The smartphone platform wars are pretty much over, and Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) won. But it's interesting, in passing, to note the final score, and think about what it means.
Globally, something around 5 billion people (give or take perhaps 250 million each way) have a mobile phone, out of around 5.5 billion people over the age of 16 (This number is fuzzy because many people have more than one SIM card). This will rise to closer to 6 billion over the next few years as the population and the penetration grow.
Apple said in January 2016 that it has "1 billion" active devices (a nicely rounded number), across the Mac, iPhone, iPad, iPod, Apple TV and Watch. Of these, there are around 90m Macs (Tim Cook said 80m in early 2014), something over 10m watches, closer to 20m Apple TVs and perhaps as many iPods still in use. That leaves something close to 900m iPhones and iPads. Apple has sold 318m iPads - if we assume a three-year lifespan for iPhones and four years for iPads, that gets an install base in December 2015 of 630m iPhones and 250m iPads, or 880m in total - close enough. Given both iPad and iPhone sales have been flat since then, this number probably hasn't changed much.
China Mobile (NYSE:CHL) said that in Q1 2016, 15% of its 830m active base was using iPhones - so 125m of those 630m iPhones. China Mobile has 60% of Chinese mobile subscriptions (note as above, this is not the same as users per se), but as the premium operator, it has 73% of 4G, which is probably more relevant. This implies something around 175m iPhones in China across all three operators. This is more iPhones than there are in the US (Note that not all of these were sold in China - this includes imported second-hand devices as well).
Overall, Chinese mobile operators reported 591m 4G subscribers in Q2 2016 and 808m combined 3G and 4G users at the end of 2015, when the Chinese government reported 620m mobile Internet users (rising at a bit over 2% a quarter). One should be very cautious combining numbers from different sources with different methodology, but this implies that if there were 175m iPhones in Q1, that leaves perhaps 450m or so to be Android (or at least Android that go online). Of course, this is Chinese Android - not a fork, but lacking any Google services and excluded from Google's statistics. Meanwhile, the government also reports 220m people using tablets to go online (see footnote). It's not clear how many of these are shared, so one should round this down a bit.
Then, we have Google Android (as opposed to Chinese Android). Google always has been constructively opaque about Android statistics, using shifting metrics that never quite reconciled with each other. The last time it gave a solid number for the active base was September 2015, when it said there were 1.4bn active Google Android users. According to the Android developer dashboard at that time, about 10% of the active base had a large or extra-large screen, implying a tablet - so, 1.25bn phones and 150m tablets, rounded. How much has this risen since? Well, on most estimates, smartphone sales overall have been pretty flat for the last few quarters, with any marginal sales coming at the very low end (the entry price for Android is now well under $50). So this base might have risen by (say?) 100m, but probably no more. Plotting this as a chart (showing only Google's rounded numbers at scheduled events), a March 2016 number of 1.5bn total Google Android and hence 1.35bn phones looks plausible, and might be high.
So, for March 2016:
- 630m iPhones and 250m iPads, for a total of 880m.
- 1.3-1.4bn Google Android phones, and 150-200m Google Android tablets.
- Maybe 450m additional Android phones and 200m Android tablets in China, not connected to Google services.
- For a total base of 2.4-2.5bn iOS and Android phones, and (say) 600-750m iOS and Android tablets.
Some of these numbers are quite a long way from what people not digging deep into the data might expect. I posted this not-entirely-scientific poll on Twitter last week and got the following wildly wrong results. The correct answer is under 2.5x, but two-thirds of people voted for over 4x, which would require 2.5-3bn Google Android phones.
These numbers illustrate the fundamental change in scale that the shift to mobile represents for the tech industry. Annual smartphone sales will rise to close to 2bn units and PC sales fall to close to 200m while the smartphone install base will rise from 2.5bn to close to 5bn and the PC install base fall from today's 1.5bn to closer to 1bn (if that). So mobile has 10x the unit volume and 5x the install base - "a billion is the new million." This is why all the industry investment is shifting to the ARM/iOS/Android ecosystem from the WinTel ecosystem.
Meanwhile, it's now perfectly clear that both Apple and Android have sufficient scale for their ecosystems to be viable (including the Android subset in China), and that no one else does. But at the same time, once you've achieved that scale, further changes in market share are not very meaningful. It doesn't matter to a product manager at a big US bank how many Android users there are in China, nor to a product manager launching in India how many iPhones are in California. Where your users are, which users you want and which users spend what is more important.
That is, the war is over. Yes, we'll go from 2.5bn smartphones to 5bn, but the dynamics of the two ecosystems will not change much with that growth. Apple will get some more uses, perhaps, while Android will convert most of that next 2.5bn, but most of those people are in emerging markets and most will be buying phones for under $50 and certainly under $100.
Rather, the changes, and the things to think about, come from other directions - VR and AR on one hand, AI and machine learning on the other. They might change the balance between Apple and Google, but they're more likely to make that distinction boring. I stopped updating my Nokia (NYSE:NOK), RIM (BBRY) and Microsoft (NASDAQ:MSFT) models a while ago - my Android and Apple models are increasingly lower on my priority list too.
Note 1: If you're thinking all of this methodology is vague and somewhat fuzzy, you're right, but that's how the sausage is made. I wrote a long piece about these issues here.
Note 2: Both the Google Android and Chinese Android tablet numbers I've mentioned are explicitly devices that are going online. There's a significant gap between the numbers of Android that are seen online and the numbers that are reported as sold to consumers. The core of this is that there are really two tablet markets: the "PC replacement" vision of Apple and high-end Android tablets, and another almost separate market for generic cheap black plastic tablets that don't last long and/or never or rarely go online - this might increase the base by at least a third, maybe more.