A new Wall Street analyst report finds a troubling sign for Android. While's there's some truth to it, here's why the conclusion is flawed.
There were conflicting reports on Monday about the state of the iPhone-Android battle. One report has Samsung eclipsing Apple as the single biggest smartphone hardware maker, on the strength of its Android phones. The other, more juicy, report says that Android growth faltered in Q3 and that could indicate that a lot of Android owners are considering a switch to the new iPhone in Q4.
The first report comes from The Wall Street Journal and it estimates that Samsung sold between 20-30 million smartphones in Q3 — Samsung doesn't officially break out the numbers — while Apple sold about 17 million. This is significant since in Q2, IDC estimated that Apple was the leading smartphone manufacturer with 19% of the market of 106 million smartphones sold while Samsung was No. 2 with 17%. Gartner also ranked Apple as the No. 1 smartphone manufacturer in Q2 with 18% of the market (Android manufacturers combined for 43% of the market).
The second report comes from Morgan Keegan analyst Tavis McCourt via Fortune. McCourt analyzed the AT&T and Verizon smartphone sales data for Q3 (see chart below) and noted that smartphone sales declined in Q3 for the first time. His conclusion was that there were a bunch of significant Android device launches in Q3 (including the Droid Bionic and Samsung Galaxy S II) so that likely means that a lot of Android customers were playing wait-and-see on upgrades until Apple announced its new iPhone 4S on October 4.
McCourt stated, "We believe slowdown in Android/Blackberry/[Windows Phone] sales at AT&T/Verizon likely indicates a reasonable number of customers choosing not to upgrade in Q3, but rather waiting to switch to the iPhone in Q4. The strong initial sales figures for iPhone 4S would seem to back up this assumption."
While plenty of Android users were likely waiting to see what Apple announced before making a decision on their next smartphone, I think the problem here is McCourt's assumption that all of them are going to switch to the iPhone. I'm sure there were a lot of Android users who saw what Apple announced and decided to either stick with what they've got or upgrade to another Android device instead, like the forthcoming Galaxy Nexus.
While I agree that Android may lose some of the users at the top end of the smartphone market to the iPhone — especially non-tinkerers like business managers — I think Android will more than make up for that by adding a lot of new users from people who are converting from feature phones to smartphones for the first time over the next couple years.Read: Android Growth versus Stagnation