anti iPhone hype machine.

Apple should just go on with the way they have been making a single device for the world that is the standard bearer and this can be ATT exclusive when released for a number of months. But they should also have a follow-on CDMA device that supports Sprint and Verizon. Make it with an small team, could be partly out of house. The point is to support the full US market and compete on every front. An if other major markets (Japan, Korea, China?) have non-GSM networks, consider supporting them too.

@ChuckO

“1. Android isn’t “outselling” the iPhone it’s out give awaying the iPhone. For this to matter they would have to send iPhone sales into a tailspin and so far that’s not happening.”

We all know the cost of these devices is in the data plan. A 2 year commitment to $30/month is not a freebie.

“2. The Nexus sales model so far is a train wreck. Where Google goes with Nexus from here will be interesting. This is the real Android iPhone competitor and it seems like a bust.”

Nexus was a fail for marketing but the Incredible is a better device and is going thru normal channels – it will do well.

“3. Regardless of what you think about AT&T for Apple it’s more about selling a “world phone”. This is very smart.”

Any phone with a keyboard is not as well suited for the world but the Incredible is just as worldly as the iPhone.

“So far it doesn’t look like Apple needs to worry about Android much more than they do about dumb phones.”

Wrong and baseless. It is a platform just like the iPhone. It has features the iPhone does not have, better camera, flash, radio, free nav. It is on every carrier in many versions, styles, price points. Don’t kid yourself too much.

51 Berend Schotanus { 05.11.10 at 11:34 am }

“Rather than taking on the iPhone, Android is really just replacing the plummeting sales of [...] and [...] and [...].”

That’s the kind of effect I’m trying to point at when I’m saying that somebody has to fill the “dull 51% of shelf space”. In this case the effect is (at least partially), as you rightfully point out, explained by carriers giving away smartphones in order to maintain market share. In my observation, in any market a part of the sales volume has to be explained by this kind of forces rather than by the actual quality of the product.

I don’t think these forces should be fought against until the bottom, they are just a fact of life. Most important is they don’t dominate the market.
Still: good thing you are pointing out the underlying mechanisms.

52 ChuckO { 05.11.10 at 11:39 am }

roz 50,
“Wrong and baseless. It is a platform just like the iPhone. It has features the iPhone does not have, better camera, flash, radio, free nav. It is on every carrier in many versions, styles, price points. Don’t kid yourself too much.”

That’s all great but Apple actually get’s people to BUY STUFF like say the iPhone. That’s terrific for Apple as they make a lot of money a lot of which they put into R&D for the next version of the iPhone. Maybe tons of Android phones (half of which are sold to people a lot of those at firesale prices, half of which folks got for free) is great for Google but I doubt it will work for HTC or Motorola for long. The Nexus is Google’s real answer and competitor to the iPhone (You HAVE to buy it) and if you read up on it you’ll see carriers are running away from it.

53 roz { 05.11.10 at 11:50 am }

@ChuckO
“Maybe tons of Android phones (half of which are sold to people a lot of those at firesale prices, half of which folks got for free) is great for Google but I doubt it will work for HTC or Motorola for long.”

HTC and Motorola have no problem with that pricing because they get a subsidy from Verizon. The real cost is retail amount plus the service plan. And don’t forget their R+D is less expensive because they got the OS for free. Verizon is happy to retain customers. Google is happy to spread Android.

The Nexus is a failure – it was never sold in a store – only online. But the Incredible is an improved version of the Nexus (coming out like what 3 months later?) and carriers will be excited to sell that.

I am not trying to be a dick or a troll or depressing. I just want people to understand what is happening in real terms and not be lured into complacency.

54 Alan { 05.11.10 at 12:05 pm }

Dan, I think the most valuable piece of info you could dig up is how long will CDMA radios be needed on Sprint and Verizon phones even as WiMax and LTE are rolled out. I read an article a while back saying the estimate could be as long as 5+ years.

Sprint/Clearwire now has 4G Wimax covering 30 million people and are supposed to cover 120 million people by years end. I happen to live in a Wimax city, Atlanta. I will be getting the new HTC Evo that supports Wimax but I am grateful that it will also fall back to CDMA/EVDO when I am outside the metro area. But even with WiMax and the Evo, I would get a new iPhone on Sprint in a heartbeat if I had the chance. I just will not switch for shoddier coverage and over twice the monthly price. I will have to upgrade my plan for the EVO to the $69 plan but after a 25% corporate discount that will bring it down to $52 a month for basically unlimited everything. How much is the equivalent iPhone plan on AT&T?

