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.


Q2 2012 Units

Q2 2012 Market Share

Q3 2012 Units

Q3 2012 Market Share

Galaxy S3

5.4 million


18 million


iPhone 4S

19.4 million


16.2 million


iPhone 5



6 million


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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.