When Verizon iPhone doubles marketshare, analysts will choke on words

Almost no one is going to buy a Verizon iPhone unless they’re already using an iPhone, claim pundits who are clearly high on something. Here’s what’s actually going to happen: Verizon customers, who’ve been stubbornly holding for the iPhone for as long as it’s existed, will line up in droves, literally, on the first day the Verizon iPhone is available. AT&T customers, who’ve been using the iPhone going back to 2007, will mostly stay put. With Verizon about as large as AT&T, it’s easily conceivable that the arrival of the iPhone on the other side of that impenetrable cellular wall will result in the iPhone seeing its U.S. marketshare double by the time it fully saturates itself among Verizon customers, leaving analysts who are predicting the converse to choke on their own words. In the mean time, with what little time is left before the Verizon iPhone rolls, it’s worth analyzing why the analysts have got it so wrong.

The theory analysts are clinging to says that nearly everyone who’s ever going to buy an iPhone has done so by now. But that theory assumes that nearly every consumer values having the phone they want over using the carrier they prefer, which any formal or informal survey of Verizon, Sprint, or T-Mobile customers will quickly disprove. Earned or not, AT&T has a special kind of bad reputation among much of the populace. Even as most iPhone users profess to have little or no issues using their iPhone with AT&T, users of the other three carriers are simply unwilling or unable to believe them. Many of AT&T’s haters will point to customer service horror stories of years past, rather than any real evidence of network or call quality issues, as they reason why they’ll “never” become an AT&T customer under any circumstances. Intriguingly, some of those haters have referenced their own first-hand experiences with AT&T from a decade or more ago, when AT&T was primarily a long distance landline provider whose makeup bears almost no resemblance to the AT&T of today, calling into question the sageness of the carrier’s 2007 switch from the Cingular name back to AT&T. In any case, with so many Verizon, Sprint, and T-Mobile customers unwilling to go anywhere near AT&T, iPhone or otherwise, it’s clear that a Verizon iPhone will see significant sales from the Verizon customer base right out of the gate, as the product currently has an unprecedented level of pent up demand.

With the iPhone going to Verizon in early 2011 but apparently not going to Sprint or T-Mobile, the real question is not whether the Verizon iPhone will hurt AT&T, which as the iPhone, but whether the Verizon iPhone will lure customers away from the other two carriers. How many Sprint and T-Mobile customers, who’ve been avoiding the iPhone because they can’t live with AT&T, will suddenly decide that they can in fact live with Verizon once the Verizon iPhone hits the market? These are the angles analysts should be focusing on, rather inexplicably pimping the notion that everyone with an interest in the iPhone has already switched to AT&T and bought one. Here’s more on the Verizon iPhone.

iPhone and iPad each outpacing entire Android platform in web usage

Claims of the Android platform somehow outpacing the Apple’s “iOS” (iPhone / iPad / iPod touch) platform have been greatly exaggerated, as usual, as evidenced by the latest study which shows that the iPhone and iPad each account for more internet traffic than the entire collection of Android devices combined.

Netmarkershare (according to Macworld via Daring Fireball) reports that while the Android platform is showing strong growth with a current total of 0.24 percent of web traffic, the iPhone accounts for more than three times that amount with a 0.75 percent share. And for those Android devotees who will invariably point out that the iPhone has been on the market longer than the Android, the devastating news (for them) is that even the iPad, which has existed nary half a year, is already outpacing the entire Android platform with a 0.30 percent share.

In other words, despite the incredible sounding yet highly suspicious activation numbers that Google’s CEO loves to throw around in interviews and informal conversations (yet the company itself carefully keeps out of any of its official – in other words, actionable – communications), third party numbers continue to show that the Android platform, while growing, still isn’t coming close to competing with the iOS platform, which has a total combined share nearly five times as large. That won’t stop Droid fanatics from proclaiming these numbers to be irrelevant and slapping their usual “delusional” tag on anyone who dares to point out that the numbers are what they are. But apparently no one is listening to them anyway, as the iOS platform being five times as large as the Android platform means that no one is taking Android fanatics’ advice particularly seriously.

