Will iOS Ever Catch Up?

Like clockwork, the latest figures on the state of the smartphone market from researcher Gartner are out. The theme continues to be that Android is the king of the smartphone hill.

The third-quarter data shows that Google (NAS: GOOG) continues to explode, thanks to its open nature and its army of OEM vendors, including Samsung, HTC, and Motorola Mobility (NYS: MMI) . Apple (NAS: AAPL) showed a little bit of shrinkage, and Symbian got crushed. Research In Motion (NAS: RIMM) and Microsoft (NAS: MSFT) continue to lag uninspiringly, while Samsung's proprietary Bada doubled its small share.


Source: Gartner press release.

Android now claims more than half of worldwide smartphone sales and now has more than triple that of iOS. A year ago, Android's slice was 25.3% compared with iOS's 16.6%. This past year has dramatically expanded Android's lead in the race.

The numbers mostly line up with the stats separately released by Nielsen earlier in the year, which also pegged Android's market share near half. What this latest batch doesn't play nicely with is Gartner's own premonition that Windows Phone 7 will overtake iOS as soon as 2015. Microsoft's share was nearly sliced in half over the past year, falling from 2.7% in Q3 2010 to just 1.5%.

When it comes to vendor ranking, Nokia (NYS: NOK) is still the top dog, with 23.9% of worldwide mobile-device sales. Samsung follows up with 17.8%, and Apple sells only 3.9% of devices. Nokia lost the most ground, falling from 28.2% last year. Overall unit sales from all vendors grew by 5.6% to 440.5 million in the third quarter.

What Apple lacks in market share, it more than compensates in profits. According to figures from Canaccord Genuity analyst T. Michael Walkley, Apple's share of profits in the sector is estimated at 52%, despite its roughly 4% market share. On top of that, it's almost guaranteed that Apple's average selling price (ASP) for iPhones will jump and expand margins further.

Last year, Apple's iPhone ASP was $650 at a time when its retail prices were $599 and $699 for 16 GB and 32 GB flavors, respectively. This year's model has seen its retail prices jump to $649, $749, and $850 with the addition of a 64 GB model, and they're flying off shelves, leading me to estimate ASPs approaching $750.

Android's Ice Cream Sandwich looks pretty delectable and should give Android OEMs plenty of ammo in the war, while RIM's rapid decline needs no introduction.

At this rate, it seems like iOS may never catch up in the market-share game. At least it's still winning the profit-share game.

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