US Smartphone Leaders

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US Smartphone Leaders

by Faulkner Staff

Docid: 00021531

Publication Date: 2209

Report Type: MARKET

Preview

Smartphones are truly one of the marvels of technological development.
These advanced devices – part phone, part computer, part portable
entertainment device – allow users to make phone calls, check email and
calendar appointments, surf the Internet, access multimedia content, get
driving directions, check in on social media, and much, much more. The
global market for these devices has exploded since the introduction of
revolutionary handsets like the Apple iPhone and a variety of models based
on Google’s Android operating system. This report discusses some of the
market leading smartphones in the US, including devices created by Apple,
Google, and others.

Executive Summary

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At its core, the smartphone is a cellular telephone that offers a number
of additional features that used to be only found on computers, allowing
people to get driving directions, check email, surf the Internet, take
photographs, and more. According to Statista, there are more than 6.25
billion smartphone subscriptions as of the end of 2021, with an estimate
of 7.69 by 2027.¹ Pew Research Center estimates the share of
Americans who own a smartphone in 2021 was 85 percent, up from just 35
percent from 2011.²

The market for smartphones first started to take off when BlackBerry —
then known as Research In Motion — crossed over into the consumer market.
That demand exploded when Apple introduced the iPhone in 2007. The
iPhone was one of the most revolutionary consumer electronic devices to
come out in the last 20 years, and it quickly vaulted Apple into the role
as a smartphone leader. Google entered the market with the Android
operating system in 2008. Since then, the US and global smartphone markets
have increasingly become a two-horse race, with BlackBerry ceasing
production of smartphones and Microsoft’s gradual abandonment of its
Windows Phone platform. Today, the market finds itself split almost
entirely between Apple’s iOS and Google’s Android.

Market Dynamics

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The telecommunications industry never really developed a standard
definition for what a smartphone is, but PC Magazine defines it
as “a cellphone with e-mail and Web, music and movie player, camera and
camcorder, GPS navigation, voice dictation for messaging and a voice
search for asking questions about everything…. Ironically, the least
spectacular thing about a smartphone is the phone.”³

Smartphones have become important and popular tools for business users
and consumers. They allow business users to do almost anything that can be
done at a computer, including sending email, managing calendars, accessing
millions of applications, and viewing or editing files like PDFs or
Microsoft Office documents.

Consumers also love them because they are portable gaming and
entertainment devices. People can use them to listen to music, watch
movies, play games, access social media networks, share photographs, get
driving directions, and more. Although it may seem like the third-party
apps that make smartphones so versatile have always gone hand in hand with
smartphones themselves, that is not true. Apple was actually the pioneer
of this business model when it launched the app store through iTunes to
support the iPhone, which did not initially launch with a built-in method
for installing third-party applications. Google, of course, has since
become just as major a player in the app arena with its own Google Play
store.

As stated above, the choice most smartphone owners in the US and abroad
now have to make is whether they wish to join the Android or iOS
ecosystem. While both operating systems offer similar menu systems with
access to first-party app stores offering a variety of free and paid
applications, there are many differences between the two operating
systems, reflecting their originating companies’ disparate philosophies.
For example, Apple has typically placed tight restrictions on the products
offered through its App Store, although a number of law suits have been
chipping away at the company’s control. Google, on the other hand, takes a
more hands-off approach to its Google Play app store, attempting to block
only those apps that would pose a direct security threat to its users.
Although differences of this type abound between the two pillars of the
current smartphone market, they have converged to the point where any
Android user should be able to pick up an iOS-based device and use it
without feeling completely lost, and vice-versa.

Market Leaders

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As previously stated, the current smartphone operating system landscape
in the US is essentially a duopoly. This has been the case for several
years, since Android began its meteoric rise and BlackBerry began to
tumble from its once lofty perch atop the business smartphone market.
While the leaders of this race have shifted back-and-forth between Apple’s
iOS and Google’s Android several times over the years, the followers have
remained fairly constant with Microsoft and BlackBerry both scraping by
with less than two percent each for several years. However, now that
BlackBerry has ceased producing devices based on the BlackBerry OS, its
market share has ceased to be measurable. Meanwhile, Microsoft, having
ended development of the Windows Phone platform, is in a similar
situation. It is worth mentioning that there have been some other
momentary entrants into the race as well, including niche offerings from
Amazon, Samsung’s Tizen, and others. However, only Apple’s iOS, Google’s
Android, Microsoft’s Windows Phone, and BlackBerry’s BlackBerry OS have
ever had enough impact on the market to be considered competitors in any
real way.

The following table shows the market share for mobile operating systems
in the United States from August 2021 through August 2022.

Figure 1. Mobile Operating System Market Share in the
United States of America – August 2022

Figure 1. Mobile Operating System Market Share in the United States of America - August 2022

Source: Statcounter⁴

While the above figures show the leaders based solely on the operating
system being run on the smartphone sold in the US, they do not provide a
complete picture of the marketplace. That is due to the fact that, unlike
Apple, Google allows its mobile operating systems to be installed by
third-party manufacturers. Indeed, the vast majority of Android phones are
made by companies like Samsung, Motorola, and HTC. Because of this, it is
also important to understand which companies are benefiting the most from
US sales by examining the market share of device hardware brands, not just
platforms.