Sprint hemorrhaged millions of customers in the last few years and rightfully so due to past mistakes, but these have been largely fixed and things are starting to turn around. Customer service is now top notch, fewer dropped calls than AT&T, the 2nd biggest 3G network and only working 4G network. Many people still enjoy bashing Sprint, but I think that Sprint would be a far better partner than Verizon. It sure would give Apple a lot more leverage with Verizon if they did release a Sprint version first, especially since we get free roaming on the Verizon network.

Without knowing how long the transition to full voice call coverage will take for LTE or WiMax, it is impossible to speculate on whether a CDMA iPhone will make sense or not. If it is only 1 or 2 years, it probably wouldn’t make sense as you said. But if a CDMA radio will be necessary for voice calls for for many more years to come, then not making a phone that will work for 72% of the market begins to look less rationale. I also think that Apple is also waiting on a chipset that can truly support all networks and meet their power requirements.

It looks the chipset inside the EVO is almost there. Maybe the engineers at Apple can find a way to make this work. http://www.thesearethedroids.com/2010/03/25/sprint-evo4-chipset-qsd8650-supports-gsm-and-hspa/

55 ChuckO { 05.11.10 at 12:54 pm }

@Roz 53,
“HTC and Motorola have no problem with that pricing because they get a subsidy from Verizon. The real cost is retail amount plus the service plan. And don’t forget their R+D is less expensive because they got the OS for free. Verizon is happy to retain customers. Google is happy to spread Android. ”

I think your wrong here. Apple’s getting a way better subsidy. That matter’s in the long run.

“The Nexus is a failure – it was never sold in a store – only online. But the Incredible is an improved version of the Nexus (coming out like what 3 months later?) and carriers will be excited to sell that. ”

I think your logic is a mess here. Google has significant disruptive plans in the mobile space and the failure of the Nexus (business) model is very significant in that regard. The similarity in hardware isn’t what’s important here.

“I am not trying to be a dick or a troll or depressing. I just want people to understand what is happening in real terms and not be lured into complacency.”

Understood. This is all in good fun. I think the thing here is if competing with Android on a number of phone’s sold basis was in Apple’s best interest they could alter their model pretty quick to get on Verizon and hit more price points, etc.

I personally suspect that the iPad is the first shot in a new model for Apple mobile hardware where they compete more aggressively on cost but as is Apple’s habit I think they’ll be smart and wait for iAds to start paying to make up for the lower hardware margins. They’re crafty devils those Apple folk.

56 roz { 05.11.10 at 2:03 pm }

@ChuckO
“I think your wrong here. Apple’s getting a way better subsidy. That matter’s in the long run.”

I don’t think I am wrong here. Your point was that the discounts are a problem for the hardware makers: “…I doubt it will work for HTC or Motorola for long” But Motorola and HTC don’t care that much about Verizon’s discounts. They sell devices to Verizon at some wholesale price, Verizon packages them with service contracts and sells them to us. The hardware makers don’t care that much about the retail price.

And regarding your point that Apple’s higher margins – which are no doubt higher – matter in the long run. THAT is the question. Apple can happily trade some market share for margins but the iPhone represents an opportunity for owning the dominant product and ecosystem in the category – that is worth even bigger margins down the road and now whatever deal they have with ATT is putting that at risk – if it has not already been lost. Is the iPhone viable with 10 – 15% of the market? Sure. Is it meeting the potential of the kind of device it could be? No way. That is the point. If Android has 1/2 the margins but is being sold to 60% of the market, that is a better position. And there is no reason for it because currently Apple is only selling to 28% of the market. They should be addressing 100% of the market by now.

57 MathMan { 05.11.10 at 2:13 pm }

It seems to me that Android’s fractionalized platform is a big reason that Google is going to allow flash on the Android platform. That way, they will get all those flash web games to partially compensate for the difficulties of developing natively. This still leaves them with a bunch of lowest common denominator apps, but they do get a lot of them.

