iOS Q2 Market Share Slips Amidst Competing Metrics

| Analysis

The Android and iOS mobile operating systems combined to power 85 percent of all smartphones shipped in the second quarter of 2012, according a new report published by research firm IDC Wednesday. The total represents a new high for the two dominant mobile platforms together, but shows a rare iOS market share decrease despite an increase in unit shipments.

Is Apple’s shipment market share decrease bad news for the company? We provide some thoughts on the subject but, first, the numbers for the quarter:

IDC 2Q2012 Mobile Shipments

Individually, Google’s Android represented 68.1 percent of all smartphones shipped during the quarter, up from 46.9 percent in the same quarter last year, with total shipments of 104.8 million units, up from 50.8 million.

“Android continues to fire on all cylinders,” Ramon Llamas, senior research analyst with IDC’s Mobile Phone Technology and Trends program, said in a statement. “The market was entreated to several flagship models from Android’s handset partners, prices were well within reach to meet multiple budgetary needs, and the user experience from both Google and its handset partners boosted Android smartphones’ utility far beyond simple telephony.”

He added, “Apple’s iOS posted double-digit growth, but not enough to keep up with the overall market.”

According to IDC, Apple’s iOS represented 16.9 percent of shipped units in the second quarter, down from 18.8 percent last year, a rare decrease. Conversely, iOS shipments rose by 5.6 million units year-over-year, to 26 million units, up from 20.4 million.

“Demand for Apple’s flagship smartphone has cooled off now that the device has been available since October, and the rumors around the blogosphere have fueled speculation about a new design and features. Despite these trends, iOS remained the solid number two operating system behind Android worldwide, and greater than the total number of smartphones on the remaining platforms,” the report stated.

Struggling BlackBerry and Symbian each fell below five percent for the quarter, shipping 7.4 and 6.8 million units, respectively.

Windows Phone 7 and its predecessor Windows Mobile combined for 3.5 percent with 5.4 million units shipped during the quarter.

In total, 154 million units were shipped during the second quarter, up from 108.3 million a year ago, for a year-over-year increase of 42.2 percent.

“The mobile OS market is now unquestionably a two-horse race due to the dominance of Android and iOS,” said Kevin Restivo, senior research analyst with IDC. “With much of the world’s mobile phone user base still operating feature phones, the smartphone OS market share battle is far from over. There is still room for some mobile OS competitors to gain share, although such efforts will become increasingly difficult as smartphone penetration increases.”

IDC iOS Shipments Good or Badvia Shutterstock

Bad News for Apple?

Wednesday’s numbers from IDC showing a decline in iOS market share represent only unit shipments for the quarter. While some industry analysts hang their hats on this metric, others prefer to look at overall usage share or profitability, both of which show Apple in a growing, healthy position.

Recently released numbers from comScore, as an example, show Apple at 15.4 percent of total mobile subscribers last quarter (that includes feature phones), up from 14 percent in the previous quarter. Looking at just smartphones, Apple more than doubles its position to 32.4 percent of smartphone subscribers last quarter, compared to 30.7 in the previous quarter.

Even better for Apple is profitability, with Canaccord Genuity analyst T. Michael Walkley reporting that Apple claimed 71 percent of second quarter 2012 profits for the entire mobile phone industry in a quarter that saw many major mobile companies, such as Nokia, RIM, and Motorola, record significant losses.

Can Apple Sustain Profitability?

However, as noted by IDC in their report, Apple’s growth of 5.6 million units was “not enough to keep up with the overall market.” If Android continues to outpace Apple, how long will it be until iOS finds itself in single digit market share?

Apple may continue to sell tens of millions of iOS devices, but in a rapidly approaching reality of multiple billions of devices sold each year, will Apple be able to sustain its profitability?

Apple supporters claim that the quality, ease of use, and immersive ecosystem will keep the platform viable, even if Android, or another competing platform, becomes completely dominant.

Others fear that if Android reaches 70 or 80 percent of the total market, the draw of advertising dollars and potential customer base will be too large for most developers to ignore. While it’s certainly possible for app developers to maintain apps on multiple platforms, if Android becomes the “preferred” platform, will a dearth of quality apps (something that iOS fans have chided Android fans about for some time) cost iOS its user base?

In a Market of Billions, Does it Matter?

During the introduction of the iPhone in 2007, Steve Jobs told the audience that Apple’s goal for the phone was to reach 1 percent of the global phone market in one year. Apple’s rationale was that to reach 1 percent in a market (at the time) of 1.2 billion phone shipments per year was “pretty good.”

The iPhone, and the entire mobile device industry, has changed dramatically since Mr. Jobs made that modest prediction over five years ago, but the rationale hasn’t. During the period from the rise of Windows to the introduction of the iPod, Apple rarely enjoyed a market lead in any product category. Although the company fell on hard times, it was still able to climb back to profitability with multiple products that were highly profitable but not necessarily market share leaders.

