In 1985, Microsoft introduced the Windows operating system for personal computers. Leveraging a more open partnership model, Windows overtook the operating sytem market, with market share now exceeding 90%. As the 80s drew to a close, IBM had faltered as the world’s most valued brand in computing, leaving an opening for the combination of Windows and Intel, aka “Wintel,” to be associated with value to consumers.
In October 2008, T-Mobile released the G1 by HTC, the first commercially available mobile device running on the Android operating system. For consumers, this marked the first opportunity to use a new kind of handset born of the Open Handset Alliance, a Google-led collaboration of now more than 79 member companies who pledged to support open standards for mobile devices.
With OEMs such as HTC, Motorola, Samsung and LG all adopting the Android OS, the race is on to earn a Wintel-like place in the hearts and minds of consumers. In this report, Flurry reviews the first two years of the Android device market and concludes that the combination of Samsung and Android, or “Samdroid” as we are coining it, has emerged as a new leader in non-iOS smartphones.
Android Growth Explodes in 2010
Through its analytics service, Flurry estimates it detects over 80% of all Android devices. Presenting our own count of Android devices from 2009 to 2010, without any adjustment, the chart below shows how the launch of wave after wave of increasingly more powerful Android devices has resulted in unprecedented year-over-year growth. By our count, devices running on Android OS now exceed 60 million. From 2009 to 2010, Android adoption increased by nearly 10 times, from 5.9 million to 53 million devices.
The New 2010 Android Landscape
In 2009, the leading Android handsets were the T-Mobile G1 by HTC, myTouch 3G by HTC and Motorola Droid. Overall, for 2009, HTC’s early commitment to Android was rewarded. By the end of 2010, however, three companies split the majority of share for Android devices, with Samsung coming on very strong in the second half of 2010. Additionally, LG captured 7% of Android device activations with a surge of Q4 sales. As a new brand in consumer electronics, HTC appeared unable to withstand erosion of its early, dominant market share lead against mature brands like Motorola, Samsung and LG.
Samsung Disruption in Q4 2010
Breaking out new Android device activations by OEM by quarter in 2010, as is done in the subsequent chart, provides a view into how Samsung enters strongly in the back half of 2010. In fact, Q4 2010 marked the first quarter since Android launched eight quarters ago in Q4 2008, with the T-Mobile G1 by HTC on T-Mobile, that HTC did not lead the market in quarterly new Android activations. While HTC enjoyed strong first-mover advantage, coupled with additional penetration through its willingness to white label for Google and T-Mobile branded Android devices, it succumbed to the brand power of Samsung led by its Galaxy S line of Android devices in Q4 2010.
The Galaxy is out of this World for Holiday 2010
Studying the Holiday period in December 2010, not only does Samsung dominate the top position with the Galaxy S, but also claims the third best spot with the Galaxy Tab, the best-selling Android tablet and only non-phone in the top ten. Additionally noteworthy is that the top five does not include HTC. However, it’s also fair to point out that by expanding the list to include the top ten devices, spots six through ten are all HTC devices, in the following order: HTC EVO 4G, HTC Desire, HTC Incredible, HTC Glacier and HTC Wildfire.
There is a lot riding on the Motorola Droid. Verizon is looking for an answer to the iPhone, which has driven enviable data ARPU growth for AT&T. According to Rita Chang of Ad Age, the Droid is supported by a $100 million integrated marketing campaign, the largest in Verizon history, running through the end of 2009. Google's long-term bet on mobile, underscored by its recent $750 million offer to purchase Admob, demands that the Android OS propagate. Meanwhile, HTC enjoys an early mover advantage with its G1 and 1.5 generation of Android handsets. Finally, several more leading OEM's have pledged to support Android, with as many as 100 handsets scheduled to ship in 2010. In short, the once dominant, now reinvented Motorola has little room for error.
Through its analytics service, Flurry monitors usage of over 10,000 developers' applications on iPhone and Android. In total, Flurry tracks applications on approximately two out of every three unique iPhone and Android handsets in the market, including over 15,000 million user sessions per day. To estimate first week sales totals for the myTouch 3G, Droid and iPhone 3GS, Flurry detected new handsets within its system, and then made adjustments to account for varying levels of Flurry application penetration by handset. Flurry additionally cross-checked its estimates against Apple actual sales, released for the iPhone 3GS, which totaled one million units sold over the three days of sales, Jun 19 - 21. Flurry first week sales estimates can be found in the table below.
While Flurry estimates Apple sold approximately 1.6 million 3GS units over its first week of sales, it is important to note that Apple simultaneously launched its device across eight countries (U.S., Canada and six European countries), while the Droid launched only in the U.S. Additionally, the iPhone commanded a strong installed base of over 25 million at the time the 3GS launched. Of those, over 6 million were first generation iPhone users who were expected to upgrade to the 3GS. Taken in this context, Droid sales of 250,000 units during its first week from a standing start and in just one country, is a strong result for Motorola and Verizon. Also, by Flurry's measurement Android does have an edge over iPhone app usage, with the average Android session length at four minutes vs. two minutes for iPhone apps.
With its first week showing, the Droid is the fastest-selling Android phone to date. Compared to the myTouch 3G on T-Mobile, Droid outsold it by more than four times. Of course, Verizon has nearly 90 million subscribers to T-Mobile's 34 million and Verizon has shown a willingness to outspend previous carriers with its $100 million campaign. With Motorola forecasting its own Droid sales at one million through the end of the year, that equates to a cost per acquisition of $100 per handset sold. Verizon's aggressive campaign coupled with its 3G network advantage in key, populous regions of the country like the Northeast positions the Droid as a legitimate challenger to the iPhone.
While iPhone continues to dominate the Smartphone market overall, each subsequent Android handset launch increases competition for Apple. Furthermore, Flurry has monitored a sharp increase in new Android project starts by application developers within its system, a 94% jump in October compared to September. The launch of Droid signals the beginning of a viable platform alternative to the iPhone as Android builds critical mass. As major companies continue to vie for a piece of the exploding Smartphone market, the consumer has never had more choice and innovation in the mobile industry. With Droid, Motorola has raised the bar for Android handsets, contributing to an ever-growing base of Android handsets upon which applications developers can build a business.