58 ChuckO { 05.11.10 at 4:59 pm }

@Roz 56, Your a panic-er. Apple would be in the toilet if they listened to you. It’s the long game that matters. Verizon can’t keep spending 100′s of millions of $ marketing Android. In the meantime Apple is out there executing like a mofunga just relentlessly grinding away, making things better, innovating on so many levels the “open handset alliance” can’t begin to dream of and don’t have the resources to match. Apple will give them these questionable headlines this quarter to spit them out a couple of quarters down the road like the cheap punks they are.

59 roz { 05.11.10 at 5:09 pm }

@ChuckO
There is no panic here. It’s called awareness, deal with it. And I am speaking from experience because I have seen Apple have a superior product only to piss the advantage all away because they had all these arbitrary issues that kept them from competing.

Say what you like but look at the specs of Evo: http://now.sprint.com/evo/?ECID=vanity:evo

That’s just one device. A lot of other makers are working on them too. And Android, while not ideal, does not totally suck.

Are you sure you know what you are talking about?

60 ChuckO { 05.11.10 at 5:27 pm }

@roz, Ughh. I do know what I’m talking about. I’ll just leave it at “You’ll see! Mark my words! You’ll see!”.

Are you the guy that told me I didn’t know what I was talking about when I predicted the iPad would sell for $500 back on one of Dan’s iPad threads?

61 roz { 05.11.10 at 5:38 pm }

@ChuckO

No that was not me.

The key is picking up more carriers, particularly Verizon. If they do that, great. I’ll be happy to let them work on features, innovation. If they punt on that again, it will be an ugly sad mess.

62 ChuckO { 05.11.10 at 5:46 pm }

When it makes sense they will…and when they do all the Android users will switch. In the meantime they have the rest of the world, and the iPad, and iPod Touch and Macs and stuff we haven’t seen, etc., etc., etc.

Motorola and HTC should have such problems.

63 calebcar { 05.11.10 at 6:19 pm }

One MAJOR disadvantage of Android- With the platform this fragmented, how can they ever get any sales in enterprise. Apple may not be as enterprise friendly as Blackberry, but at least the IT people have one product to decide what they can and cannot allow. Android is too undefined to make any headway in enterprise.

64 roz { 05.11.10 at 6:48 pm }

@ChuckO
It made sense to have a device on Verizon a year ago and nip all this Android crap in the bud.

@calecar
Fragmentation is an issue for a game developer. Not sure why an enterprise manager would care. As long as the devices act consistently for Exchange or whatever device manager they have in place slight differences between handset implementation probably would not matter to them that much. If the devices are cheaper and they have the choice of maker and supplier it might be more attractive to them. Many organization won’t order things that have a single source supplier if there is an alternative. They can develop solution and can distribute to devices without dealing with Apple. And as we have seen in the PC market, Corporations just LOVE cheap crap and will select it over usability everyday of the week.

65 airmanchairman { 05.12.10 at 12:20 am }

Yawn.

It’s that time of the year again, almost always a month or two before the launch of a new Apple mobile handset, when all these pseudo-rational arguments, replete with graphs and figures, emerge about how the naysayers can start Flamenco-dancing on Apple’s grave a la Macintosh 1996 etc etc.

And then, come the launch, these arguments die out within weeks (days even) given the stupendous REAL sales figures as opposed to these contrived figures skewed by promotional offers (remember the Motorola Razr being pronounced the hottest-selling handset via this very artifice in 2007/2008?).

Prepare for even more critical vitriol in the wake of the launch, in the manner of that remorselessly brainless music known as Disco (the only sure thing after you hear the first thud is that after an appropriately uniform time-gap, it will be followed by another remorseless thud of equal intensity, and so on).

Gratifyingly, with every week of sales figures released (and every new hardware and software feature i-upgrade introduced) the monotonous uproar recedes slowly into merciful silence. That is, until the next “i-killer” technology announced by the mobile industry.

Very reminiscent of the Fox Channel and its robotic threnody of criticism directed at Senator Kerry years ago (“Flip-flop, flip-flop, flip-flop, flip-flop, flip-flop, flip-flop”)

You could almost set your watch and calendar by it…

66 roz { 05.12.10 at 1:54 pm }

@airmanchairman

Fluctuations in sales would not be an issue if Apple was really competing across the market. Currently they only sell to one of four carriers, representing only 28% of the market. The rest have no iPhone option available.

