Apple fanboi faithful must be having mass cases of the vapours with the news that Android sales are eating everyone’s lunch:
I’ve written before that I think Google has been running a long game aimed against the telecomms carriers’ preferred strategy of customer lock-in, and executing on that game very well. Against the iPhone, its strategy has been a classic example of what the economist Clayton Christensen called “disruption from below” in his classic The Innovator’s Dilemma. With the G-1, Google initially competed on price, winning customers who didn’t want to pay Apple/AT&T’s premium and were willing to trade away Apple’s perceived superiority in “user experience” for a better price. Just as importantly, Android offered a near-irresistible deal to the carriers: months, even years slashed off time-to-market for a state-of-the-art cellphone; a huge advantage in licensing costs; and the illusion (now disintegrating) that said carriers would be able to retain enough control of Android-powered devices to practice their habitual screw-the-customer tactics.
In Christensen’s model, a market being disrupted from below features two products, sustaining and disrupter, both improving over time but with the disruptor at a lower price point and lesser capabilities. Typically, the sustaining company will be focused on control of its customers and business partners to extract maximum margins; on the other hand, the disruptor will be playing a ubiquity game, sacrificing margin to gain share. The sustaining company will gold-plate its product in order to chase high-end price-insenstive customers; the disruptor will seek out price-sensitive low-end customers.
I have to admit, I didn’t see this coming . . . I thought Google was mistaken to put so much development effort into the mobile phone market. I was clearly wrong about that.
In the smartphone market I have been expecting a disruptive break that would body-slam Apple’s market share, but I expected it to be several quarters in the future and with a really fast drop-off when it happened. Instead, it looks like Apple took a bruising in 4Q 2009 and has failed to regain share in 1Q 2010 while Android sales continued to rocket. Android hammered market-leader Blackberry just as badly, a fact which has gooten far less play than it probably should because the trade-press loves the drama of the Apple-vs.-Google catfight so much.
What actually seems to be going on here is that Android is successfully disrupting both Apple and Blackberry from below; together they’ve lost about 25% of market share, not enough to put Android on top but close enough that another quarter like the last will certainly do that.
I’ve heard several comments from folks that Apple’s iPhone sales are probably lower because of the widespread interest in the “next” iPhone model, which is likely to be announced in the next few weeks. Apple has followed this pattern since introducing the original iPhone, but there’s no rule saying they can’t break the pattern.
I’ll be interested in the announcement, as I’ll have a year left in my Rogers contract, so if the next iPhone isn’t a block-buster, I’ll be considering other options for when I’m out of contract.
