ABI Research
Google ought to be terrified at this news. Apple's iOS operating system for iPhone and iPad is trampling all over the Android world right now. This isn't just an incremental shift in market share. This is, if left unchecked, an existential turning point for Android and its developers and manufacturers. After all, if you can't win a battle against a product that costs about $700/£550 with a product that's equally good but free, then you're screwed.
"Defeat" for Android is relative, of course. Apple sold 75 million phones in Q4, whereas Android sold 206 million. So Android is still King Kong to Apple's Fay Wray. But Android has never seen a quarter of sales declines. Usually, market share shifts between Apple and Android, but Android always sells more phones. Now Android is selling fewer phones.
It has never been more depressing to be an Android fan than right now.
It wasn't supposed to be like this.
In the official playbook, the iPhone is the phone of the rich, that handful of Western countries where $700 isn't a month's wages. Android is for everyone else - the poor, the working class, the ordinary people. For years, 80% of phones sold have been Android phones. While it might "feel" like everyone in London, New York and San Francisco has an iPhone, the reality is that outside those wealth bubbles it's an Android planet. In country after country, Apple could only muster market share in the single digits.
Android's noble mission
Android's mission is a noble one, too. Google didn't just launch a new phone product. It launched a free mobile computing platform that would let everyone have access to the internet at almost any price-point. Google introduced the Android One in India and other countries for just $100. Xiaomi launched a bestselling Android phone brand in China that looked and felt as cool as an iPhone but for a fraction of the price. While Apple rejoiced at selling 75 million expensive phones, Google wanted Android to get into the hands of the next 5 billion people. Developing countries are buying phones at a rate of 100 million units a quarter, and not because of Apple. That's Android's doing.
iPhone was for the 1%.
But Android was The People's Phone.
The People, however, appear to have had other ideas.
It's not simply the case that one product is better than the other. Android is arguably superior for users - you can do more with it in more flexible ways. Android had NFC payments years before Apple Pay showed up. And Android has a back button! iOS is great but it's also boring - there is only one way to use it. And Apple is about to ship an update to iOS that is focused on "stability" and "optimisation." In plain English, iOS is currently full of bugs and Apple wants to fix them. Remember when Apple shipped that iOS 8 update that prevented phones from making phone calls? That's how "superior" iOS is to Android.
All that turned out to be irrelevant, however. In Q4 2014, Apple didn't just sell a lot of iPhone 6 units. That was expected: Apple always sells a lot of its newly launched phones in Q4, right after launch. Rather, Apple went a step further and actually stole market share from Android that - according to the playbook - Google should never have ceded.
What's going on?
One thing that might be changing is assumptions around the role of price competition. The received wisdom is that when consumers are faced with two relatively equal products but one is priced much lower than the other, then the cheaper product will solidify healthy market share. The fact that iPhones are the most expensive phones on the market suggests that the poor will plump for Android.
But the ABI numbers (above), if they're accurate, suggest we're seeing a situation where even consumers on modest incomes are saving up and buying iPhones. There are very few products where poor people feel compelled to do that - cars and weddings are two of them. Apple is making inroads much further down the economic ladder than it used to, perhaps.
And then there are the manufacturers. Samsung is essentially imploding. For years it sold big-screen phones and took advantage because Apple only sold small screens. They were great phones, but those days are over. Now, Samsung phones - filled with self-promotional Samsung bloatware - don't look so good by comparison to iPhone 6.
Xiaomi has "forked" Android and is making its own great models - but they're only available in some Asian countries. Competing Android system developers like Cyanogen and Amazon are working to end Google's stewardship of the system.
Android is in disarray
PBS
Android's last stand? Not yet.
One hesitates to write Android's obituary, of course. Google really is intent on bringing the next billion people online (and Facebook is helping the company do it). For those people, people who are on a dollar a day or more but who need to be online, the iPhone may well be out of reach. Earth may once again become the Android Planet, and iOS may revert to its default status as the Rolls Royce of computer operating systems, used by people who think that having two cars, two televisions, and two showers a day is completely typical human behaviour.
But Apple has proved one major fact that Google must now accept: The reach of iPhone will be far greater than previously thought, and simply being the cheap/adequate alternative may not be good enough.