There may be dozens of different companies making Android handsets, but in the U.S., it's increasingly a duopoly. Samsung (NASDAQOTH:SSNLF) and LG (NASDAQOTH:LGEAF) accounted for 78% of Android handset sales in the second quarter according to new data from Kantar Worldpanel.
It's a positive development for shareholders of the South Korean tech giants, and it stands in contrast to other markets where competition appears to be intensifying.
Android takes a bigger share of the U.S. market
In total, handsets powered by Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Android operating system took a larger share of the American market in the second quarter. In the three months ended this past June, Android handsets accounted for 66.1% of smartphone sales, up from 62.7% in the same period last year. The gain appears to have come at the expense of iOS (which went from 32.8% to 30.5%) and BlackBerry (which went from 2.1% to 0.40%).
Both Samsung and LG released their latest flagship phones in the U.S. during that period. The Galaxy S6 and Galaxy S6 Edge debuted in early April, while LG's G4 launched at the beginning of June. LG doubled its share of the U.S. smartphone market, and captured more first-time smartphone buyers than Samsung.
LG's G4, with its 5.5-inch screen, is quite a bit bigger than Samsung's competing Galaxy S6. It also boasts two features that Samsung removed from its Galaxy line -- a removable battery and expandable storage. Both of those factors could've played a role in LG's performance, but its release schedule may have also been important. Like Samsung, LG once released two different flagship phones (a smaller phone and a phablet counterpart) each year, but it consolidated its lineup beginning with the G2 in 2013. Samsung will release its second batch of flagship phones -- the Note 5 and the S6 Edge+ -- this month, while LG could remain dependent on the G4 into 2016.
Samsung and LG's success seems to have a taken a toll on other Android handset makers. Earlier this month, HTC shares crashed (falling below the value of its cash on hand) after the company forecast worse than expected sales for the third quarter. HTC's flagship -- the One M9 -- debuted alongside the Galaxy S6 in the U.S., but appears to have been completely overshadowed by it and LG's G4.
But the situation is quite different elsewhere
Samsung and LG are significantly less dominant in other markets.
In China, both firms have been overshadowed by homegrown competitors in recent quarters. Although Samsung remains the largest handset vendor globally, its share of the Chinese smartphone market has plummeted as Xiaomi and Huawei have seen their sales rise. Despite its success in the U.S., LG isn't even a top five handset vendor -- Huawei, Xiaomi, and Lenovo all outrank it. Lenovo competes in the U.S. through its ownership of Motorola, but neither Huawei nor Xiaomi have much of a presence. That should soon change.
Huawei is widely rumored to be developing the next version of the Nexus 6 for Google. Meanwhile, Xiaomi's Hugo Barra hinted that his company would eventually come to the U.S. in an interview with Bloomberg last month. Other vendors, including ZTE, Alcatel, and OnePlus have attracted attention with cheap Android phones of surprising quality.
Samsung and LG have advantages over these vendors, including established relationships with major carriers, brand recognition, and in Samsung's case, a retail presence. That could limit their losses, but I wouldn't expect the U.S. Android market to remain a two-horse race for much longer.