Today's Opinions, Tomorrow's Reality 

A Welcome Resurgence

By David G. Young

Washington, DC, January 27, 2015 --  

Apple's gain in the mobile phone market is good news for owners of Android and Apple phones alike.

When Apple announced its new product line for the holiday season, it started a predictable chain of events.  A glitzy launch of a new iPhone model was followed by Apple fans waiting in long lines to be the first to get their hands on them.  Sales surged, and Apple's share of the smartphone market rebounded after losing ground for most of the year. 

The same thing happened last year, the year before, and the year before that, too.

What's different this year? It's the sheer size of the bump. Apple sold more iPhones in the United States than all other models combined, achieving 50 percent of U.S. sales for the first time, and selling over 20 million phones around the world in November.1

This is important because it is counter to the general trend, where Apple has been steadily losing smartphone market share to devices running Google's Android operating system.  Starting from nearly zero in 2009, when Apple owned the touchscreen phone category,  Android has captured the lion's share of the global market.  It hit a stunning 84.4 percent in the third quarter of 2014, when Apple falling to 11.7 percent.2

Android's market dominance is reminiscent of the desktop operating system market in the late 1990s, when Microsoft Windows achieved over 90 percent share.  The lack of competition led to a near halt in innovation as Microsoft's enemies more often fought its monopoly status in the courts than the marketplace. The Apple Macintosh became a niche product for designers and educators, and Linux a niche product for the geeks.

To be sure, Apple owes much of its recent resurgence to its release of large screen devices with the iPhone 6 and 6+.  For years, the company refused to build a phone more than 2.3 inches wide because late CEO Steve Jobs thought wider devices too awkward to control with a single hand.  Consumers disagreed. They flocked to ever larger Android screens. By mid-2014, Apple phones looked downright old-fashioned.

It's possible that Apple's resurgence merely a one time correction, triggered by the company giving up its small-screen stubbornness.  If so, the risk is that the long-term trend will resume, pushing Android ever closer to the 90 percent market share that signals a virtual monopoly harming innovation.

This would be terrible news.  Many other players have tried to enter the mobile operating system market: WebOS, Tizen, Firefox OS and Ubuntu Touch to name a few.  All have failed to capture even a small market share.  Older players like Blackberry and Microsoft have funneled billions of dollars into shoring up their flagging mobile operating systems.  But to date, their market share appears hardly more than a rounding error.

Several of these minor mobile operating systems have their strengths, but it is very difficult for any to get a foothold due to network effects. Consumers are reluctant to use a minor mobile operating system because there are so few apps. Mobile phone manufacturers don't want to support them because there isn't enough consumer demand. Apple grabbed a big chunk of the market near the beginning. Android took an even bigger chunk two years later, and has grown alarmingly ever since. Today, no player besides Apple has proven capable of keeping Android in check.

This is why it is in the interests of everyone -- Apple and Android owners alike -- that Apple's iPhone line remains successful. If the iPhone market share resumes its decline, Apple risks falling out of the mainstream, becoming niche player for the high-end. It would be little more than the Gucci bag of technology.

If this happens, an Android monopoly, with stagnant features and obnoxious commercialization, won't be far behind.

Full disclosure: David is an Apple shareholder who regularly carries an Android phone.


1. eWeek, Apple iPhone 6 Smartphones Top U.S. Sales for Q4 2014, January 26, 2014

2. IDC, Smartphone OS Market Share, Q3 2014, October 2014