Why Verizon? iPhone outselling Droid and all Moto phones combined

The iPhone needs Verizon compatibility in order to keep up with the rapidly ascending Droid and the rest of the Android platform, the claim goes. The iPhone’s AT&T exclusivity is causing Verizon customers, even if they would prefer the iPhone, to settle for an Android-based phone available from Verizon instead, the headlines proclaim. But the sales numbers say different. Not only is the iPhone outselling Motorola’s Droid line of phones according to the latest sales numbers, the iPhone is single-handedly outselling all of Motorola’s phones combined, says Apple Insider. In fact, the big picture numbers say that since the iPhone launched three years ago, Motorola’s total number of phones sold has plummeted, thus painting the current success of the Droid and Droid X as perhaps a mere anomaly for a company whose fortunes in the cellphone industry have been dwindling for years.

And before you go blaming Motorola’s misfortunes on the bad economy, the company is now selling a mere one-fifth as many cellphones as it was selling back when the iPhone first launched. With death-spiral numbers like that, it begs the question of just what Verizon was thinking when it chose a flagging partner like Motorola to build its flagship Droid line of phones. The move suggests Verizon was in a panic to come up with an iPhone competitor of any kind, even if that meant saddling up with a dying company like Motorola. It also strongly suggests that Verizon knew the Droid thing wouldn’t be a permanent one, more aimed at forcing Apple to bring the iPhone to the bargaining table under terms that favored Verizon more than they favored Apple itself.

While the Droid is far from the only Android-based phone on the market, Verizon has spent more than a year positioning the phone as its most visible flagship product. But even with all that effort, the iPhone is outselling the Droid and every other Motorola phone combined. It makes you wonder why Verizon isn’t pushing harder to get its hands on the iPhone than it is – or perhaps that’s exactly what’s going on behind the scenes.

Four in 5 iPhone users will buy another one; 4 in 5 Android users bailing

iPhone users are pleased with their overall user experience to the tune of about four in five of them saying they plan to buy another iPhone when the time comes. In contrast, only one in five Android users say they expect to ever buy another Android phone, says CNN. The new data further shatters the myth that the iPhone is losing momentum to the competing Android platform, and instead helps confirm the theory that most consumers buying an Android are doing so because they want an iPhone but aren’t willing to switch to AT&T just to get one; they instead settle for using an Android with their current carrier as a quasi-iPhone compromise. The fact that eighty percent of Android users plan to go elsewhere with their next phone purchase strongly suggests that most Android users are quickly concluding that the Android experience is not an adequate substitute for the iPhone experience.

Speaking of cellular carriers, despite the large number of Verizon customers who claim that every iPhone user they encounter is having reception problems with AT&T, the same Yankee Group survey reveals that seventy-three percent of current iPhone users are “very satisfied” with AT&T’s service. This data suggests confirmation of the theory that some current customers of Verizon (Sprint, T-Mobile, etc) who want an iPhone but have decided to stick with their current carrier instead, have subsequently been exaggerating the negative experiences of iPhone users they’ve encountered in an effort to rationalize their own decision not to buy one.

Despite continual pleading on the part of tech pundits who’ve all but begged their audiences to switch from iPhone to Android, the iPhone has more than three times the marketshare of Android. Early Android momentum and hype has primarily come from gadget geeks who prefer the Android’s easy hackability and anarchist development structure to that of the iPhone’s well-regulated app store and consistent user experience. And while that type of geek-oriented user is likely to stick with the Android platform for philosophical reasons, this new data reveals a very different story for mainstream consumers who gave the Android a try, eighty percent of whom now have no intention of giving Android a second try. The question now, with eighty percent of current Android users stating their intention to buy a different kind of phone next time around, how many of them will find their way to the iPhone or other competing smartphones like the aging BlackBerry, as compared to how many of them will feel burned enough by their negative Android experience that they’ll revert back to a simple flip-phone? Moreover, of those who are bailing on the Android but still want an iPhone, how many of them will now be willing to finally switch over to AT&T to make it happen? In other words, does Apple still need a Verizon iPhone? In any case, based on these numbers, it’s now clear that Verizon needs a “Verizon iPhone” a whole lot more than its current overconfident Droid television ads would suggest. Here’s more on iPhone vs Android marketshare.

