A model displays a new smart phone with a 3D display produced by electronics giant Sharp has and based on Google's Android OS:
If you think the smartphone wars are a two-horse race between RIM’s BlackBerry and Apple’s iPhone, think again. Google’s barely two-year-old Android mobile operating system now outsells them both.
Data this week from research firm NPD confirms that Android is now the most popular smartphone operating system in the U.S.
In the most recent quarter, Android accounted for 44 per cent of all smartphones purchased, an increase of 11 per cent over the previous quarter. Apple’s 23-per-cent share was up by one percentage point, while RIM’s 28 per cent was down six points.
New purchases are also making Android the fastest-growing platform by overall subscriptions. Research firm comScore shows that Android phones accounted for 21.4 per cent of all smartphone subscriptions in September, up almost two percentage points over the previous month and a stunning change from its 2.5 per cent share a year earlier.
In contrast, Apple held steady between September 2009 and 2010, 24.1 per cent to 24.3 per cent, while RIM dropped from 42.6 per cent to 37.3 per cent.
“I think Android has completely changed the market in the last year,” says David Eads, founder and CEO of Mobile Strategy Partners, a consulting firm.
“At around this time last year, I remember talking to bankers and other executives about how Android might be a factor in the future. And now it’s overtaken the iPhone and is dominating.”
In many respects, Google’s gain comes at the expense of Microsoft and Nokia. Microsoft struggled mightily to keep its Windows Mobile operating system relevant before finally rebooting its mobile aspirations with the just-launched Windows Phone 7.\
Nokia, the global cellphone leader, has stumbled badly in the North American market, its smartphones powered by the Symbian operating system barely registering on consumers’ radar.
Android avoids Microsoft’s and Nokia’s fate by being open-source. This runs counter to competitors like RIM and Apple, whose operating systems are proprietary and closed, with only the original vendors allowed to make changes to them.
Google, on the other hand, gives the code away for free to hardware vendors like HTC, LG, Motorola and Samsung, and actively encourages them to make changes to the basic core. As a result, an Android-running phone from Samsung, for example, has a different look and feel than one from Motorola.
Avi Greengart, consumer devices research director with Current Analysys, says Google “greatly helped itself by giving the operating system away to make money on the back end through mobile advertising,” a move which echoes the model it used to become a search and Web services powerhouse.
Greengart also credits Google for “rapidly iterating the operating system from the unfinished mess that was 1.0 to today’s 2.2 which, if not elegant, is at least fast and polished.”
This openness gives handset makers more leeway to negotiate hardware pricing with carriers – which can ultimately flow down to lower prices for consumers.
This is a key factor in Android’s success in global markets, where price sensitivity rules and the shift to more capable smartphones is key to Google’s global growth plans. Google is all too willing to give it away up-front in exchange for advertising revenues later on.
“Adding $50 to the price of a phone probably wouldn’t bother us that much here in North America,” says Jack Gold, president and principal analyst of J.Gold Associates.
“In some parts of the world, adding $50 to the price of a phone could mean the difference between selling it and not selling it.”
Android’s openness also accelerates the pace of innovation and change because, unlike closed operating systems under direct control of the companies that invented them, entire communities of developers work on new updates simultaneously. This explains why barely two years after it first hit the market, Android has progressed from version 1.0 to 2.2, with 2.3 and 3.0 now appearing on the horizon.
All this openness, however, can also be Android’s Achilles Heel. Unlike Apple, which controls all aspects of the hardware, and ships one phone running one version of its own operating system, Google must wrestle with something called fragmentation.
With the exception of the short-lived, slow-selling Nexus One phone, Google does not make its own hardware. It gives the Android operating system to its handheld vendor partners, who then integrate the software into their own smartphones.
The brutally fast development process of the operating system means a broad range of versions – from 1.6 all the way to 2.2, typically – are available to vendors at any one time. While this gives Android-powered devices excellent visibility at retail, it creates problems for end users.
“Android may have a large and growing market share, but it’s being controlled by many different companies,” says Eads. “There may be compatibility issues, such as a phone running version 2.2 may not be compatible with Android 1.6 on a different network.”
Fragmentation drives software incompatibility as well as consumer confusion. Unlike Apple, which aggressively manages its mobile environment to keep things simple for its users, Google Android is more of a free-for-all.
It’s great for techies who don’t mind rolling up their sleeves to upgrade the operating system on their own and then test their apps to make sure they still work. But your smartphone-newbie grandparents may find crawling online help forums a bit of a stretch.
Eads says the relative simplicity of environments like Apple’s – which provide one-stop shopping for users looking for tech support, software downloads and product availability – could help it stave off the Android challenge.
“By keeping it simple, Apple is able to get more momentum and more products built for its platform,” he says. “This encourages a virtuous cycle that in turn drives more adoption of their platform.”
Gold says it’s a strategy that Apple may not be able to hold onto forever – something which brings back memories of the PC-era battles between Apple’s Mac and Microsoft’s Windows.
In the early 1990s, Microsoft – a yesteryear version of Google – licensed its then-new Windows operating systems to dozens of hardware vendors, who then brought their own machines to market. They weren’t as elegant or as integrated as the fully-Apple-controlled, premium-priced Mac, but they were good – and cheap – enough for most consumers.
“Right now, Apple basically charges a premium for their iPhone because people perceive it as the best in the market,” he says. “Eventually, if they don’t keep that wide gap, people will go with other stuff that’s good enough, but better value.”
That other stuff is increasingly Android. And with consistent double-digit growth and a growing community of partners and developers, Google’s mobile operating system could be the next good-enough solution that defines how we stay connected while we’re on the go.
Carmi Levy is a London, Ont.-based independent technology analyst and journalist. carmilevy@gmail.com
Android Fast Facts
• What is it? Open-source, Linux-based mobile operating system.
• Who invented it? Android Inc., a small California startup that was acquired by Google in 2005.
• Who owns it: Google, but as an open-source product, the company makes it available for free through the Open Handset Alliance, an industry group of 78 software firms, hardware vendors, wireless carriers and chip makers. Android is a key component of the OHA.
• Is there a pattern to code names attached to new releases? Yes, all new versions of the operating system are named after desserts. For example, version 1.5 was known as Cupcake, with Donut (1.6), Éclair (2.0 and 2.1) and Froyo (2.2) rounding out currently available versions. Future versions include Gingerbread (2.3) and Honeycomb (3.0).
Courtesy: Google News 
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