67 gslusher { 05.12.10 at 10:29 pm }

@roz

“IT IS DUMB TO ONLY SUPPORT ONE CARRIER IN THE US MARKET.”

Oh, like Motorola with the Droid? It’s available only on Verizon. Why aren’t you foaming at the mouth about that decision?

68 gslusher { 05.12.10 at 10:48 pm }

@roz:

“People don’t want to use ATT.”

Some do, apparently, since it’s the second largest carrier in the US. From

http://business-phone-service.tmcnet.com/topics/business-phone-service/articles/76913-largest-us-wireless-carrier-subscribers-tallied.htm

Data for end of 2009. Numbers in parentheses are changes during the last quarter:

1. Verizon Wireless: 91.2 million (added 2.2 million)
2. AT&T Inc.: 85.1 million (added 2.7 million)
3. Sprint Nextel Corp: 48.1 million (lost 148,000)
4. T-Mobile USA: 33.8 million (added 371,000)

So, Verizon is only **7%** larger than ATT and ATT grew faster in the last quarter of 2009.

Historically, Verizon has apparently insisted on controlling the phones it sells. I doubt that they would have agreed to Apple’s terms–that’s probably what the problem was, as Apple insisted on being in control. (E.g., software updates, apps.) Verizon also has a long record of “dumbing down” the phones it sells, disabling features and/or requiring users to use Verizon’s extra-cost services. According to Samsung, my cheap flip phone can load ringtones from a PC, but Verizon disabled that feature. I had to buy ringtones through their selected sources at inflated prices PLUS pay extra charges for “data access.”

69 roz { 05.13.10 at 12:03 am }

@gslusher 67

“Oh, like Motorola with the Droid? It’s available only on Verizon. Why aren’t you foaming at the mouth about that decision?”

Hmm. Well, if Android, as a platform, approached the US market with basically one device on one carrier, yes that would also be a dumb idea. And if that one device was a hit and other carriers wanted to carry it – it would be even dumber for Android not to offer them devices. And then, right, let’s say a competitor, call it Robot, said they were going to offer a similar kind of product at every carrier, at different price points and sizes and in response Android said, well, no as a platform we are still exclusive to one carrier and basically one device – that also would be a dumb idea. And if the Robot brand started to outsell Android on all those carriers, including the carrier Androids are sold at, because it was a one sided exclusive deal, and Robot started to find a following and Android said, well we make a little more money with our one sided exclusive deal, so market share does not really matter – yes I would say that was a dumb idea. The question to me, why the heck would anyone defend that, like you do? Why would any one want to lose a market to a competitor so willingly?

Apple is going to make great margins even if they sell to other carriers. They retail the device so they get a big cut there – no other manufacturer is in that position. They make money on apps and everything else on iTunes. Books, music, tv – everything. All of that would be leveraged across a much larger install base. They sell protection plans which they make money on and replacement batteries that they make money on. The iPhone gives a halo to all their other products. Of course they want to sell as many of the devices as they can! Seriously, you guys call me deluded and foaming at the mouth when you don’t see the reality of this arbitrary limitation as a massive strategic mistake. And don’t forget – all the carriers want the iPhone, forget what you read. They all want it and would make good terms for it. Maybe not as good as ATT where they are over a barrel without it but still good terms.

Oh and by the way, Motorola has many devices, on different network standards, at every carrier. Motorola has Android devices on other carriers too – the Motoblur, Android, is on T-Mobile. The BackFlip, another Android device, is on ATT. That is called competing.

The Droid brand is not even owned by Motorola, its Verizon’s spin on Android so of course it’s not going to be on any other carrier. Droid is on more than one device though, the Eris, the Incredible and the Droid by Motorola are all Droids.

So what are you talking about exactly?

70 roz { 05.13.10 at 12:19 am }

@gslusher 68

What is your point here? I am saying, Apple should support all carriers at this point. They can’t grow anymore if they are restricted to ATT.

You say, ATT is number #2. Some people like it. Uh ok.

Here is why I am saying people may not be excited to be switching to ATT right now, iPhone or not:
http://news.cnet.com/8301-1035_3-20004547-94.html

or this:

http://mashable.com/2009/12/01/att-dead-last/

You are aware that the #1, #3, and #4 carriers are all pushing the competitor to iPhone? Spending money advertising it. Heck even ATT #2 has Android devices.

Why would any company want to tie a successful exclusively to a bad service?
And then do it AGAIN with another product?