Thanks to Beatweek reader @bgiese for the tip

Editor’s note: the CNN article referenced is right here.

Apple reports quarterly revenue up 60%, Mac sales up 33%

Apple has announced its revenue figures for the quarter that just ended on June 30th. The company says it made $15.7 billion in revenue during that span, which represents a sixty percent increase over the year ago quarter. The quarter included just the first seven days of sales of the new iPhone as well as the first few months of iPad sales. However the revenue increase was not merely the result of new product launches, as sales of Macintosh computers were up thirty-three percent over the year-ago quarter. According to Apple CEO Steve Jobs, “It was a phenomenal quarter that exceeded our expectations all around, including the most successful product launch in Apple’s history with iPhone 4,” said Steve Jobs, Apple’s CEO. “iPad is off to a terrific start, more people are buying Macs than ever before, and we have amazing new products still to come this year.”

Nearly one in four iPhone 4 buyers were switching to iPhone platform

Nearly one in four iPhone 4 buyers on the first day were first-time iPhone buyers, sending another geek theory down the toilet. Android fanatics, who have been actively misrepresenting the reach and marketshare of their favorite smartphone since almost before the product existed, had claimed leading up to the iPhone 4 launch that “all” people placing an iPhone 4 pre-order to lining up to buy one on launch day were existing iPhone users who were merely upgrading, which would mean that the launch of the iPhone 4 would have no positive impact on overall iPhone marketshare. But as it turned out, twenty-three percent of all first day iPhone 4 buyers were switching over from another type of cellphone, so says Fortune. About half of those came from the “other” category which likely means they were finally buying their first iPhone after years using a generic flip-phone, while a fourth of all switchers came from the BlackBerry camp (continuing a trend that’s been slowly playing out for the past three years). Interestingly, a few percentage points worth of first day iPhone 4 buyers were switching from an Android phone, a fact that has got to hurt even more for those Android fanatics who had been absolutely certain that one hundred percent of all early iPhone 4 sales would come from within the iPhone installed base, and that iPhone growth was done-for. Meanwhile, recent marketshare shows there to be more than three times as many iPhone users as Android users, with that margin now having been documented to have grown even larger yesterday – and that’s before the non-early-adopters get involved.

Nielsen: iPhone is kicking Android’s ass in marketshare

Apple’s iPhone OS is dominating Google’s Android OS in U.S. marketshare by a measure of more than three to one, according to newly published Nielsen statistics. The news will come as no surprise to anyone paying attention, as iPhones are nearly ubiquitous in the wild while the various phones on the Android platform are a fairly rare sighting. The news from Nielsen instantly discredits the earlier “small volunteer online survey” from NPD group which some of the more, uh, enthusiastic members of the Android user base had been misrepresenting as being actual marketshare numbers. As it turns out actual smartphone marketshare data, according to Nielsen, shows devices running RIM’s BlackBerry OS to make up 35% of smartphone market, a number which is in modest decline but it still atop the market. iPhone OS devices (including the iPod touch) account for 28% of the market, while even Microsoft’s Windows Mobile platform, largely considered a fading failure, still claims 19% of the market. Meanwhile the Android OS, despite endless hype from geek tech pundits and a core user base which appears to be under the mistaken belief that the Android is the dominant phone on the market, is languishing in a distant fourth with a mere single-digit 9% of the market, less than half that of Windows Mobile and less than a third that of iPhone.

