This is the fourth post in a series analyzing the rise of Android in 2010 and beyond. To read about preconditions that existed before the smartphone revolution the iPhone brought about in 2007, check out this post. Here’s why I think it’s wrong to think about iPhone and Android handsets as smartphones, and why we should consider them as a completely new category of mobile device. And this post covers the 2007-2010 connected mobile computing device revolution that brought Android to the top of the world this year.
The second half of 2009 and 2010 have been an amazing 18 months for Google Android OS. It started this stretch with 30 000 device activations a day and finished it with 300 000. A mind blowing 10x growth that catapulted an upstart Android from nowhere into a solid second place among smartphone platforms worldwide, behind only Nokia’s Symbian.
And the next year looks to be even better for Google’s new OS. Here are some trends that should continue to drive Android in 2011:
- Tablets with Android 3.0 Honeycomb. Just like with iPhone in 2007, with iPad in 2010, Apple caught high tech industry with their pants down and scrambling to catch up. Even though tablets have been around for almost a decade, just like with smartphones before 2007, their usability and overall user experience was really bad. So nobody in consumer world cared much about tablets. Then Apple came along, showed how it’s done, and suddenly tablets became all the rage. The problem was that nobody else had anything that could even approach iOS/AppStore combo in tablet usability, so Apple was left pretty much alone to rule this new market for almost a year.
Android was the next best available option for device makers to enter the tablet category. Some, like ViewSonic and Archos, even tried to do that. But after evaluating Android 2.x chances against iOS tablet, Google decided that the second generation Android was not good enough. Not wanting to spoil the first impression, by not allowing official Google Apps and Marketplace on any tablet device, Google signaled device makers that they don’t want this version of Android on tablets. Samsung Galaxy Tab is more an exception that proves the rule. I’m not sure how Samsung got Google to agree to allow Galaxy Tab. It probably had a lot to do with Samsung’s clout as the second biggest mobile device maker in the world, it’s huge commitment to and impact on Android growth via Galaxy S line, and ability to make customizations that made Galaxy Tab actually work.
Well, now tablet optimized Android 3.0 Honeycomb OS is almost ready, and every major and minor Android smartphone player is busy working on it’s own Honeycomb tablet. And, just like with it was with iPhone, for at least the first few months of 2011, Android seems to be the main alternative to Apple’s dominance.
- Dual core mobile CPUs. Just like 1GHz Qualcomm Snapdragon and Samsung Hummingbird CPUs in 2010, Tegra 2 and dual core CPUs from Qualcomm and Samsung, combined with third generation Honeycomb OS should give another order of magnitude boost to Android handset performance, igniting new interest and sales at the high end.
- Cheaper, lower end Android devices.Just like in PC industry during last few decades, Moore’s law is hard at work in mobile device industry today, with ever falling component prices and improved performance. By the middle of next year, devices with specs similar to top Androids of 2010 (ARM Cortex A8 600-1000MHz CPU, 512MB RAM, WVGA 480×854 display) will come down to $350-450 level, bringing today’s top of the line Android performance to a much bigger upper mid-tier market worldwide. Devices similar to HTC Wildfire and Samsung Galaxy 3 will move to sub $200-300 level, and new Android optimized 3G chipsets from from Mediatek, Via/WindRiver and Broadcomm will make a $100 over even lower priced Android handsets possible. Overall, the market opportunity for Android in 2011 should grow enormously.
- 3G network build-out in developing world. While we here in Europe, U.S. and advanced Asian countries like Japan or Korea have been enjoying fast and relatively affordable mobile data on 3G/HSDPA networks for years now, most of the rest of the world didn’t. And let’s face it, without reliable and affordable mobile data access, any Android handset looses half of its appeal. But in 2011 the build-out of 3G mobile networks will be well underway in many of the developing countries throughout Asia and Latin America. Which will open up those markets for Android, in a big way.
With all these trends propelling Android growth in 2011, will Android start completely taking over connected mobile computing device industry in an unwelcome replay of PC industry dynamics, with Google as 21st century Microsoft? Some people think so.
Me? I very much doubt that. Especially if we are talking about the growth rates, and not the absolute unit volumes. There is absolutely no way Android can repeat that 10x/1000% growth spurt during the next 12-18 months.
So what are the factors that will be slowing Android down? There will be quite a lot of them.
Understanding the sources of 2010 Android growth
As I told you yesterday in How Android got to the top of the world in 2010 post, it was a very unique set of circumstances, a perfect storm of positive influences propelling Android to the top. Yes, Google executed flawlessly on the opportunity of being the only good enough iPhone alternative for almost a year. But lucky timing plaid no less a role in big part of what Android achieved in 2010.
When people talk and write about the rise of Android in 2010, they talk about it as some sort of natural process, about how a great open Operating System beating all the competitors to a pulp in quality and features, became a consumer platform of choice, and rose to the top propelled by that consumer demand. Which is nowhere close to what actually happened.
Most of Android growth in 2010 came from the commitment of only 3 smartphone makers and a handful of mobile operators.