The following figures show US sales market share based on the
manufacturers of the smartphone in question.

Figure 2. Market Share for Smartphones by Device
Manufacturer, Q1 2021 — Q2 2022

Figure 2. Market Share for Smartphones by Device Manufacturer, Q1 2021 — Q2 2022

Source: Counterpoint Research⁵

Although the specific percentages held by the leaders have shifted fairly
drastically in just the most recently tracked year, there are a few clear
trends which can be seen here. First, Apple has maintained a larger
portion of the market than any other competitor in all but one of the
recorded quarters, showing the strength provided by its position as the
sole purveyor of iOS-based devices. Second, Samsung is the only company
currently capable of competing with Apple directly in terms of raw sales
figures. While there are seasonal spikes for all smartphone makers, based
on the release of new models, no other entrant on the above chart, nor any
other company in the US, has managed to meet or exceed Apple’s sales in a
single quarter. This may be a very different story in other parts of the
world, particularly in Asia where Huawei, OPPO, and other brands that have
yet to crack the US market make much stronger showings. However, in the
US, the race between smartphone makers is only slightly less of a
two-horse affair than the race between mobile OS developers.

Leader Profiles

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This section takes a deeper dive into the history of each of the four
platform market leaders (or two leaders and two former competitors, as the
case may now be) listed above, while also examining their current status
and flagship offerings.

BlackBerry

BlackBerry, a part of this report primarily for historical purposes, was
a pioneer in bringing smartphones to the consumer market. It is now a
former player in the market, having completely ceased producing its own
smartphones and having licensed the BlackBerry brand name for use by TCL
Corporation, a Chinese electronics manufacturer. Formerly known as
Research In Motion (RIM), BlackBerry was arguably the first to bring
smartphones to the consumer market from their original niche as a
business-only device. The BlackBerry was introduced in 1999 as a tool for
employees to access email while out of the office. The BlackBerry’s QWERTY
keyboard, trackball, and simple interface changed the way people work and
became so popular that people started calling them “Crack Berrys” because
of how addicted people were to their phones.

The BlackBerry line slowly spilled over into the consumer market and RIM
reacted by launching a device called the BlackBerry Pearl in 2006. This
handset was the company’s first designed strictly for consumers: It had a
digital camera and, instead of a full QWERTY keyboard, it used a
proprietary one called SureType that spread the letters of a regular
keyboard across an expanded telephone keypad.

RIM was the undisputed leader of the smartphone market for years, but the
company’s share of the market has nearly disappeared now. Even before
ceasing production, the vast majority of the company’s user base had
already ditched their BlackBerrys for iPhones or Android devices. When
RIM’s struggles became apparent, its revenue and stock price fell
significantly. The company laid off thousands of employees and overhauled
its executive leadership team. It also ditched the RIM name and refocused
its strategy on corporate customers rather than trying to compete with
Apple and Google in the consumer market.

Unfortunately for the Canadian smartphone maker, these changes were not
nearly enough and it was forced to realize that even more drastic measures
were required. What followed was the release of BlackBerry’s first
Android-based smartphone and a complete movement away from the BlackBerry
OS, which was discontinued. Still, the shift was not enough to revitalize
the company’s flagging smartphone hardware business. Realizing this,
BlackBerry decided to stop producing hardware entirely and focus on its
software and service business.

Today, BlackBerry exists primarily as a provider of mobile software and
services, with a strong focus on security and privacy solutions for
enterprise customer.

Microsoft

Microsoft had dabbled in the wireless market with its Windows Mobile
operating system, which was available for several years before the iPhone
launched. However, once the promise of the smartphone market became
apparent to the company, it quickly began attempting to stake its claim as
a third major competitor alongside Apple and Google. Unfortunately for
Microsoft, the company has never been able to translate its desktop OS
success to the mobile space.

While Windows Phone did eventually surpass BlackBerry for a time, it
never captured more than five percent of the market at any given time.
This was not for lack of trying on Microsoft’s part. Efforts such the
company’s short-lived ownership of Nokia, a push to unify the Windows
Phone and Windows desktop operating systems, and various promotional
offers all failed to gain the Redmond-based company any sort of major
traction in the smartphone space.

The reasons for this have been argued over the years. Some believe
Microsoft was unable shake an image of being a stodgy, business-minded
company, allowing the newer and fresher images of Google and Apple to
surpass it. Others point at the minuscule software offerings that were
available to Windows Phone owners compared to the likes of iTunes and
Google Play. Some simply believe Microsoft entered the game too late, only
providing a viable alternative to Android or iOS long after those
platforms had established themselves as the true leaders.