With Apple expected to offer a total revamp of the iPhone this week after having spent the past two years pushing the same 3G/3GS model, those who have been waiting for a new iPhone to come to market before either entering the platform or upgrading from an older iPhone will now likely dive in with sufficient force to drive iPhone OS marketshare up significantly in the next Nielsen reporting cycle. Whether the push from the new iPhone will be enough to overtake BlackBerry in marketshare remains to be seen. But what’s clear from the current numbers is that Android OS, having less than one-third the marketshare of iPhone OS, is not nearly as relevant of a competitor as some geeks might have you believe.

Perhaps the most significant statistic from the Nielsen numbers is the fact that all smartphones combined account for less than one fourth of all cellphones in the U.S., meaning that the vast majority of Americans are still using a featureless flip-phone.

Nielsen source: Gizmodo

How Apple beat Microsoft: catering to the non-geek majority

Apple is now doing so well that it has to explain to the government why it’s so handily beating its opponents, while Microsoft is now so embarrassed at being surpassed in market cap that it has to explain to its shareholders what it plans to do to right the ship. But while the answer to how Apple managed to grow larger than Microsoft is fairly straightforward, it’s not the answer that immediately comes to mind: sure, Apple’s diversification into everything from music players to cellphones to music sales to tablets has given the company a wider revenue base upon which to capitalize. But Microsoft has also moved into every one of these markets and failed each time, so it’s not as simple as the fact that Apple has broadened its product line. Why is it that the iPod worked and the Zune didn’t? Is it because the iPod came first and cornered the market before the Zune got out the door? If so, then how does one explain the dominance of the iPhone over Windows Mobile phones, when the latter have been around longer? And how about the iPad? Microsoft has wanted to go there for what seems like a decade, and then newcomer Apple steps in and steals the whole market?

Microsoft’s original strategy in the eighties and the nineties, and a highly successful one at that, was to cater to the technology geeks who made the buying decisions on behalf of the non-geek majority. That meant making sure its products were suitable to the corporate IT geeks who not only directly influenced the buying decisions for their companies, but also indirectly influenced the home purchases of their non-geek coworkers who invariably turned to them for advice. And it meant catering to geek technology pundits, upon whom regular non-geek folks also relied upon for buying advice. And man did it ever work when it came to getting people to adopt not only Windows, which was a geek’s warped vision of what a consumer might want in an operating system, but also Office, which represented such a warped vision that it took the concept of typing words on a screen and hitting the print button, what should have been the simplest (and least expensive) task in all of computing, and instead turned word processing into something that cost hundreds of dollars and involved having nineteen toolbars on the screen. And yet the strategy worked so well that it even had non-geek regular people paying for PowerPoint slide show presentation software for their home computer, which they could not possibly ever have a home use for.

When Steve Jobs came back to Apple, he knew that he was never going to be able to change the geeks’ minds. So instead his strategy was to try to change the game by getting the non-geek majority to stop paying attention to the geeks altogether – and that strategy has taken a long, long time to pay off. Looking back over the years you can see the early incremental stages of it, whether it be something as subtle as offering all in one computers in a choice of colors to get consumers chewing on the possibility that buying a computer might be their decision to make and not that of the local resident geek, and releasing a portable music player in the iPod whose interface was so drop dead simple that even the most technology averse among the population couldn’t come up with a reason to be intimidated by it.

As consumers have grown to trust Apple to offer products that are actually aimed at them instead of the geeks, the company has grown progressively bolder in its moves by offering products like the iPhone, a smartphone which, while still being straightforward in its functionality, offered a far more sophisticated array of features. And because the public trusted that the product would be geared toward them instead of being geared toward the computer store salesmen of the world, they bought in.

Meanwhile Microsoft has continued to offer up one geek’s warped vision of a consumer product after another. While the Zune was a similar product to the iPod, the difference between the two was akin to someone who could speak the language vs. someone who was only capable of making gibberish noises which sort of sounded like the language; consumers saw the Zune for the faux-consumer product that it was and stayed away. The same goes for every new failed cellphone that Microsoft has launched in the hopes of staving off the mobile marketshare it’s been losing to the iPhone over the past three years. Ironically, Microsoft’s problem is that because the vast majority of consumers are current or former Windows users, they know first hand just how unsuitable Microsoft’s products are for consumers – and even if they’re still using Windows it’s only because they think they have to, and they’re not about to expand their reliance on Microsoft products one inch more than they absolutely must.

