US iPhone share

No sign of weakness in US iPhone sales, with T-Mobile appearing to be purely additive. There's an obvious diminishing return at work - each new operator sells a lower share of iPhone. This is most probably due to self-selection - the people who really want an iPhone move operator to get it. 

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Annoyingly, AT&T has stopped disclosing iPhone sales, though it gave some hints. Applying those, it looks like the iPhone was a little over 50% of smartphone activations at the big 4 operators, and 40% of their contract phone activations, which is actually the more relevant metric.

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Meanwhile, contract smartphones sales are getting close to topping out. You can't sell more than 100% and the overall contract phone volume is growing very slowly. (Note that this is not adjusted for the Metro PCS acquisition.)

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iPhone USA

A quick note for reference; iPhone remains dominant in the USA market, taking over 50% of Q2 Verizon smartphone activations (and 44% of contract phone sales) . Somewhat unique, due to the US pricing structure, which tends to hide the iPhone's price premium. I'll update this with numbers from Sprint and AT&T as they report. 

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Q1 2013 US smartphone share

Numbers for the three big US operators that carry the iPhone (T-Mobile, which didn't in Q1, hasn't released the Q1 numbers yet). iPhone was 57% of smartphone activations and 49% of ALL contract phone sales. Smartphones are 86% of contract sales. 

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To be strictly precise, these numbers are a mix of 'activations' and 'sales', which are not always consistently reported. The main delta is in second-hand sales. However, these do not (yet) appear to be big enough to change these numbers much. 

US smart sales

Lots of interesting things in this chart. 

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First, Android isn't really growing at all in the USA, at least at the big two operators. ('Other smart' is almost all Android now). All the growth is coming from iPhone. 

Second, there's near-zero seasonality in Android phone sales. People decide they want a phone and go out and buy whatever's in the shop at the time that looks good. Launches of 'hero' Android phones appear to have no impact at all - they may take share from other Androids, but not from iPhone and they don't increase overall sales. 

Third, there seems to be a complete disconnect between Android and iPhone purchasing. One can understand iPhone sales per se going up in a launch quarter, but why don't Android sales go down in those quarters? It looks like a new iPhone launch doesn't tempt in Android buyers at all. 

The implication is that there is an ongoing base of sales that goes to Android, and to some extent iPhone as well, that totally ignores product launches, and just buys a phone. Then, there's a base of people who wait to buy the new iPhone (and of course come off their 24m contact in another launch quarter, eager to buy). And this latter base is getting bigger every year, and indeed driving all of the growth. 

What isn't shown in this chart, of course, is churn within the Android base: Android users moving to iPhone while new non-smart buyers shift to Android, keeping the sales steady. That's a bit more work. 


AT&T and Verizon WIreless had about 65% of US smartphone sales in Q4 2012. They're the only operators (anywhere) that reported this data. Sprint only began reporting smartphone sales in Q4, and T-Mobile USA hadn't started selling the iPhone: it had had about 9% of smartphone sales, almost all Android and growing slowly

This particular split is very US-specific: the US market's pricing structure tends to conceal the price premium of the iPhone. A chart for China, assuming one could get the data, would show very strong Android growth (though also strong iPhone growth)

US smartphones at 90% of contract sales

With Sprint, VZW and AT&T Q4 results now out, we can see that US smartphone sales were at or near 90% of contract phone sales. 

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Within that:

  • The iPhone, with 17m sold, was 65% of reported Q4 smart sales and 57% of contract sales at the big 3 US MNOs carrying it. It was about 48% of total US contract sales
  • Maybe 13m non-iPhone smartphones were sold on contract in the USA in Q4.

As an aside, this means that the US was well under 10% of global Q4 Android unit sales, versus 36% of iPhone sales. 

Verizon iPhones

Verizon reported iPhone activations of 6.2m, 9.8m total smartphones and ~11.4m retail postpaid phones sold in the December quarter. That means that iPhones were 63% of smartphone activations and 55% of all postpaid phone volume. This is obviously much higher than the iPhone's global share, due to the unique pricing environment in the USA. 

Interestingly, this is the highest share that the iPhone has ever had at Verizon. Share did spike last year with the iPhone 4S launch, but not by as much. 

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Verizon also said that half of the iPhone sales were of old models, a surprisingly high figure. It may be that both this and the dramatically higher sales are a little exceptional: December was the first quarter in which Verizon was selling an older iPhone model discounted to zero (after subsidy), since this was the first quarter that the last-but-one model (the iPhone 4) was available in a CDMA version (the 3GS was GSM-only)*.

In other words, a surge in pent-up demand for a 'free' iPhone at Verizon (and, by extension, Sprint) would result in a surge in demand focused on the older model, that would not be replicated globally. This means there's little likelihood that the sales of the lower (absolute) margin iPhone 4 are increasing more generally. On the other hand, we cannot yet tell how much of the higher share is a one-off and how much the continuing availability of the 'free' iPhone on Verizon will mean ongoing higher share. Probably a bit of both. 

