In the 2011 calendar fourth quarter, Verizon’s “wireless revenue rose 13 percent to $18.3 billion, led by a 19 percent increase in data sales,” Scott Moritz reports for Bloomberg.
“The strategy of subsidizing smartphones helped Verizon add 1.2 million subscribers on monthly contracts,” Moritz reports. “While iPhone sales more than doubled from the third quarter to 4.3 million units, total smartphone sales fell short, signaling waning demand for handsets that run on Google Inc.’s Android operating system, said Walt Piecyk, an analyst with BTIG LLC in New York.”
“‘The average smartphone customer will spend about $2,000 over the two-year contract, if the subsidy is $400, you’re still getting $1,600, and that’s very cash-flow positive,’ James Ratcliffe, an analyst at Barclays Capital in New York said,” Moritz reports. “Verizon and rivals such as AT&T Inc. sell the Apple Inc. iPhone and other smartphones at a loss as they compete to get customers to sign up for contracts that typically run for two years.”
Read more in the full article here.
MacDailyNews Take: Siri, what did we say about Android back on March 09, 2010?
You said: “Google’s going to rue the day they got greedy by deciding to try to work against Apple instead of with them.”
That is good. Now Apple needs to really push in some developing markets since they are the factor that lowers company’s worldwide share of smartphones.
In a developing country, an average salary can be no more than half of current starting iPhone price ($650 for the 16GB model).
Regardless of how carriers subsidy this price, an average person of a developing country simply can’t afford an iPhone.
Meanwhile, an Android phone can be hand for a starting price of $70 (a crappy Huawey or ZTE model, running FroYo). This is with no subsidy; a price of a mid-range dumb-phone not long ago. And there are tens of thousands of free apps for that Android device.
Developing world needs to do a lot more developing before substantial percentage of population is able to afford iPhones.
Isn’t it the cost over the life of the contract that puts iPhone out of reach for millions of Android users?
From a third-world perspective, my monthly iPhone bill to AT&T represents almost of third of their take-home pay!
In Thailand a Samsung Galaxy Mini can be bought for about US$150, no contract. Usage is prepaid, and costs about 3 cents per minute for outgoing voice, but received calls are free.
The Mini is pretty much useless as a “smart” phone. Browsing the web is torture. But it makes a reasonably good camera phone.
It counts as an Android phone, and they sell a million of them here, but it doesn’t do Google any good at all, as no one actually uses it like they would an iPhone or high-end Android phone.
But that’s not Apple’s target market. It’s also not developers’ target markets, because none of those people can pay for apps anyway.
I meant “Second World” countries, rather than “Third World” ones.
Many people in Russia or Brazil can afford iPhone, but with crazy prices (comparing to Samsung and HTC) that officially offered for the devices, iPhones get marginalized there. All phones are pricier there, but Apple’s much more pricey due to wrong price policy and distribution model.
With no marketing there, these markets are basically abandoned. Lots of advertisements from Samsung and HTC and much better pricing hampers markets where people buy millions of smartphones.
From a historical perspective:
There was the time during the Cold War when the world was divided into the Western World (the United States sphere of influence, also known as the Free World) and the Iron Curtain World (Soviet Union and its satellites, the PRC, N. Korea). The rest of the countries were “non-aligned” nations and that was known as the Third World. As the Cold War waned and spheres of influence changed daily, the definition of “Third World” has largely changed to mean “developing nations.”
There never really was a “First” or “Second” World
I have no idea how to classify nations like Russia and Brazil as they clearly aren’t developing economies but they are also not part of the top tier either. So perhaps Second World aptly defines these second tier economies.
iPhone 3GS is $1 w/contract.
AT&T only.
Not Verizon.
Market share is virtually meaningless. Apple’s iOS does not need or even want large numbers of third-worlders without two cents to rub together who carry feature phones that Google counts as Android activations and who will never, ever buy apps in any meaningful quantities.
The only things Apple needs to dominate in are:
1) Customers who buy apps (which naturally means iOS is developers’ first choice and main focus)
2) Global profit share
Apple currently dominates both categories quite handily.
“Market share is virtually meaningless” is an Apple mantra and it’s not true for one very simple reason: when HUGE numbers of people are buying Androids, they tell their friends, people see them on the street- it winds up in the public psyche. Market share is NOT meaningless- it’s part of automatic advertising.
