Smartphone market share myths

Samsung sells more smartphones than any other company. Reuters reports Samsung accounts for every third smartphone sold around the world in 2013.  Gartner puts Apple’s market share at around 12 percent.

Conventional thinking says this gives Samsung a dominate market position. The same thinking says this means strong profits. And you might think it would make Samsung a favourite target for app developers.

Yet Samsung lags behind Apple in both departments.

That large market share counts for less than you might think.

Two years ago Horace Dediu showed how despite a smaller market share, Apple took the largest slice of profit from selling smartphones. If there are more up to date figures on this, I haven’t seen them.

Technology moves fast, but it’s likely Apple still takes a larger slice of profit from the phone business than Samsung. Both companies recent financial reports suggest this is the case.

You could argue a smaller share of profits from a larger slice of the market means Samsung is buying market share.

The app developer question is a little more complex. Few write programs specifically for Samsung. Instead Samsung phones use the Android operating system – depending on which set of numbers you believe Android could account for anywhere up to 80 percent of all smartphones.

As Dave Smith writes for readwrite:

Though Android dwarfs iOS in devices and downloads, Apple rakes in an estimated $5.1 million in revenue from the App Store each day, while Google banks just $1.1 million per day.

Smith goes on to report Android accounts for 75 percent of app downloads while Apple’s iOS only has a 18 percent share. Yet the Google Play store – used to distribute Android apps – only took 13 percent of the revenue Apple achieved.

Although Android’s app market is catching up, it’s clear Apple users are not the same as Android users. Each Apple customer is worth far more to the hardware maker and software developers. That’s why most successful developers focus on iOS apps first. Many don’t bother with Android at all.

Samsung’s Galaxy s4 customers are an elite group by Android standards, but they still appear to be considerably less valuable than iPhone customers.

The problem here is that when we look at markets, it’s too easy to be seduced by simple statistics such as market share.  That’s not surprising, in many technology sectors there’s a direct correlation between market share and profits. One day the smartphone market may be the same, but that day has yet to come.

4 thoughts on “Smartphone market share myths

  1. The problem with market share of anything is that the market needs to be defined first before a share can be computed. In the case of iOS vs Android, these are not two markets, but two operating systems with the Android one being severely fragmented to the extent that a comparison with iOS is meaningless.
    Imagine comparing iOS with a toy sold in toyshops with an Android operating system to enable it to do simple maths. Not the same market.
    I have yet to see a sensible comparison between iOS and smartphones similar in specs with Android onboard, that would be the single market that should be compared.

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    • In other words the smartphone market isn’t a single coherent entity so any further comparisons or analysis are effectively meaningless? Yes, I can see the argument. It’s not unreasonable. It may also explain why smartphones just don’t follow what happens in other competitive tech markets.

      On the other hand are we comfortable with the idea that iPhones are beyond comparison with other smartphones – are they really that different?

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      • Definitely the iPhone should be compared, but with smartphones that people make the choice between, not unrelated products. There are a number of full featured android and windows smartphones that can be compared to an iPhone and that I am sure is what many buyers do. Pity the analysts don’t.

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  2. I would like to point out that I think the iOS vs. Android app store is a self-fulfilling prophecy. Companies don’t think Android is worth it so they port their iOS app or poorly build an Android app, not taking the investment to make an app tailored to Android and all it’s features. This is why apps look bad in tablet form, Android has been set up like a responsive website and good apps flow and morph fluidly between different screen sizes unlike iOS. Android also has a very different paradigm of interaction and design guides which many seem to ignore and make their app look like their iOS one which confuses and hides functionality Android users are used to having.
    A prime example of this is Facebook Home. They made their app without seeing what makes Android different, so when they released it everyone hated it because it obfuscated Android functionality that they (iOS developers) didn’t even think of or knew existed. It’s like knowing how to build a house and therefore you think you know how to build a skyscraper. Nah-uh.

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