Let’s take a look at Android device activation growth chart:
|Date||Week No.||No. of devices activated/day||Growth % from previous milestone|
|Oct. 16, 2008||1||0||-|
|May 20, 2009||31||30,000||-|
|Feb. 15, 2010||69||60,000||100%|
|May 12, 2010||81||100,000||60%|
|June 23, 2010||87||160,000||60%|
|Aug. 4, 2010||94||200,000||25%|
|Dec. 09, 2010||112||300,000||50%|
During the first year after launch – October 2008—October 2009, Android was an interesting novelty, able to achieve about 10 million a year unit run rate. Not bad, but nothing too impressive in the smartphone world. Google didn’t report anything interesting about Android activations at their Android 2.0 unveiling/Motorola Verizon Droid event, so I assume there wasn’t anything interesting to report at the end of October 2009– Android activations stayed at more or less at the same 30K a day level. New Android handsets launched without heavy carrier support – HTC Hero in Europe and on Sprint, Samsung Galaxy and even Motorola Cliq, didn’t seem to help a lot.
The first big Android growth spurt (30K to 60K) comes during November 2009 – January 2010 period, and can be tied to the Verizon’s “DROID Does” campaign and, for the most part, to Verizon’s Motorola Droid flagship. With some help from HTC Droid Eris and other cheaper phones. From February to May Motorola DROID and last generation Android 1.6 devices helped propel Android activations to 100K. Notice that without carrier support, the most advanced Android superphone in the market – Google Nexus One – failed to make any impact on shipment volumes.
The next big Android growth spurt – from 100K a day to 160K to 200K- happened from May to August of 2010. It coincides with the arrival of advanced next generation Android handsets like HTC Desire/Incredible, EVO 4G in April/May, and then Samsung Galaxy S and Motorola Droid X a couple of months later. To stem the customer loses they’ve seen last couple of years, with every new iPhone launch, carriers on both sides of Atlantic started huge promotion campaigns for these first “good enough” iPhone alternatives. Which contributed hugely to the doubling of Android activations in 3 months.
But those 200K activations a day – that’s the level Android was pretty much stuck for the next 4 months – from August through November 2010. Neither Droid 2 launch, nor the multiple U.S. and international network rollouts of Samsung Galaxy S and great sales it was delivering, nor an arrival of HTC Desire HD, Desire Z/My Touch 3G; nor even “sales in South Korea going berserk”, none of that was able to break Android activations past that 200K a day mark. If they had bigger activations numbers – they would have mentioned it either during their Q3 earnings conference call in mid October, or during Eric Schmidt’s presentation at Web 2.0 Summit in mid November, where he first showed off Nexus S.
Only on Dec. 9th, as the holiday shopping numbers from U.S. and Europe started rolling in, Andy Rubin was able to tweet (?!) that Google is now activating 300 000 Android devices a day.
So what about 2011? Why can’t Android continue it’s breakneck growth for the next 12 months?
As I just showed you, Android explosion of 2010 came mostly from the heavy or even exclusive commitment of 3 big smartphone vendors – Motorola, HTC and Samsung. And equally heavy and quite often exclusive commitment from carriers like Verizon, Sprint, T-Mobile in U.S., Vodafone, Telefonica, T-Mobile and few others in Europe and a few carriers in Asia.
And most of this growth came from the top of the line, heavily promoted iPhone alternatives – like Galaxy S, Droid X and Desire. Yes, smaller vendors like LG, Acer, Asus, Dell and Sony Ericsson contributed some, as did cheaper Android phones like Wildfire, Optimus One, Galaxy 3 or Xperia X10 mini. But their impact on the overall growth of Android was limited.
However, carriers and vendors went Android exclusive for their smartphones only because there was nothing else to counter the iPhone. And, especially in the U.S., were Android grew the most, the iPhone wasn’t available to other carriers in 2010.
This will not be the case in 2011 anymore. The CDMA iPhone is coming to the biggest Android driver – Verizon , and it’s marketing budgets will be split between iPhone and Droids from now on.
Microsoft was finally able to ship it’s own modern connected mobile computing OS – Windows Phone 7, which is good enough to compete with both Android and Apple. First WP7 iteration is actually way better then what Android 1.0 and iPhone 1.0 had at launch. Microsoft Marketplace app store seems to be ramping faster the Android Market and even Apple’s AppStore did at similar point of their existence. And as far as device shipments go, WP7 also seems to be doing better then Android did at launch, and on par with what first iPhone was able to achieve. Furthermore – Microsoft is heavily committed to the success of WP7, they will be improving and adding features to it at a very fast pace. Also, Microsoft has a huge pile of money already allocated for the promotion of WP7 and is not shy about using it.
Except of Motorola (for now) – the biggest Android vendors of 2010 are already hedging their bets and releasing both Android and WP7 handsets, and the share of WP7 in their smartphone portfolio will only grow next year. Carriers also are already accepting WP7 and starting to allocate marketing resources to it.
So Android already has another very formidable competitor in it’s best – U.S. market, and it’s strongest – high end – device category. And even as those high specc’ed (1GHZ, 512 MB RAM, WVGA display) Android devices become cheaper and start moving towards $400-350 price point, Windows Phone will be matching those price reductions at once.