71 adobephile { 05.13.10 at 8:18 am }

Nice try, there, roz! You sure can write long posts, and you spell good, too!

But the more words you write the more they firm up you still twisted point of view. You’re zeroed in on Apple’s “craziness” while you patently disregard their ever increasing prosperity. This is indeed the most reliable gauge of them DOING THINGS RIGHT.

Just because you’re not privy to their strategy doesn’t meant that its not a good one and that it’s not working.

72 ChuckO { 05.13.10 at 5:17 pm }

Lot’s of rumors out there about them going to Verizon this fall. It’ll be interesting to see what happens.

@Roz, Nice job standing your ground against a veritable tsunami of “your crazy”‘s! I think one thing that hasn’t come up is I don’t know how much longer Verizon can continue to buy Android market share. I almost hope Verizon doesn’t get the iPhone just to see what would happen after the $100 Droid campaign is over. Would Android stay hot or hot enough to keep surpassing iPhone?

73 adobephile { 05.13.10 at 7:58 pm }

@ChuckO As tantalizing and affordable/popular as Android “real estate” may seem now, Droid and other “structures” are built on fragmented foundations of “sand” and to me seem highly prone to “sink holes” in the future.

In stark contrast, Apple is building on a much sounder foundation of not only the tried and true OS X, but on a carefully crafted ecosystem of quality hardware, a well engineered IDE which pays and in many cases automatic and careful attention to memory and resource usage, and user interface guidelines, coupled with extensive hardware engineering all coordinated to provide for its customers a high level of ease of use, reliability, generous warrantee programs, and smooth upgrade paths to an always improving system of products which work together well and are easy and pleasurable to use.

Of course the unwashed masses are legion and convinced that the “smart” way is always the cheap way and who will readily part with their shekels to get shiniest gewgaws which are “just as good.” But they’d probably never cross an Apple Store threshold anyway.

So that’s the competition which really isn’t competing in the same space as Apple. Apple gets new customers when they realize that they’re ready to pass through the looking glass. Some may go back, but I think most stay and are glad they moved up.

So I guess both sides will be fine in their respective sandboxes.

74 roz { 05.14.10 at 12:49 pm }

@ChuckO

It will be interesting to see what happens. Imagining from their perspective it is not a bad investment. The are subsidizing the phone with pricing and marketing and establishing the Droid brand but when they are done, Droid, whoever makes the device is under Verizon’s control. They can do whatever they want with it. With the iPhone they will continue to be beholden to Apple.

If Apple ships iPhone for other carriers, please god, then we will see the extent to which damage was done. Let’s hope the pricing is reasonable and that its the latest HD and not an older model.

75 Dude { 05.14.10 at 6:22 pm }

The Wall Street Journal is reporting that Google will halt online sales of the Nexus One phone. Unlike the Nexus-6 models in Blade Runner with a built-in life span of 4 years, the Nexus One direct online sales had a life span of ~4 months.
From the WSJ:
“The Internet company Friday said in a blog post it would instead work with wireless carriers to make the phone available to consumers through existing retail stores.”

76 JohnWatkins { 05.15.10 at 10:38 am }

This sums it up well:
(sorry I can’t find the link to the article, but I’m sure its on the site somewhere!)
http://ismashphone.typepad.com/.a/6a00e55225079e88340120a4f8571b970b-550wi

Long story short, with less than a 5% share, Apple gets 8% of the total industry revenue, and 32% of the total industry profit. They get 40% margins where the rest of the industry gets from 1/5th to 1/2 that margin. Classic Apple–quietly slip in and take the cream and let everyone else get in a knife fight over the whey. This is why the BOGO stategy is not sustainable for the likes of RIM and The Android phones.
For some reason Ros can’t understand this strategy. Apple doesn’t have to take over the lion’s share of the market now. It can do so at its leisure. Think iPod vs MP3 plyers, not early Mac vs Windows.

77 adobephile { 05.15.10 at 12:07 pm }

@JohnWatkins
Well perceived, well put. Roz is stuck with mere convictions in the absence of such. So is the rest of the world beyond Apple.

Let’s hope they don’t succumb to too much outside negative influence while executing their grand strategies for ours and their benefit.