So now that a new sequel in the Apple vs. Microsoft saga is about to begin playing out after the current plotline ended with Apple catching up to Microsoft and becoming an equal sized company, there’s every reason to believe that the current trend will continue to play out in the next chapter of the two companies’ decades-long battle. For Microsoft to regain momentum it would have to suddenly gain an understanding of what consumers actually want and figure out how to speak that language, but that’s just not part of Microsoft’s DNA and never has been. They’d need a new outside CEO, for starters, but the problem is that there’s only ever been one CEO in the history of consumer technology who’s understood how to give consumers what they want and had the guts to do so at the expense of riling up the geeks, and he’s already running Apple. It’s no coincidence that the one and only market in which Microsoft is seeing growth is that of hard core gaming with its Xbox, one of the few consumer technology markets that’s still dominated by geeks, for the simple reason that most gamers are geeks.

While Microsoft is now left to its own devices to come up with a strategy for getting consumers enthusiastic about its offerings, the company surprisingly no longer has any momentum left on its side at all. Even the geeks have given up the Microsoft ghost – and no, the geeks haven’t turned to Apple, which they largely view as the devil for making technology “too easy” and taking all their power away; no, the geeks have turned to Google, whose unofficial mission statement now consists of trying to turn back the hands of time back to that era in which the geeks were calling all the shots. And while it’s incredibly unlikely that Google will be able to pull that off, at least the company has a strategy. Microsoft, on the other hand? The company recently announced that it’s now going to focus on products – which begs the question of just what it is that they’ve been focusing on for the past three decades.

In hindsight, while a quick surmising of the two companies’ histories will leave you scratching your head as to how Apple could now possibly be a larger company than Microsoft, a closer inspection is likely to leave one wondering how it is that it took Steve Jobs thirteen entire years to pull off, considering the competition. The real question now is whether Apple continues to keep its foot on the consumer-oriented gas pedal now that it’s won this stage of the battle.

Android real world sightings are rare, despite popularity claims

This morning someone sent me a study which claims that there are now half as many Android phones in use in the U.S. as there are iPhones in use. If so, Android users must surely never take them out of their pockets.

A few years back, after the Zune had been on the market for a little while, I didn’t need to see marketshare numbers to know that the product was flopping; I’d seen a grand total of two Zunes in use by real people in the world, in the same stretch of time that I’d seen so many iPods in use that I’d say they easily stretched into the hundreds or perhaps thousands without even having had to count them. And yet here we, are a good stretch of time into the Android era, and I’ve seen a grand total of two Android phones in the wild. That’s right, I’ve seen just as many Zunes as I’ve seen Androids – and in the time since the Android began shipping, I’ve lived in Los Angeles, New York City, and Florida, and I’ve spent time in Las Vegas, San Francisco, and every city along the southern border of the United States.

And yet even after collecting anecdotal evidence in all these places, I’m left to ask just where all these supposed Android phones are. I’ve seen two of them in all this time, and I’m always looking for them. Ever curious as to what people are using, I’m the guy who’s inappropriately snooping around, staring at any smartphone I see in use in the wild. I see a metric of iPhones everywhere I go. I see a fair amount of BlackBerry phones in use, I see quite a large number of various flip-phones still in use, and I’ve even seen a few Palm Pre phones in use – that’s right, I’ve seen more Palm Pres in use than Android Phones, and the Pre flopped so bad that Palm no longer even exists as a company.