So while it’s true that Apple “only” needs to dominate “consumers who buy apps”, that’s only true so long as people are buying iDevices. Back in the 80’s and early 90’s Apple charged MUCH more for Macs and made a lot more profit than other companies on each computer they sold- but people soon stopped buying Macs for the cheaper PCs- so while you can make a fortune [even MUCH more than anyone else] for a while, if you lose market share, eventually you’ll die).
Yes all of that tripe sound nice… except, the fly in your ointment is that (according to the most recent figures) the iPhone is taking market share from android.
So I would say yes; while loosing market share is not fatal for a pinnacle (best of breed) product like the iPhone, it is ominous for a half baked rip off like android.
Because that strategy worked so well for Nokia.
Oh wait…
Guess this means those predictions of Android becoming the developers’ platform of choice in the next couple of years are worth the paper they were written on, eh?
The scenario is this: Apple Hating tech weenies & press convince unsuspecting consumers that the android phones are just like an iPhone. Unsuspecting consumers buy one and then discover they aren’t “just like an iPhone” and buy an iPhone next contract upgrade.
Net result, only the true Apple haters, militant freetards and the remaining extremely naive consumers will be buying android phones.
They did the same thing (to a lessor degree, and a shorter span) with the Kindle Fire. Wait till you see; the amounts of returns, and the precipitous rate at which the sales will drop on that one.
Net result, they had an emerging market with an unexperienced and unsavvy customer base. Those days are quickly waining and too is the opportunity to foist half baked crap on them.
Only one flaw in your logic and I will demonstrate by analogy: Apple Hating tech weenies & press convince unsuspecting consumers that Windows is just as good as a Mac. People buy Windows, see it isn’t as good as a Mac and buy a Mac for their next computer.
Now, what’s wrong with this logic? People have to USE an iPhone to know that their Android isn’t as good. Almost no one does this. The people I know who use Android love it (largely, IMHO, because they don’t know better). How can they know that iOS is better if they never use it?
You’re right. This is true of most things consumers buy. Ignorance is bliss.
You know I see you point, however two things make it different
Most Windows people had never had a chance to see and use OS X (but that is changing and so too the recent sales profiles) because it is difficult to take you desktop with you (and even in the case of laptops it is uncommon to just had it to someone to play with. Add to that desktop (and laptop) operating systems are not incredibly intuitive and require some practice and familiarity simply to operate.
iPhones and iPods are different the first thing people do is hand it to you to look at. That in a nutshell is the fundamental difference; (combined with the fact that iOS is inherently intuitive and require little (or no) experience to run them) Exposure, the iphones and ipads have it, the Mac (until recently) didn’t.
a couple of flaws in the ‘market share is everything’ logic; greater share no longer means control of the market and the eradication of competitors, with the iPhone/iPad/laptop/desktop integration through iCloud Apple (I have 4 of 4) has at least 4 sales in each customer for effectively creating — seamlessly — a single virtual computer out of several devices each suited to a particular need or environment (eg. In class, on a bus, at your desk, at the bedside, etc.), and finally I don’t think that the referrals of 1,000 Android users has the impact of a single iPhone user because the iPhone functionality is so vastly superior and that functional superiority is a huge defense against displacement. This is proved by the corollary both Nokia and Rim absolutely dominated their markets but both vanished overnight in the face of Apple’s superiority notwithstanding all those Nokia and Rim users presumed recommendations. Market share means nothing in the face of superior fuctionality and user experience which is Apple’s forte and should continue to be their focus.
I think that one of Apple’s future challenges (which I’m sure they’re already well on their way to figuring out) is what to do when their form/function designs become the standard to which every manufacturer must comply and Apple will be compelled to share their form/function innovations with everyone.
I don’t disagree with your basic premise – that Apple phones deliver a better experience overall which is why they’ve been able to maintain market share in the face of the Android onslaught whereas lesser players like RIM & Palm, even with the support of HP, have fallen by the wayside.
Set against that, however, is the lack of choice when it comes to the phone, other than the amount of memory and black or white bezel. Some people actually like the freedom of choice in hardware specifications and the ability to modify the way the operating system works to suit their tastes.