Overall, smartphones carried on growing as a percentage of sales, though at over 85% of total phone sales there's only so much more room for growth. 

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(This chart has been changed: originally I based it on total 'connected device' sales rather than just phone sales for VZW Q4.)

*I was reminded of this by Daring Fireball

RIM in the USA

Yesterday I posted a Google Trends chart showing relative search volume for "BBM for iPhone" and "BBM for Android", the hypothesis being that RIM user who switched platforms would look for BBM on their new phone (though it doesn't exist).

Narrowing this into the USA is equally interesting: it looks like rather more Blackberry users went to iPhone than Android, and also that they've now mostly already left (borne out by most other market stats). "BBM for iPhone" is red, "BBM for Android" is blue. 

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This speaks to the question of whether the RIM strategy of offering Android apps on BB10 (sort of) will work: the overlap between iPhone and Android app availability is far from perfect. 

US Q3 handset market: 80% smart and Apple has over half

With T-Mobile USA reporting Q3 results yesterday, the last of the 'big 4' US operators, which have around 90% of the market, have now given us a pretty complete picture of the US handset market. The three that carry the iPhone report iPhone unit sales, and all except Sprint report total (postpaid retail) handset sales and the smart/dumb split as well: Sprint gives enough hints to make a reasonable estimate. Here are the numbers:


A couple of observations:

  • 22.6m phones were sold, of which 9.3m were iPhones and 8.7m other smartphones
  • Smartphones are now 80% of run-rate sales
  • The iPhone is over half of smartphone sales. Adding the remaining 10% from smaller carriers would take this down a point or two
  • iPhone  dominance is very constant: this quarter contains both a dip in sales before the iPhone 5 launch and a spike afterwards, but the iPhone has had these levels of share for the last year. 
  • We don't have equivalent data for Prepay, which is maybe 10% of the US market (much lower than in most other markets) - this will be skewed towards featurephones and cheap Android handsets, but not enough to change the overall picture.

In other words, Android has over 75% of the global smartphone market, but just under 50% of the US market.

The interesting analytical problem is that these figures are very different from those from surveys of the install base (by Comscore and others), which suggest that iPhone share is more like a third of US smartphones. Yet the iPhone has been at or around 50% of sales for almost 2 years. Either the surveys are wrong or the iPhone has a significantly higher replacement cycle - despite being on the same two-year contracts as Android. Puzzling. 


iPhone USA

(Updated to include Sprint results)

Apple continues its dominance of the US handset market, backed by a much higher pricing structure that masks the iPhone price premium. At AT&T and Verizon Wireless in Q3:

  • 48% of all post-paid retail handsets sold were iPhones
  • 80% were smartphones
  • 60% of smartphones sold were iPhones

Sprint reports iPhone unit sales but doesn't directly give smartphone or handset unit sales: I've estimated these in the charts below. Overall, US iPhone sale from the 'Big 3' were 9.3m units, showing no sign of a decline in the run-up to the iPhone 5 (or more precisely, iPhone 5 sales offset any decline). 


(Both of these charts show unit sales, rather than revenue)

How Many Tablets Are In The USA? And Does It Matter?

Another day, another number for tablet market share. Pew has released its latest survey for the US market, suggesting (amongst many other things) that Apple now has ‘just’ 52% share of the US tablet install base.


So, do we believe this? And what might it mean?

The tablet market is problematic to analyse because there is an almost complete absence of real data. Apple gives global quarterly unit shipments (indeed, it is by far the most open company in this market), as does RIM (but its numbers are too small to be meaningful) and Motorola used to, but otherwise we’re groping in the dark. Google gives data for the share of the devices connecting to Google Play that have large screens, but this is global, may not be a good sample and is contaminated by poor reporting (for example, at least one Samsung device changed the screen size it reported after a software update). Then there are the industry data firms, which generally base their pitch on aggregating data from the manufacturers, but I rather doubt Amazon is telling them anything. That leaves surveys (if you believe them) and triangulation: in other words, analysis.

We know from the Apple/Samsung patent lawsuit disclosures that Samsung sold just 1.4m Android tablets in the US through June 2012 (excluding the 5″ ‘phablet’ models and some newer models that weren’t subject to the lawsuit, though) where Apple sold 34m – 20m in the last 12 months.

Then, Amazon says the Fire has ’22% share in the USA’, but gives no indication of how it calculated this, or even if it is cumulative or for the most recent quarter (and it has been suggested it comes from… an industry data firm). Meanwhile Nook business unit revenue was $200m in Q2 (including tablets, ebooks and ereaders), so B&N must be selling well under 500k Nook units a quarter. For context, B&N claims 25% or so ebook market share versus over 60% for Amazon.