78 roz { 05.15.10 at 1:06 pm }

@JohnWatkins
Nice graphic. I don’t actually see that as that going against anything I am arguing. Smartphones are more profitable but that graphic is about the entire industry, right? So drawing conclusions about the viability or profitability of BOGO offers for Android is not really reasonably possible, at least not from that data.

In any case, I didn’t say Apple should charge less per se or that they should alter their strategy in any way other than offering the same breed of phone on more carriers in the US, at least Verizon but ideally all of them. Frankly, I can’t see why that is at all controversial even if it did lead to slightly lower margins, it is the only way the can truly take over the market.

With iPod Apple was very aggressive with pricing and getting the device into every sales channel it could. That is why we saw iPods in Costcos and Walmarts. Everywhere that someone went to buy a music player, anywhere in the world, there was an iPod at a relatively competitive price. So when people went to buy an MP3 player, iPod was always right there as an option, and it usually was a better option – the market followed.

Cell phones are different. Like it or not, not everyone can or wants to change carriers. They might not have ATT coverage where they need it or their work my require another carrier. This should not be news to anyone. The result is that they can only get what the carrier offers and the means the iPhone is not an option. Can you see how this approach is different from the conditions of the iPod’s market success? Apple is only going to grow so much under the arbitrary limitation of ATT which only serves 30% of the market. Apple is very profitable, so it would likely be worth some margin to be able to address the other 70% of the market. That was true before Android started taking off, its even more true now.

If in the iPod market Apple were getting high margins but losing market share to a competitor – that would not be a good situation, right? Long term they would risk losing the market. That is the same issue here. I understand profit taking. Do you understand the risk to Apple’s long term position if they lose developer mind share and real market share to Android?

79 JohnWatkins { 05.15.10 at 3:58 pm }

Actually iPods were pretty expensive and exclusive at first. It seem like they were always aggressively priced and widely available because they are now. Apple advanced their strategy relatively quickly because the MP3 product and market are less complicated and were more quickly commoditized.
The mobile phone/device market will tend to move more towards Apple than Apple to it because Apple will continue to keep their hardware offerings simple even as their competitors waste money and resources offering everything under the sun while simultaneously Balkanizing their similarities and imitating Apple’s offerings from two years before.

80 JohnWatkins { 05.15.10 at 4:04 pm }

By the way, Android is not a brand that can have mindshare. In fact it can’t even have profits as its open source. 30 different Android offerings from each of 20 different providers will make nobody (except Apple) any money, nor will it make any competition for Apple. It will confuse customers, frustrate developers, confuse and frustrate HW and SW updates and downloads, and diffuse profits.

81 enzos { 05.16.10 at 1:45 pm }

I think the USA is a testing ground. Better to start with one carrier-partner that helps develop and test the technology as it is rolled out. In Oz (and more recently in the UK) the iPhone is on all major carriers and is the only game in town. http://mobile-phones.smh.com.au/MobilePhones “The Apple iPhone is the most popular *mobile phone* on our site…by a long way! Compare Apple iPhone deals here.”

82 roz { 05.16.10 at 1:55 pm }

Initially it made sense to launch with one carrier. It also can make sense to have short terms exclusive deals. The iPhone though has been out for 3 years now.

Check this out: http://bit.ly/b37EDV

According to that guy iPhone is 65% of ATTs smartphone market. Is there really anything keeping it from getting the same portion of the total US smartphone market? Yes, it’s the deal which means that 70% of cellphone customers don’t have iPhone as an option with their current carrier?

[You kind of sound like the critics that used to say, "Apple just needs to gain market share. If it gained 5% more market share, it would be selling millions more Macs!" The problem is not discovering the issue, it's figuring out how to address the issue without causing new, unintended consequences or failing to execute the solution properly - Dan]

83 enzos { 05.16.10 at 3:45 pm }

Indeed, Roz, with reservations I agree that the ATT/Apple partnership may be getting a bit over-ripe.. unless, that is, there’s a stunning new technology that they are developing together.

“the company will focus on its HSPA+ data network which should, at least in theory, bring its subscribers betters Internet surfing speeds which will be averaging somewhere between 7.2Mbps and 14.4Mbps. / AT&T is said to bring HSPA+ to no less than 250 million Americans by the end of the year ” http://tinyurl.com/2w3mhp3
Don’t know if this would qualify as ground-breaking but I’m thinking it keeps the iPhone ahead of the rest in terms of (best case) user experience, for now.

