The iPhone 5 Is Turning the Tide On Android

Earlier this month, the Google (NASDAQ: GOOGL  ) Android army cheered as one of its biggest champions, Samsung's Galaxy S3, outsold Apple's (NASDAQ: AAPL  ) iPhone to become the top-selling smartphone in the world.

Strategy Analytics estimated that GS3 unit sales more than tripled sequentially in the third quarter to 18 million. That was enough to best the iPhone 4S and iPhone 5 individually, which sold 16.2 million and 6 million units, respectively.

Smartphone

Q2 2012 Units

Q2 2012 Market Share

Q3 2012 Units

Q3 2012 Market Share

Galaxy S3

5.4 million

3.5%

18 million

10.7%

iPhone 4S

19.4 million

12.7%

16.2 million

9.7%

iPhone 5

0

0%

6 million

3.6%

Source: Strategy Analytics.

Remember that the iPhone 5 was only on sale for about nine days in the third quarter, though, during which time it was severely supply constrained. Meanwhile, most consumers were well aware that the iPhone 5 was coming, so a drop in iPhone 4S unit sales was entirely predictable. Either way, there's no arguing that Samsung's performance with the Galaxy S3 is nothing short of impressive since its launch earlier this year.

The tables have turned
Thanks to strong sales of the iPhone 5, Kantar Worldpanel ComTech now estimates that iOS has overtaken Android's market share in the U.S. by a slim margin. During the 12 weeks ending Oct. 28, iOS claimed a 48.1% domestic market share, retaking its No. 1 spot and narrowly besting Android's 46.7%. That makes sense when you consider that the iPhone represented 60% of smartphone activations among the top two wireless carriers, AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) , in the third quarter.

Analyst Dominic Sunnebo said the last time that iOS beat Android was when the iPhone 4S was launched and Apple was able to maintain its domestic top dog status for three quarters. On top of that, Sunnebo believes that Apple will go on to top its prior record of 49.3% of the domestic market and hit a new all-time high over the next two quarters.

What about the European iPhone subsidy crisis?
iOS is stronger in the U.S. than in any other part of the world. On a global basis, Android now has an overwhelming 75% market share. Within Europe, KWP ComTech pegs Android's market share at 73.9% in Germany and 81.7% in Spain. Apple is showing some strength in Britain, though, with a 32.7% slice.

One reason why iOS isn't faring so well in Spain is that local carriers Telefonica (NYSE: TEF  ) and Vodafone (NASDAQ: VOD  ) Spain have experimented this year with removing subsidies, and iPhone sticker shock can be hard to swallow. Vodafone, which also jointly owns Verizon Wireless, is scrambling to reintroduce subsidies after its Spanish subsidiary lost 639,000 subscribers in the second quarter.

Rivals like France Telecom's (NYSE: ORAN  ) Orange Spain are benefiting from the move, adding over 80,000 subscribers over the same time. That carrier is committed to subsidies, with CEO Jean Marc Vignolles recently telling Bloomberg:

There's no need to end subsidies. I have not personally seen any evidence that our two competitors have benefited from such a radical move. They've suffered commercially.

Nokia's (NYSE: NOK  ) Lumia lineup continues to sell well in Italy, another geography where Apple faces headwinds. KWP ComTech says that the Lumia 610 and Lumia 800 have helped push Microsoft (NASDAQ: MSFT  ) Windows Phone's market share up to 11.7%, the platform's highest within Europe.

Home court advantage
In the U.S., iOS and Android remain neck-and-neck and Sunnebo notes that Apple fetches much higher loyalty among its users thanks to its brand strength. Roughly 62% of unit sales are coming from existing iPhone owners upgrading to the newest model and a whopping 92% of existing iPhone users in the U.S. are sticking with Apple's device next time an upgrade rolls around.

There may still be plenty of work to gain share in other countries, but stateside the iPhone 5 has helped turn the tide on Android.

There is absolutely no argument that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On November 28, 2012, at 3:56 AM, CanadaDreamer wrote:

    Apple who? Oh, the guys who are now a generation behind...

    Nexus 10 beats the pants of the iPad. Samsung S3 and now Nexus 4 put make the iPhone 5 look like a vastly overpriced archaic brick. My 70 yr old mother in law owns an iPhone for goodness sakes...

    Apple is out of ideas. Go look at the Asus Transformer series of tablets to see a company with ideas - if they had an apple logo on them, the world would be oohhhing and aaaahhhing about how "great" their tablets are...

  • Report this Comment On November 28, 2012, at 8:28 AM, chaddly wrote:

    Oh boy oh boy, I hope Apple stays at the top. I don't want everyone to start thinking my brand new iphone isn't old news already! I don't know what ill do I have to resort to android. I know they are the best but I just don't want to admit that I was wrong this whole time. Maybe if I keep writing news articles every time Apple gains a small lead in some odd way people will begin to hop on the bandwagon again and think Apple devices are cool again. Wait could Apple just be a fad this whole time, surely not?

  • Report this Comment On November 28, 2012, at 11:35 AM, Zerilos wrote:

    My wife has a s3 and I wouldn't trade her my iPhone 5 in a million years. My iPhone is technically superior in almost every category (check the benchmarks and tests they all show the iPhone to be far superior). If you can live without widgets and don't want a phone made of cheap plastic then the iPhone is clearly the way to go.

    The Nexus 4 is a piece of junk with a 4 hour battery and Nexus 10 is a nice screen wrapped in cheap plastic with an underpowered chip that struggles reaching 30 FPS.

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