There's trouble brewing for Google's (GOOG) Android. This trouble was first highlighted by Apple's (AAPL) Tim Cook when presenting the iPhone 5. In his presentation, Tim Cook showed how the tablet market share for the iPad was 68%, but yet the iPad commanded 91% of the web browsing.
This trouble was again highlighted this weekend by IBM (IBM). IBM put out a report on online shopping in this year's Thanksgiving and Black Friday. In this report IBM talked about the increasing online sales, as well as the mobile devices being used to do online shopping. According to IBM, mobile devices were used by 24% of U.S. consumers to visit the websites of online retailers, up from 14.3% last year. Then comes the surprise, of this 24%, 18.5% or a full 77% of the total, were iPhones or iPads. Android represented just 5.5%, or 23% of the total.
This is the great disconnect. According to Comscore as of September 2012 Android had a full 52.5% of smartphone market, to Apple's 34.3%. Sure, Apple's share of the tablet market was higher at around 2/3rds of the market as we saw with Tim Cook's presentation, but still both things taken together imply but one conclusion: Android sees much lower usage than iOS, and much lower usage than expected given its market presence.
This might have many implications, some of the most relevant being:
- Android will have a harder time attracting developers, especially is this lower usage is compounded by fragmentation of the Android market, leading to even smaller sub-segments within Android. Developing for Android might require versions for several screen sizes, processors, GPUs, and even entire forks such as those created by Amazon.com (AMZN) for its Kindle line or Barnes & Noble (BKS) for its Nook;
- Android customers might be intrinsically less well-off. One of the defining characteristics of Android devices is that they're cheaper. It might happen -- indeed, there are already clues pointing to this - that the typical Android user will then also consume less content and shop less frequently. Indeed, he might even use significantly less data. This is anecdotally confirmed by several reports (1)(2)(3);
- Ultimately, it might mean either Apple or some other ecosystem - perhaps Microsoft (MSFT) with Windows 8 -- might have a shot at conquering the mid-to-low market, since Android's user behavior seems to point towards a "second best", uncommitted attitude towards the operating system.
Google seems to have a problem with Android's usage. Although Android is the leading OS when it comes to installed base, its effective usage seems far from matching Apple's iOS on a lower installed base. This might mean lack of commitment and lack of interest in using the devices which ultimately carries with it a greater ease to lose the market position Android has attained.
Disclosure: I am short AMZN.