Not every Android owner is a militant Apple hater – they happen to fall within the cracks that Apple does not wish to serve. Which brings me to my next subject and that is the diversity of hardware.
I think Apple should bring out a bigger screened device to satisfy those of us who require one. To those happy with peering through a 3.5″ periscope, so be it. They can buy that. This leads me to want Apple to develop resolution independence for the iOS platform so we can have 4.5″ (or 4″) iPhones and 7″ iPod touch maxis.
Judging by the sales volumes on Android (where there are currently some 25 different models on the American market, between four major carriers and half-dozen or so handset makers), devices with displays larger than about 3.5″ are selling in marginal numbers. Vast majority of phones out there are sold with screens of 3.5″ AND SMALLER.
I would love for Apple to make a device that I consider ideal. Unfortunately, it is more than likely that my personal set of preferences isn’t exactly aligned with the average consumer. It appears that, given choice, American consumer wants the phone screen to be no bigger than 3.5 inches. Anything greater than that and the sales numbers suddenly drop. This is easy to understand, as mentioned many times before: 3.5″ is about the biggest screen that can comfortably be reached using just one hand (and outstretched thumb).
If Apple were to ever come out with an iPhone larger than the current size, I would be thoroughly surprised. They generally don’t chase the very corners of the market.
About that Kindle Fire: we will never know the numbers sold, the numbers returned, the sales numbers trends (growth, fall, whatever), because Amazon will never report them. We will just hear some (more or less) educated guesses from (more or less) competent analysts.
But the analysts have been telling us for months that Android sales were growing by leaps and bounds! Does this mean that the analysts were wrong? I’m crushed!
One big problem with the analysis: Just as last quarter’s results showing Android with a significant lead were tempered with “wait til next quarter to see the full iPhone 4S effect”, we need at least one more quarter, after the 4S demand dies down, to see if the trend is sustained.
As for cost over term of contract, I tried explaining that to several typical-consumer friends, and how $50 more would get them the 4S over the 4. They didn’t care, it was $50 saved *now*.
One poster mentioned that people who buy phones operating with the Android OS are often disappointed once they purchase it and discover it is not like an iPhone. If these individuals have not used iPhones, what would be the basis of their comparison. On the surface level, the Android OS and iOS APPEAR to function similarly.
Now, I am an iPhone user. My phone is the iPhone 4S. However, I do testing for our public agencies so I can recommend which devices will be available for deployment in our organization. I have tested and used the Samsung Galaxy S II and the Samsung Galaxy S II Skyrocket. The latter is the 4G LTE version. Having used these devices, I can say that for the average person with no significant “smartphone” needs, they seem to do just fine.
In the final analysis, I did not recommend the phones. My decision was based on the variations in interface of Android devices. Our IT people would have a tough time keeping up in an 8,000 member organization. However, were I not an iPhone user, I would consider Androids the next best thing. They’re still a bit unintuitive (especially some parts of the OS). THey are certainly a major step ahead of RIM’s offerings. And we do have a Blackberry Enterprise Server. On that end, we are down to only about 20 users.
So, I favor the iPhone for it’s reliability, ease of use, interface consistency etc. But I would not label all Android devices “poor.” I think they offer some good options.
And just down the MDN page is this thread:
This is as stunning as the record results Apple just posted (and by record I mean the 2nd most profitable quarter in the history of BUSINESS–ANY business–in all history.)
No company has done more to promote Android than Verizon. But it’s not what their customers want.
If Android has a nominally higher number of units because of all the forks for low end manufacturers selling in the 3rd world… I can live with that. I’m a developer… I need users with a few bucks to spend.
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Anecdotally this matches what I’ve observed at my fav sbux last few weeks. Suddenly it’s 75% 4s (4 and 4s since they look the same) 25% everything else which includes feature phones, BBs, 3GS and Android.)
In my wildest fantasies I did not imagine Apple doing so well.
And get this: the iPhone is STILL supply constrained.
I know Android has some real fans (good for you enjoy), and some prefer more hardware choice (though most consumers want simplicity not choice) and I’m happy you guys have Android to choose from. But what’s clear is that a lot of Android share has been people that would have preferred iPhone but just couldn’t get one due to carrier choice or cost.
And get this as well: Verizon doesn’t even have a free iphone variant. Imagine what the ratio is at AT&T!