Monday, August 2, 2010

Is Apple's iPhone bound to lead the smartphone market? It might be a matter of price.

Nielsen published on Monday (8/2/2010) its latest numbers on Smartphone’s market shares (Android Soars, but iPhone Still Most Desired as Smartphones Grab 25% of U.S. Mobile Market, leading to many editorial comments on Android’s takeover and RIM’s need for a home run for its next generation expected to be revealed today (see A new BlackBerry: RIM's last shot, SAI CHART OF THE DAY: RIM Needs A Home Run With Its Next Phone and Android smart phone shipments grow 886% year-on-year in Q2 2010).

The 2 charts bellow illustrate the current market share for smartphones in the U.S. based on total units and units shipped during Q2 2010.

As everyone has now mentioned, Android sales are soaring and the Android OS is well on its way to catch up with Apple’s iPhone.

Not so fast… Nielsen also released the results of a survey showing what owners of the top 3 OS would choose for their next Smartphone.

Nielsen points that the iPhone remains the most desired device currently in the market place, regardless of what anyone is using. While Android has a high intended loyalty (71%), it’s nowhere near the iPhone’s (89%) and only 21% of the current Blackberry owners seemed attracted to an Android device while 29% claim a preference for the iPhone. Given the current position of Blackberry in the market, these 8 percentage points represent a large chunk which could make a difference in defining the market share in the near future.

I ran a simplistic simulation for market share based on current owners switch given both the current market shares and the market share based on Q2 2010 shipments (chart below)

Obviously, the market does not comprise of switchers only, but it seems that the iPhone is bound to become the leader in the market and this even given the current Android shipments.
This is obviously assuming that those who desire an iPhone for their next Smartphone are ready to pay the premium price. Pricing will become a critical factor in the battle for market share between Android, iPhone and RIM’s new device.