If iOS shrinks further in the coming quarters, even if it falls into to the single digits of mobile marketshare, will it mark the “beginning of the end” for iOS and Apple’s resurgence? The answer to that question depends on how the market, and consumers, view the relative importance shipment market share, usage share, and profitability. If Apple can maintain market-leading levels of profitability and product quality, it is doubtful that the executives in Cupertino, or Apple customers, will care much about any other metric, even if Google partisans cherry pick a metric that proves a Google “win” in their eyes.

Teaser graphic via Shutterstock

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I was unaware that business journalists were required to have brain surgery to remove their memory and reasoning capacity. Seriously…with rumors rampant regarding a September announcement of the iPhone 5 (or whatever they end up calling it), its surprising that iPhone activations are down? 
Really?  Two weeks after the new iPhone ships, everyone will be amazed and the surge of new activations.

Bosco (Brad Hutchings)

Apple supporters claim that the quality, ease of use, and immersive ecosystem will keep the platform viable, even if Android, or another competing platform, becomes completely dominant.

Wow, it’s just like the 1990s all over again, rationalizations included! There are two problems with a rosy outlook for the iPhone. One is embodied in the quote. The iPhone just isn’t that much better, if at all, for most people than the best Android phone for them. The fragmentation decried for going on 2.5 years by the Apple crowd lets people who choose Android find the right balance for them. Whether that be price, durability, screen size, physical keyboard, skins, etc., choice lets people find the right phone for them. Second problem is the profits. Right now, the carriers eat the jacked up cost for iPhones via subsidies. Sprint is taking a bath on its iPhone experiment so that Apple can make profits. Meanwhile, Verizon is steering customers to much better Android phones that keep more money in VZN’s pockets. The future threat on networks that continue to use SIM cards is that very nice phones might become inexpensive enough unsubsidized that the iPhone may have to compete at retail price. Galaxy Nexus HSPA+ direct from Google, no contract, $349.

iPhone probably will get a marketshare boost after the fall refresh just from people who intend to stay in the prison garden and have stretched out their wait for an upgrade. But there is no way that one phone could be the best phone ever, even for a fleeting moment in today’s smartphone market. Best compromise, sure, but it will already be bested on some important metric from any side you look.


Who cares? Out of the 104 million Androids shipped, at least 80 million are cheap phones. 52 million come from Samsung the only one outside of Apple who made a profit. It means the other 52 million shipped at cost to manufacturers. The only one benefiting is Google. More places to put their ads were people can accidentally click them.

It’s not a question of how long Apple can maintain their profits. Are they loosing customers? Absolutely not. They’re not feeling any pressure, they’re still growing even at 50% profit margin. The real question is how long can the other manufacturers keep churning out this phones at little to no profit?

There is a reason why Apple is not targeting the cheap phone market. They don’t care about market share. Only Google does. And the other manufacturers will die while Google rakes in all the advertising dollars.


71% share of the profits. That’s the only number that matters. That means more money to make innovations. And that means people will keep buying it.

App developers are making 4 times more money in iOS than in Android. Why? Because of the target market. It doesn’t matter if 1 billion Android phones sell. If the people who use them doesn’t have the money to buy apps it’s no use. And any developer can tell you that ad money on apps is a joke. So unless that reverses in a major way developers will keep prioritizing iOS.

Besides the dynamics hasn’t changed. Low-end Android smartphones are merely replacing the current feature phones. The money is still in the high-end market.


Yeah, let’s revisit these numbers after the new iPhone’s first full quarter in the global market, shall we?

A few points to think about (apart from the obvious stated above, that we’re only one month away from the announcement of the next iPhone, so of course sales of the current iPhones have slowed down. Duh!)

1. The iPhone 4 sold extremely well in it’s first year. By October all the people who bought an iPhone 4 back then will have had their iPhones for two years, so they’ll be out of their old contracts. Time to update? I think so!

2. The two main grudges that kept people from buying the iPhone 4S and sent them looking at Android phones was that they wanted a bigger display and 4G capability. The next iPhone will have both, AND a new and thinner design to boot!

3. The world’s largest mobile carrier, China Mobile Ltd., still doesn’t carry the iPhone. When the next iPhone debuts in China they will!

Put these three facts together and Steve’s words about waging “thermonuclear war” on Android suddenly starts to take on real meaning. The next iPhone will indeed have the impact of a thermonuclear intercontinental ballistic missile in Android Land.


There are two problems with a rosy outlook for the iPhone. One is embodied in the quote. The iPhone just isn?t that much better, if at all, for most people than the best Android phone for them. ...

