Android Set To Increase Dominance of Smart Phone Market

• By David Nagel
• 12/11/12

Google's Android operating system is cruising toward total dominance of the smart phone market globally. According to new research, Android will power 68.3 percent of all smart phones shipped in 2012--up nearly 20 points from 2011--while Apple's iOS remains at a healthy but unmoving 18.8 percent market share. On the horizon, both Android and iOS will be challenged by Microsoft Windows-based handsets.

According to the latest data from IDC's Worldwide Quarterly Mobile Phone Tracker, released last week, the total volume of all mobile phones shipped worldwide--both standard phones and smart phones--will grow just 1.2 percent by the end of the year (to 1.7 billion units). But smart phones in particular will see a staggering 45.1 percent growth rate year over year, reaching 717.5 million units by the end of 2012. In the fourth quarter of 2012 alone, unit shipments of smart phones are expected to reach 224.5 million, IDC reported, up 39.5 percent over the same period last year.

"Sluggish economic conditions worldwide have cast a pall over the mobile phone market this year," said Kevin Restivo, senior research analyst with IDC's Worldwide Quarterly Mobile Phone Tracker, in a prepared statement. "However, the fourth quarter will be relatively bright due in part to sales of high-profile smartphones, such as the iPhone 5 and Samsung's Galaxy S3, in addition to lower-cost Android-powered smartphones shipped to China and other high-growth emerging markets."

According to IDC, Android's market share increase this year can be attributed to "a broad selection of devices from a wide range of partners. Samsung is the leading Android smartphone seller though resurgent smartphone vendors LG Electronics and Sony, both of which cracked the top five smartphone vendors during 3Q12, are not to be overlooked. IDC believes the net result of this will be continued double-digit growth throughout the forecast period [through 2016]."

IDC predicted that Android's market share would remain dominant for the five-year period in the current forecast but would slip slightly through 2016 as Windows creeps slowly toward a double-digit market share. Currently in fourth place among handset operating systems with a 2.6 percent market share, Windows Phone is expected to increase to an 11.4 percent market share by 2016, experiencing a 71.3 percent compound annual growth rate, and taking the No. 3 slot.

That means current No. 3 player BlackBerry will drop one place by 2016. RIM BlackBerry's current market share is 4.7 percent; that will dip to 4.1 percent in 2016, IDC predicted.

"Underpinning the worldwide smartphone market is a constantly shifting mobile operating system landscape," said Ramon Llamas, research manager with IDC's Mobile Phone team, also in a prepared statement. "Android is expected to stay in front, but we also expect it to be the biggest target for competing operating systems to grab market share. At the same time, Windows Phone stands to gain the most market share as its smartphone and carrier partners have gained valuable experience in selling the differentiated experience Windows Phone has to offer. What bears close observation is how BlackBerry's new platform, BlackBerry 10, and multiple versions of Linux will affect the market once the devices running these systems are available."

While iOS' market share will barely change through 2016, IDC predicted it will remain in the No. 2 position, with its growth hampered in part by the high cost of entry for the current iPhone lineup. "In order to maintain current growth rates, Apple will need to examine the possibility of offering less expensive models, similar to its iPod line," according to IDC. "Until that happens, IDC forecasts iOS to ship lower volumes than Android."

The market share for all other handset systems, including Linux, is forecast to slip further through 2016. The combined market share of Linux and other systems for 2012 is forecast at 5.6 percent. That will collapse to 1.6 percent by 2016.

Additional details can be found in IDC's Worldwide Quarterly Mobile Phone Tracker.