Android Numbers Game

As far as number of handsets out in the market go Android has been wonderfully successful. Most folks agree that all things being equal, the number of Android handsets is going to surpass the number of iPhones pretty soon. Generally that’s been taken as a sign that developers should start thinking about Android cause it’s going to be the next gold mine. I’ve started to question that a bit however.

I’m a huge Android fan. My main phone right now is a Nexus One. I would actually like to see Android grow into a viable competitor for the iPhone. But there’s this huge glaring dark spot with respect to the number of handsets in the market determining the viability of the platform. If number of handsets out in the market really was the determining factor in the viability of the platform then Nokia would have already won. So obviously, it’s got to be a more complex issue.

So if it’s not number of handsets out in the market what would be the signaling factor, what else do we need to pay attention to? As far as third party developers go, their main set of concerns revolves around their ability to make money off their applications – either through direct sales or by monetizing audience. Right now the iPhone does that far and away better than the Android Marketplace does. Why?

I think a lot of it boils down to consumer disposition. Completely outside of the technology itself, it’s more of a marketing or psychology problem. I’m just not familiar enough with the terminology here to know what to call it. But the iPhone is a consumer pull, and Android is a service provider push. Apple seeded desire for the iPhone with a brilliant marketing campaign, and for the most part folks who get an iPhone genuinely want an iPhone. They know what an iPhone is and they know what they can do with it.

On the other hand, lots of the folks who end up with Android devices didn’t necessarily make a decision to get an Android phone. Snag someone in an elevator some time who has an Android phone and ask them why they got it. Generally they’ll say something like “it’s less expensive than an iPhone” or “I didn’t want to get on AT&T” or “I’m not an Apple person”. It’s not that they went out to explicitly get an Android phone, they just went out to get a good phone that isn’t an iPhone. What got sold to them was an Android phone. There’s a whole other discussion about if carriers are driving Android sales harder cause they’re making more off each Android unit in the field than they are off iPhone.. but lets skip that one for right now.

Because the consumer motivation started out different, their behavior ends up being different. I’m not sure if it’s causality or correlation, but Apple has setup the App Store in a way that it seems to drive a ton more sales than the Marketplace does. I’m not saying that the Android technique isn’t valid. Just that an equal number of Android handsets in the market does not make it on par with iPhone as far as third party developers go.

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9 Responses to Android Numbers Game

  1. mikec says:

    Which came first the chicken or the egg. Maybe just maybe apps dont sell phones either ?

  2. Jason Devitt says:

    Mike, I don’t think it has anything to do with consumer psychology. Most of the people who bought a G1 (and everyone who bought a Nexus One) were very different from the average consumer. But the great majority of Android devices today were bought by regular consumers who wanted something like an iPhone but didn’t want to leave Verizon Wireless. If both types of phone were available on both carriers, we could have a meaningful conversation about differing consumer preferences. But they’re not.

    The answer is simple: the Android Market is a lousy, lousy market. Search is broken. Discovery in general is poor. Because it’s a free for all, it’s a flea market, and it’s much, much harder for consumers to tell which apps are actually worth their dollars. Because it’s a lousy place to sell your products, many of the best iPhone developers have been wary of porting their apps, so the average quality is genuinely lower. Google Checkout sucks donkey balls. I’ve actually set up carrier billing on T-Mobile, and I’ve only gotten it to work once.

    Google is an advertising company that doesn’t know how to run a retail operation. That’s understandable; that can be fixed. But to repeat my first point, Search is broken. What’s their excuse for that?

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  4. Joe says:

    You’re missing the obvious as far as Nokia is concerned. It has been possible to install apps on Nokia phones, but the majority of Nokia phones are not smartphones. You should be considering this before drawing your conclusion about the irrelevance of number of handsets. Only recently, and with more modern phones, are consumers focusing more on extending the functionality of their phones by installing extra software.

    Market saturation is a major point, and we will undoubtedly see a change for Android. Yet, an interesting point can be made for the slow progress in app developement for Android contra Apple. Apple customers are known for their willingness to keep spending money. It is then more understandable for developers to focus on them. There will be more apps coming for Android, but it will take time as the market transition settles, but there is a tendency for Android users to want more for free. That creates a less attractive environment for developers.

    What will be exciting to see is how Meego fares against Apple and Android. It already has a large application base from Maemo, and since Meego will exist for phones, netbooks, tablets, cars, etc. this could make for an interesting set of available apps, as long as they are designed to work/scale across Meego platforms.

  5. It’s an interesting point. Apple create desire for the iPhone and I’m not sure Android has that cachet. It’s not about carriers really (Phones are sold outside the US too!) and the same things are said/happening in every developed market. Android is just a bit more “computerish” and the masses want the slick “no problems” approach of Apple. Android, therefore, overindexes on younger males. “Normal” people want good apps, they want a slick phone. Google need to fix Android Market.. now.

    If I were Google I would simply give $10k to the developers of the top 200 apps on the Apple app store to port to Android. Then fix search, then have a fantastic web based Market service (not like iTunes) and watch the numbers explode.

    BTW – I have a Samsung Galaxy S – and am ex-iPhone

  6. nseika says:

    Or what if, those using Android because it’s Google are used to Google’s internet, which is getting things for free or at least not being paid with cash from the user’s pocket?
    Free web services, free Google Apps, free Chrome browser, even free Android OS?

    In the other side, buy Apple’s gadgets, buy songs from iTunes…

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  8. Reda says:

    Interesting discussion, but I think you are focusing your attention on the wrong group. I think that what you described as the consumer pull/SP push are just the symptoms of the different ecosystems we have at the moment and don’t think consumers have anything to do with the low app uptake. Of course, you have different type of consumers with different economic possibilities. However, think about the car market. People on a higher income, buy Mercs or more than one car. People on a low income, although they have different priorities due to the limited budget, still want and still buy cars (in Europe, they buy tons of small Fiats, etc).

    The problem with Android at the moment (as with Nokia) is that I don’t see a thriving ecosystem that leads to:
    • Good selection of useful apps
    • Drive the price of apps to what the consumer perceives as the right value (I don’t mean 0$, or 99c I just mean the right price)

    Going back to the car analogy, it feels like they are selling you a car that’s worth 10000€ for 3 times the price (because they sell low volume, as if I care as a consumer) or a cheap car without important parts such as steering wheel, seats etc (ok, I’m pushing the analogy here, but what I meant is that in a thriving and competitive ecosystem, consumer rejects bad apps and promotes the best ones and this is not happening)

  9. Paul M says:

    a huge number of apps in the istore are bogus, a previous maemo planet blog entry suggested two thirds were ebooks and dupes!
    a large number only exist because there’s no flash on the i/phone/pad/pod – if it did run flash it would be possible to have a rich interactive experience on iphone, android or netbook!

    when, not if, a good version of flash runs on jailbroken idevice, i can imagine a whole raft of flash apps will be fine-tuned for it.

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