Relying too heavily on anecdotal evidence is always a dangerous thing. If you live in a place like Los Angeles long enough, you go such long stretches without having to deal with a Republican that you forget they exist, and then you wonder how a clown like George W. Bush gets elected, and it turns out that in other parts of the country everyone will have to explain to their grandchildren why they voted for the bastard. But that doesn’t appear to be the case here, as I’ve been everywhere since the Android launched, I’ve spent time in to many different big cities and small towns to even list, and I’ve seen a grand total of two Android phones. I’ve even gone online and looked at pictures of various Android variations (Droid, etc) so I’ll know what to look for. And I’m left with only two possible conclusions: either there are very few Android platform users in comparison to iPhone users, or Android users never take their phone out of their pocket for any reason.

It reminds me of the old Chris Rock joke about how the Spice Girls album was like heroin: twelve million people each bought a copy, but not one of them wanted to admit to it. But unless Android users across America have been going online and studying pictures of me so they can hurry up and hide their phone when they see me coming, the Android is still just so much geek wanking.

Remember, most of the technology press is controlled by the kinds of geeks who are desperate for the geek-oriented Android platform to overtake the iPhone, because they consider the iPhone platform to be a terrible thing thanks to the fact that it’s aimed at consumers instead of geeks who’d rather be hacking it than using it. So every time you read yet another article claiming that the Android phone is wildly popular, set to overtake the iPhone, or whatever claims they’ve come up with this week, just stop and ask yourself this: how many Android phones have you seen in the wild?

iPhone-Android “marketshare” turns out to be bulls— online survey

The report yesterday claiming that Android has now surpassed the iPhone in marketshare has been revealed to be more or less total bullshit, as it turns out the the claim was based on not on a head count of actual users of both platforms or a measure of total recent sales, but instead an online voluntary survey consisting of a grand total of a hundred and fifty thousand participants, a number representing less than one half of one percent of the number of people who’ve bought an iPhone. If anything, the statistically invalid survey confirms only that Android users are more willing to take online survey about their cellphone usage than iPhone users are. This new revelation not only completely negates yesterday’s claim that the Android is outselling the iPhone, it also calls into question the validity of the same survey’s claim that the BlackBerry is outselling them both.

In light of this news, it’s unlikely that any “data” or claims from NPD will be taken seriously any time soon, and we’re back at square one in terms of knowing how each smartphone is currently selling in relation to the next.

Apple is now ninety percent as large as Microsoft

A few years ago, Steve Jobs allegedly sent a company wide email to his employees to brag about the fact that Apple had just surpassed Dell in terms of marketcap, meaning that – according to the stock market, at least – Apple had become a larger computer than its computer selling rival. This may have had something to do with the fact that Dell CEO Michael Dell had once suggested during Apple’s lowest point that the company should be shut down and the money given back to the shareholders. But with Apple now having eight times the marketcap of Dell, that particular battle is fairly far into the rearview mirror. In fact, with a string of good news out of Cupertino continuing to drive Apple’s stock price ever higher here in 2010, the company is now threatening to surpass a rival of a different kind. That’s right: at least on paper, Apple is now about ninety percent as large as Microsoft itself.

How is that possible? While Microsoft continues to largely be a three-trick pony in terms of revenue (Windows, Office, Xbox), the company’s steady growth isn’t exactly exciting investors as they realize that most of the company’s most rent high profile launches (Zune, Bing) haven’t taken off in any meaningful way. In contrast, Apple, despite its continued small share of the computer market, is showing its greatest ever gains in that area – along with dominance of the digital music market (on the hardware and software side), great success in the smartphone business with its iPhone, and has recently become the first company to have any notable success in the tablet computing market. In other words, Apple gives investors plenty of reasons to get excited about opportunities for significant growth, while Microsoft now more resembles a bank than a technology company; an investor’s money is almost certainly safe, but the growth potential is limited.

As it stands at the moment, Apple’s marketcap is $236 billion, while Microsoft’s is at $266 billion (according to Yahoo! Finance). This means that Apple’s individual share price would have to jump from its current $260 mark to roughly $290 a share, with Microsoft’s share price standing still, in order for Apple to surpass in marketcap the rival which so many people once mistakenly thought either owned Apple or had already put it out of business.