84 shadash { 05.16.10 at 4:56 pm }

enzos,

The problem with AT&T is coverage, not speed. They are already faster than Verizon. Maybe this will help some, since AT&T is already a year behind (!!) Verizon on that, but there will still be gaping holes in their coverage.

85 enzos { 05.16.10 at 5:33 pm }

So people keep saying. Must be a USA thing; I’ve never had dropped calls on any carrier in Oz or Fiji. A couple of friends have brought iPhone 3GSs from Oz to Fiji and put them on the local Digicel network (Vodafone offers a F$3000 iPhone 3G (no S) “deal” but there haven’t been many takers!). Slow 3G service but no coverage problems, even in the islands!

86 roz { 05.17.10 at 3:16 pm }

Some people complain about coverage. In my experience it seems to be about something different from coverage in places like San Francisco. You can have full bars yet have dropped calls or trouble connecting. My thought at those times is that there is a tower nearby but it’s just maxed out with too many users. That seems like a capacity issue. In the suburbs, ATT works fairly well. Go downtown SF and you sometimes can’t make a call. At least so far this does not seem like a problem that is easy to fix.

87 gslusher { 05.17.10 at 4:57 pm }

@roz:

““So far it doesn’t look like Apple needs to worry about Android much more than they do about dumb phones.”

Wrong and baseless. It is a platform just like the iPhone. It has features the iPhone does not have, better camera, flash, radio, free nav. It is on every carrier in many versions, styles, price points. Don’t kid yourself too much.”

I’m confused. First, you say that Android is a “platform just like the iPhone.” Usually, that refers to the OS. Then, you say that “it” has features the iPhone does not have, etc. It seems to me that you have confused the “platform” (OS) with specific hardware/phones. There is NO “it” when referring to the hardware in the case of Android phones. Remember that there are still phones for sale that use early versions of the Android OS and it’s very unlikely that those phones will ever be updated. (Some may not be able to be updated.) Any updates to Android phones must come from the carriers, who have little incentive to provide free updates as Apple does, worldwide.

“With iPod Apple was very aggressive with pricing and getting the device into every sales channel it could. That is why we saw iPods in Costcos and Walmarts.”

Go back and check your history. The early iPods were much more expensive than existing MP3 players. (The original 5GB iPod sold for $399 in 2001-2002, when one could buy other MP3 players for less than half that.) It was also quite a while before Wal-Mart started selling the iPod–early 2005, as far as I can find. That’s 3 years after the iPod was released.

http://www.macdailynews.com/index.php/weblog/comments/4887/

88 gslusher { 05.18.10 at 12:28 am }

Roz, et al:

Two questions:

1. Do you think that Steve Jobs and the rest of the upper management of Apple are stupid?

2. Do you think that the Apple management is unaware of the arguments and information (all readily available) you have posted?

89 roz { 05.18.10 at 1:26 am }

@glusher
Android is a platform, an OS. Leading Android devices have features and specs that surpass the iPhone 3GS. See Incredible and Evo. Hope that is clear enough.

I don’t think Jobs or Apple management are stupid, not at all. But, contrary to people here, I do think they can make mistakes. In a corporation it is very easy to make a mistake and have it perpetuated. In this example, Apple probably does have an incredible subsidy from ATT. Ok, so that makes a lot of money – it is hard to argue against that. Someone internally who owns that relationship, maybe Jobs himself, is going to defend the profit margins they are making and not want to alter the deal. Strategically though it can be a bad move. Smart people can make mistakes or perhaps there is an internal logic there that drives these things – but I still think it is wrong because it has created such an opening to a competitor.

But the reason I am posting here, doesn’t have that much to do with Apple or it’s management. I don’t think they are reading this. I am posting these points because the people here seem so closed minded. They can’t see a problem for themselves. They have to believe that everything Apple does is right even when it does not make sense in a really obvious way. So they defend a bad policy, call me deluded or an idiot when really they are the ones caught up in this dogma that keeps them from seeing things clearly.

So I have a number of friends who keep asking me what phone to get on Verizon since for whatever reason they can’t or don’t want to switch. It’s not an intellectual leap for me to see they can’t get an iPhone and that is not a good thing. People here see that as sacrilege.