Whatever the reason, Microsoft found itself unable to compete in the
smartphone space on anywhere near the scale it has penetrated the desktop
and tablet marketplaces. That is not to say that the company could not
eventually meet or exceed the shares currently enjoyed by Google or Apple.
However, doing so would require a totally new, never-before-seen entrant
into the smartphone platform arena that could provide a legitimate reason
for users to consider a third option for the first time in many years.

Apple

If Research In Motion was one of the major pioneers in the smartphone
market, Apple took the industry to a new level when it introduced the
iPhone in 2007. The iPhone has been one of the most revolutionary
telecommunications devices of all time. It has the same sleek design that
has become Apple’s hallmark with its personal computers and the iPod,
including a full touchscreen interface that is the benchmark upon which
other phones are judged.

The iPhone was originally designed with consumers in mind, but it has
spilled over into the corporate market. Today, it is very popular because
of its high-end capabilities as well as its continued existence as a
status symbol, like many Apple products.

After selling 41 million units of its iPhone 7 and 7 plus in the third
quarter of 2017, Apple decided to fork its smartphone line with its tenth
anniversary offering. For one of the few times in its history, Apple
simultaneously launched not one, but two entirely different iPhone lines
at its 2017 press event. Alongside the iterative upgrades of the iPhone 8
and 8 Plus, Apple also unveiled the iPhone X (pronounced iPhone Ten).
Since then, Apple has continued to pursue the strategy of releasing
multiple versions of its lastest phone, usually with a “Plus,” “Pro,” or,
more recently, with a “Pro Max” designation to indicate display size and
other features.

For all of its faults and many detractors, Apple continues to be a leader
of the smartphone industry in both statistics and its ability to create
devices that others wish to emulate. While the latter of these two traits
has led to several lawsuits filed to protect Apple’s intellectual
properties, it is still a testament to the company’s ability to break new
ground for the smartphone industry in the US and around the world.

Google

In October 2016, Google introduced its first self-manufactured
smartphone, the Google Pixel. However, it is not because of their hardware
that Google is an industry leader but because of Android. This Linux-based
mobile operating system is maintained by the Open Handset Alliance, an
industry consortium that includes several popular handset manufacturers
including HTC and Samsung. T-Mobile USA was the first company to offer an
Android-based phone when it launched the HTC-produced T-Mobile G1 in 2008.
Since then, each of the major handset manufacturers involved in the Open
Handset Alliance have introduced smartphones that run Android, and the
platform has grown to become the most popular mobile operating system in
the world.

Android supports most of the popular features found in smartphones,
including multitasking, multimedia messaging, touchscreens, GPS systems,
and digital cameras. Android devices also have the advantage of being able
to use the newest and most advanced mobile versions of Google’s own
properties and services, including GMail, Google Maps, Google Messages,
and more. While the company does typically launch these services and apps
on other platforms, particularly iOS, its Android-specific versions
usually offer slightly enhanced functionality or a deeper level of
integration thanks to its ability to access all levels of the platform on
which the software is running.

Most Android devices are still manufactured by third parties. This trend
is unlikely to change even though Google is now producing its own handsets
on a yearly basis. Because of this, third party manufacturers and mobile
carriers are in control of when, or if, those devices are updated to the
most recent versions of the Android operating system. This creates some
displeasure in the smartphone community, since device makers and carriers
generally lag behind Google in patching their handsets by several months.
Not only does this leave many Android users out in the cold when it comes
to new features and capabilities, but it can also result in increased
security risks due to the time it takes for new flaws to be patched. These
issues have led to the accusation that Android is a “fragmented” operating
system. Unfortunately for Google, these claims are hard to refute, as the
company itself regularly releases a set of statistics delineating the
current market share of each version of Android.

Older versions of Android still retain a significant market share,
despite being several years old. For years, Android releases were named
for a sweet or dessert, in alphabetical order. For instance, Nougat was
version 7, Oreo was version 8, and Pie was version 9. In 2019, it was
announced that the Q designation would be replaced and the new version
would simply be “Android 10.” The company explained that some of the names
were not “always understood by everyone in the global community.” The new
naming convention has remained through the latest release, Android 13 in
August 2022.

Note: The chart below, compiled by 9to5Google,
refers to Android 10 as Q, 11 as R, and 12 as S, continuing the initial
letter system used in the dessert naming scheme. Android 13 did not have a
statistically significant install base to appear when this chart was
published in August 2022.

Figure 3. Market Share for Android Versions, August 2022

Source: 9to5Google⁶

References

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¹ “Number of Smartphone Subscriptions Worldwide from 2016
to 2021, with Forecasts from 2022 to 2027.” Statista. August 22, 2022.
² “Mobile Fact Sheet.” Pew Research Center. April 7, 2021.
³ “Definition of Smartphone.” PC Magazine.
Retrieved August 2015.
⁴ “Mobile Operating System Market Share United States of
America, August 2021 – August 2022.” Statcounter. September 2022.
⁵ “US Smartphone Market Share: By Quarter.” Counterpoint
Research. August 25, 2022.
⁶ Li, Abner. “Android 12 Is Running on 13.3% of All Devices
Ahead of Android 13 Launch.” 9to5Google. August 12, 2022.

Web Links

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