Frankly, you don’t have much credibility on the subject. Three years ago (December 2009), you were claiming that the iTunes App Store was going to be “Apple’s Waterloo,” as developers realized that Android would be such a better deal for them. A few months later, you advised AAPL shareholders to sell at $242 (they’re at $620 today). You’re still singing the same tired song, and you’re still just as laughably wrong.

iPhone probably will get a marketshare boost after the fall refresh just from people who intend to stay in the prison garden…

From “Waterloo” to “prison garden,” huh? I wonder if that’s some sort of an upgrade. I suppose it doesn’t matter, since the iTunes App Store is the most successful mobile software sales destination in the history of mankind.


Frankly, you don?t have much credibility on the subject. Three years ago (December 2009)

Good one buddhistMonkey!!  Someone after my own heart - actually holding someone accountable for what they’ve said in the past.

My favorite from Bosco is the “declining and mostly irrelevant iPad” comment from Jan 31, 2011.  If anyone actually thinks he has credibility after that…


My wife still has a 3 GS and it works very well for her for what she needs. When it comes time for an upgrade she won’t think twice about replacing it with another iPhone (either 5 or more likely a 6).

My wife is a very average user who has found the iPhone has embedded itself into all aspects of her life and it continues to do so the longer she has it. I don’t think this will change really. iPhones are essentially an addiction.

The 3GS is ancient technology for most people compared to what is out now, but her experience seems to be what happens to most people who get an iPhone. Since her story is a rather average case, I don’t see the iPhone disappearing or even declining until a new communications paradigm comes along. The hundreds of millions of users will continue to replace what they have. Since the smartphone market is not saturated there still will be more new hundreds of millions of future i-device users and these future users will likely do the same as current owners of iDevices.

As I have guessed before, I think that iPhones will likely makeup 25% or so of the future smartphone market for the for-see-able future. With the bulk of the profits, that is a very sound position to be in for any company. I don’t see this changing in the next few years and I think that at least for the next 6 or so years Apple is in a pretty solid place in the market. Beyond that who knows, but for now I want to increase my holdings of Apple stock.

The iPhone and Android devices will continue to play a game of leapfrog with the iPhone improving and the android devices improving. Both will become better every year.
Both will be successful, but I think the iPhone will still continue to make the bulk of the profits while different android players try and compete over the scraps of the rest of the largely profitless market. I don’t see any grand tech leaps which will set either iPhone or Android in any significant disadvantage since they both are derived from the same operational paradigm.

I don’t really see androids or iphone getting knocked out of the market until there is a new transformational communication device which blows everything we have currently away. That could be more than a decade away perhaps.

Who will likely come out with such a device? Who has the money to bankroll such a future device? Apple could be a safe bet with their track record and large amount of cash on hand, but there may be some other companies with such vision.

I can’t wait for that, but with the newest iPhone coming out very soon, I will probably finally buy my first iPhone since now my kids, grandmas, grandpas, and my wife all have succumbed to i-Devices. After all, most phones only have a 3-4 year lifespan before they are obsolete… if that. They are largely disposable. My nokia is nearly broken and very taped up after over 2 1/2 years. Time for something new…. when it comes out.


Nice write-up, paikinho.  And when you get that iPhone, welcome aboard!!


After seeing a number of these quarterly market share reports, I don’t think they are very instructive. First of all, they are not consistent in the method of tracking. Some use market share based on sales; while others use shipment data (personally find this method not as useful). But the biggest problem is the variation due to quarterly fluctuation that results from product releases.

Comparing anual sales would be more instructive. Even keeping a rolling average of sales for the last four quarters would be better. What will happen is Apple will release the new iPhone and their market share will go up over the balance of this year and begin to tapper off again. This is nothing new.


As soon as you and far too many analysts made the jump from talking about smartphone numbers to talking about advertising dollars and app developers, that’s where your argument fell apart.

As usual you and all those analysts (and people like Bosco) have smartphone blinkers on and conveniently forget that the advertising and app platform is bigger than just the iPhone.

In addition to those 26 million iPhones sold last quarter there were another 6 million iPod touches and 17 million iPads sold.  The iOS advertising and app platform is far larger than and growing faster than just the iPhone.

In addition, despite, Android’s significantly larger unit sales, it is iOS that is 600% larger than Android in developer revenue.  It is iOS that has captured 90% of the mobile e-commerce revenue, 84% of the mobile games revenue, 97.3%.of the business tablet activations.

All Android has is unit sales numbers - just like Nokia and Symbian - but without the usage share or the profit share or the developer revenue or the ecosystem or the content or the media, it is all useless.

These are the metrics that matter.



iPhone probably will get a marketshare boost after the fall refresh just from people who intend to stay in the prison garden and have stretched out their wait for an upgrade.