90 roz { 05.18.10 at 1:48 am }

@glusher
And I don’t get why you and another are arguing against me for pointing out the way that Apple was aggressive at making the iPod broadly available. I wrote: “With iPod Apple was very aggressive with pricing and getting the device into every sales channel it could…” You say I need to check my history. I didn’t say they did that from day one, I said they did that, and they did. I am not incorrect. So it was after the iPod had some traction in the market, that does not conflict with what I wrote or my point. The iPhone has had traction in the market for a while now. I am not arguing with how the iPhone was introduced with one carrier in the US. I am arguing that now, three years later, the product is being held back arbitrarily by not being at Verizon and the others. You hear this point made my many people out there. It is by no means novel.

The timescale of the iPhone’s market adoption is much faster than the iPod. Few understood the benefits of the iPod when it was first released. It took time for the product to mature and the market to understand it’s potential benefits. So if they got to Walmart in year three that was fine in the lifespan of the iPod. I was impressed that they did that at all and reached out to more people with the product. That was very un-Apple at the time but it was the right call in my book.

The iPhone launched with iPod functionality built-in so it leveraged the iPod’s popularity and customer base – that accelerated its acceptance. There was already a market for smartphone that was paying money for flawed devices. It took a lot less time to find it’s audience, as we all know. So then the time from launch to needing to broaden the offering is going to be shorter. At least that is how I see it.

91 macpeter { 05.18.10 at 2:36 am }

@roz

Apple will come to Verizon when LTE is ready for roll out. Their network may offer better coverage than AT&T but it is not very fast at the moment. Verizon plan 4G upgrades in 30 markets till the end of the year and at least 10 times more data speed will change everything.
If Apple is ready to offer a dual mode CDMA + LTE phone in front of the competition, Verizon will accept all of Apple conditions and togehter they will land a home run in all new 4 G markets.

92 roz { 05.18.10 at 3:32 am }

@macpeter
Yeah we have been hearing that same story for a while now – wait for LTE. Even Daniel admits that the chipsets are not here yet, the network is not here yet and its not as if they can turn off CDMA tomorrow. It’s still going to be a different SKU for Verizon v ATT, so what benefit is there to waiting?

Bet they don’t wait and ship a plain old CDMA, which is fast by the way, and all this talk about how it made no sense to ship a CDMA will be shown to be the bunk that it is. All the other device makers are not waiting for LTE because they want to have something in the market right now.

93 macpeter { 05.18.10 at 4:00 am }

@ roz
Nobody except of few involved people knows, which chip Apple has ready for the next generation iPhone. Apple invested more then 2 years of development and usually they “skate where the puck is going to be” and this is for sure not CDMA.
Product- and contract cycles are at least 2 years and in in this timeframe 4 G will be offered by every modern wireless carrier.
If Apple wants to lead smartphone development, they have to lead the introduction of LTE.
A CDMA only iPhone with 4G just around the corner would be one of the most stupid things Apple could do and if they are not ready for LTE this year, then they better should wait for next year.

94 roz { 05.18.10 at 11:13 am }

@macpeter
Hey if they can ship an LTE device that is backwards compatible all the better – but they have to have something for Verizon in the market this summer. If the rumors are correct and they ship in the August/September timeframe that probably means that they are pulling something off the shelf, which to me means CDMA. I don’t see that as a mistake. There is no benefit to building an LTE device before the network is built out. You can’t even do real world testing on it. Better to be on the next rev of chipsets that are more optimized. Ship a CDMA on a mature well understood, optimized chipset and then set up for the upgrade to LTE next year when Verizon has started to light up LTE.

Apple does skate where the puck will be but for example they opted for EDGE with the OG iPhone. That in retrospect was probably a good move considering the power issues with 3G. So the EDGE iPhone was sold for a year and has a lifespan of 2-3 years. That is not a bad precedent for CDMA to LTE.

One nice thing about the new design is that perhaps they don’t feel as much need to have a white or black option. That would mean 1/2 the SKU globally. So last year they had to manage inventory of 7 SKU just for ATT. This year that could go down to 3. And maybe an additional 3 for Verizon and the few CDMA carriers around the world. Should not be too bad.

95 Reality Check: Apple not killing the Mac OS for iOS at WWDC 2010 — RoughlyDrafted Magazine { 06.10.10 at 7:47 pm }

[...] Reality Check: NPD’s Android vs. iPhone sales headlines [...]

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