It looks like there are 30m iPads in the USA (depending on how many you think have been replaced by newer models but not handed on). If one assumes 10m Fires, 2.5m Nooks and 5m ‘Pure Android’ tablets (i.e. excluding the Android-based Fire and Nook), that gets 47.5m total, Amazon to 21%, Apple to 63% and gives Samsung, say, 30% of those pure tablets, all of which is internally consistent. However,the Fire number seems a little high and it also leaves ‘Pure Android’ looking rather small compared to the Pew number. Indeed, the only way to match Pew’s number (while keeping the other numbers the same) is to assume that there are fewer iPads (say 25m) and at least 10m ‘Pure Android’ tablets. I’m not sure I believe that. Incidentally, this would also imply that Samsung has well under 20% share.

Of course, only Google knows the answer to this one, and with customary opacity they’re not saying. But whether Android has 5 or 10m tablets in the USA is relatively uninteresting – the important question is what those tablets really look like and how they’re used. How many are the Nexus 7? How many are cheap generic plastic Chinese units at $150 or below? And with Amazon ramping up its Fire proposition and going down to $160, will people keep buying those generic units or even the Nexus or will they turn to a brand with a clear content proposition? Which devices are likely to sell themselves best as an impulse purchase in a supermarket bay in early December?

I suspect Android tablets face an even bigger self-selection issue than Android phones. Given you can get a great app and content experience from Apple for $400 (or lower if the iPad Mini exists) and a great content experience from Amazon for $160, what sort of person with what sort of use case will buy the pure Android tablet, and will they be the kind of person that would install cool new apps and buy stuff? Or are they buying a ‘web tablet’ at Walgreens? Certainly, UK retailers are ramping up for a ‘cheap Android tablet Christmas’.

That doesn’t really matter to Google, of course – all of these devices, even the iPad, are expanding the inventory for Adsense. But they’re probably not a great target market for anything other than generic web use – even less than Android phones have proven to be. 

(Cross posted from my blog)

US Q2 smartphone share

As reported by the US operators, supplemented by some reasonable solid estimates on my part. The iPhone had around 47% share in Q2, roughly level with Android (RIM is now very small in the USA). 

2 years ago the iPhone was only offered by AT&T, which had 30% of the market. Today it is offered by operators with 80%. I strongly suspect that the iPhone ‘5’ will be ranged by T-Mobile (whose spectrum has been reconfigured, making this more practical): all things being equal that would take it slightly over 50% market share. 

This is especially relevant in the light of this internal Apple survey, disclosed today as part of the Apple/Samsung patent lawsuit: people choose operator first and phone second, especially in the US, given the highly variable coverage that operators provide. 

iPhone pricing and US market share

As I pointed out in an earlier post, the iPhone is now roughy half of ALL smartphone sales in the USA, as reported by the operators themselves, who really ought to know: 

And yet globally, Android is outselling the iPhone 2:1. How to explain the discrepancy? In a word, price. 

Relative to most other developed markets, the US mobile market is structured around significantly higher usage, higher monthly bills and much less competition on handset subsidy:

Crucially, unlike almost everywhere else, US operators do not vary handset subsidies depending on what contract is taken out:

  • The iPhone 4S 16Gb is available in the UK at 10 different prices (including free), depending on what contract you take out
  • In the USA, it costs $200 on any contract

US operators also offer far less flexibility in the contracts that they offer, and have a much higher entry cost: 

  • For all 4 major operators the entry price to get a smartphone on contract is $80/month, including the minimum SMS and data packages, before any handset cost
  • In the UK, for illustration, you can get a smartphone for £10 ($16) / month

The full spread of smartphone offers in the US and UK is shown in the chart below.

The iPhone’s factory gate price averages around $650, versus $250-$350 for the Android manufacturers, and this is reflected in the fact that the iPhone is priced at a premium in both markets. It is not subsidised more in the USA than elsewhere, nor is it subsidised more than other handsets in the USA. Rather, the difference is in the total cost of ownership - the TCO: 

With a minimum entry price of $80/month and a handset price of $200, the minimum 24 month contract TCO for an iPhone 4S in the USA is $2,120, whereas the minimum contact TCO for a ‘free’ smartphone is $1,920. For a US consumer, the potential saving from getting a cheaper smartphone (on contract) instead of an iPhone is just 10% of the 24m TCO

Conversely the lowest TCO at which a consumer can get an iPhone in the UK is just $998. This is under half what they would have to pay in the USA: however, it is also possible to get a smartphone on contract in the UK for a TCO of just $384 – 20% of the US equivalent

Hence, an American can only save 10% over two years by getting a ‘free’ smartphone over an iPhone. In the UK, the iPhone is 160% more expensive than the cheapest smartphone offer.  

(This is an extract from a report I published for Enders Analysis - contact me for details)

July 2012 update: This was written before some US operators started offering the iPhone on prepay, which of course changes the TCO options. However, prepay is a (very) small niche in the USA, unlike elsewhere. The new shared data plans also affect the dynamic.

The underlying point remains: American spend substantially more on their monthly phone bills than people almost anywhere else, making the iPhone price premium much smaller as a percentage of the TCO.