Then, at the at the top of the market, we have a bunch of other competitors coming in 2011.
There is Nokia, which spent the last two years in complete disarray, but now has new management team which seems empowered to make the necessary changes to get them back on track. I’m not sure how that will work out in the end, for now Nokia still seems like a really big chicken running around with it’s head cut off. But the new management team only had 3 months to work on it, so we’ll just have to wait and see if they are any good. If they do get their act together – Meego and updated Symbian may start making a significant impact by the end of 2011. Especially outside U.S.
Then there is Palm WebOS. After flirting with near death experience WebOS is now in the hands of HP, with pockets deep enough and resources to finally start fulfilling it’s promise. HP is a novice in the mobile telecom business, and as every other PC maker trying to muscle it’s way into it can tell, getting a break into an operator dominated market is no easy task. So I don’t expect any big number surprises from WebOS smartphones. Still it’s there and it will be adding to the competition both at the high and mid end markets.
As for the cheap sub $300-200 mass market Android devices, they weren’t very popular this year, and they won’t bring about a revolution next year. It seems that there is something about Android, that makes it good only on the devices with specs of no less then that of the first Droid, and we won’t be getting that for $200-300 in 2011.
A smartphone with Android 2.1-2.3 on a small QVGA or HVGA display, slow CPU and limited memory – is a crappy smartphone. And it will will remain a crappy smartphone next year. Yes – the smartphones from it’s main competitor in this category – Nokia – are also crappy smartphones. So they both may be on pretty even ground here. But then, outside of U.S., Nokia’s still got a huge brand awareness, customer loyalty and installed base lead, so it will be steep uphill battle for Android.
The same is even more true for those $150-100 Androids – they are even crappier smartphones, and Nokia’s strengths at the lowest end are even bigger.
Furthermore – one of the biggest Android supporters of 2010 –Samsung- has it’s own smartphone offering – Bada – in the $200-400 price range. You may have heard very little about it, but Samsung has already sold 5 million of Bada phones this year, and plans to ship over 20 million of them in 2011.
The brightest spot for Android growth next year, will be tablets. Here, in the first half of 2011 we are headed for a repeat of 2010 Android smartphone growth story. Tablet market that Apple created this year, is is set to explode in 2011. And in the first half of the year, for almost every OEM, Android Honeycomb will be the only alternative OS able to comepete with iPad. So Android tablet shipments and marketshare will grow by leaps and bounds.
They will have a strong competitor in HP WebOS powered tablets, if HP is able to release them soon. And WebOS tablets will do much better then WebOS smartphones next year. Tablet market and sales channels are pretty much the same as the PC/laptop/Netbook sales channels. And one thing HP knows how to do very well – is to move big numbers of PCs.
And let’s not forget Meego, which also might be able to get traction on tablets later in the year. Afterall – Nokia may finally get it’s act together next year. And the second big Meego partner is Intel, which is very interested in getting it’s Atom chips into the new tablet thingies by any means necessary. I’m pretty sure Intel will try hard to convince it’s big PC OEM partners to give Meego a try.
RIM is also rushing into a tablet game, and their Playbook looks mighty interesting.
Still, simply because everyone else – Acer, Asus, Lenovo, Motorola, Samsung, HTC – just to name a few, will be pushing Android, Honeycomb tablet sales will be several times bigger then WebOS/RIM/Meego shipments in 2011.
Unfortunately, tablet market is nowhere near as big as smartphones. Tablet shipments most likely won’t reach even a 100 million units a year level in 2011. And tablet market is still dominated by it’s creator – Apple, which will probably be able to retain at least half of it. Between iOS, WebOS and Meego, I expect between 20 to 40 million tablets to ship with Android.
Which is a nice number, but it won’t add much to the 110 million a year device shipment rate 300K Android activations today imply.
It’s a huge connected mobile computing device market out there. And it’s growing very fast – it grew 70%+, to almost 300 million units this year. And it may well repeat similar performance next year.
But while in 2010 Android was able to reign supreme as the only credible alternative to Apple iOS juggernaut, this happy state of affairs has ended. Competition has caught up or will catch up to both iOS and Android within next few months.
So yes, Android will grow nicely in 2011. It may even grow faster then the overall market, and add a few more points to the market share gains it achieved this year. I think that Android will end 2011 with somewhere between 500 000 and 600 000 device activations per day. Android has arrived in 2010, and already became the second biggest smart connected device OS in the world. It may well become #1 by the end of next year, though that is by no means guarantied yet.
Still the Android growth rates and the growth in it’s importance and impact in 2011 will be nowhere close to what we have seen in 2010.
If you liked the post, you might find these interesting too:
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- Verizon posts Android 4.0 Ice Cream Sandwich updates list. HTC, Motorola, Samsung and LG devices included
- Andy Rubin: “Android daily activations top 700K”. On the way to 1 million a day in Q2 2012
- Droid X launch bits pt1: Android riding a hockey stick. Leaves iPhone in the dust, may top Symbian soon