A co-worker friend who uses an Android phone on Verizon (a Droid, I think) is switching to the iPhone as soon as the new model comes out. One of her daughters (former Android user) also just switched to the 4S. So its not as if the only people interested in the iPhone are those currently in the “prison garden.” BTW, my friend’s family also just bought an iMac a few days ago, after having used Windows exclusively. They simply have found that they like Apple products more so than the alternatives. And yes, they have an iPad, too.

But there is no way that one phone could be the best phone ever, even for a fleeting moment in today?s smartphone market. Best compromise, sure, but it will already be bested on some important metric from any side you look.

That begs the question: What are the important metrics? Sheer OS market share means nothing to developers, if Android users refuse to pay for apps. The important metric to an app developer is: What platform gives me the greatest profit potential?

Do investors care about market share, or rather overall profit share and per-unit profit margin? (Hint: Look at some stock tickers for your answer.)

To the person buying a smartphone, do they care about any of the above, or rather, just finding a phone that does what they want it to do?

It may shock you to know that many people simply want a phone that works. They don’t care about side-loading apps, about customizing this or that, about open vs. closed, they just want a phone that works simply, consistently, and has all the available apps they desire.

Bosco (Brad Hutchings)

I’ll bet that existing captives of Apple’s walled prison will appreciate the smaller connector on the new iPhone, which will no longer work with all the accessories they’ve been trading cigarettes and hand [CENSORED] for. Meanwhile in Android land, most new devices leverage micro-USB standard.


Most connectors have adapters.
Most connectors wear out after a few years.
I have had several connectors wear out on various devices including USB connectors.

Luckily…. after every few years I tend to get a new device since technology moves on.


You are truly clueless, Bosco.  In the same paragraph where you insult Apple for a connector change you say that ‘most’ (i.e. not all of the fragmented android world) and ‘new’ (i.e. most of the old fragmented android world don’t) devices leverage micro-USB standard.  But continue to be the troll that you are and post your crap.  I find your ignorance and avoidance of the truth hilarious.


Yep, new iPhone users will appreciate the smaller connector that incorporates not just USB but also far more features such as low power - low cost audio integration, video-out on a couple of pins and other features that don’t require the more expensive and complex USB interface.

It will be funny to see what Samsung does as they had copied Apple’s dock connector right down to the long thin design and cable shape.  Will they also switch to a new copy of Apple’s new dock connector?

Since most Android devices sold are Samsung, I guess the majority of Android devices do not use micro-USB after all.



I?ll bet that existing captives of Apple?s walled prison will appreciate the smaller connector on the new iPhone

While the smaller connector is still just a rumor, assuming it’s true, as paikinho said, technology moves on. We no longer use SCSI, floppy discs, Zip disks, ADB cables, SyQuest drives, and a host of other computing technologies that have been replaced by superior technology. Besides, if the smaller connector does appear, there will no doubt be adapters made for 30-pin accessories.

Note, too, that a new connector isn’t the only iPhone change that can make some accessories obsolete: Any case, including powered cases by manufacturers such as Mophie, become obsolete each time the form factor changes on the iPhone. My Mophie battery case, for instance, will only work with the 4 and 4S, simply because of the physical shape of the case. Same for my ultra-thin Incipio case. Both are useless if I get the iPhone 5, should its form factor change. (How ironic that people complained that the 4S had the same form factor as the 4, when seen in this light.)

So a smaller Dock connector, if one really does appear, won’t be that big of a deal.


Another take on this is from NDP, which has Apple coming out ahead of Samsung on smartphone growth.

It makes little sense to take a single snapshot of any company, be it Apple, Samsung, Google or MS and prognosticate beyond what the data say about that cross section in time. Growth, or the lack thereof, is always multifactorial. The broader industry context, and the overall product growth trajectory, is the only way to rationally discuss a product’s (or company’s) performance.

On that note, I see no data, from any credible source, that Apple, or for that matter Google and its Android OEMs like Samsung, are in trouble, or are headed towards extinction any time soon.

No data.

Who dares

Well Brad has been shown up. I remember there used to be reporter with the Western Mail (local paper) and he poured scorn on iTunes and the IPod way back in 2001.
He used so much anti mac rhetoric in his biased report basically claiming the iPod and iTunes would fail and that other Windows alternatives were better. I wonder where that IT reporter is now -


Well, if this doesn’t cement Bosco as a pure troll, I don’t know what would.  Spews his garbage, sits back while we all fight back, and then avoids the entire thing.  We really should stop feeding him.  It’s obvious from those of us who’ve been here a while that he is constantly and pretty consistently wrong about just about everything.


Sad thing is, I can’t tell if he honestly believes everything he says, or if he is only saying it for some perverse pleasure that he gets from annoying people in general.  Oh well - one of those unanswered questions of the universe I guess.

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