Market Share vs. Usage Share: Why It's Not The Time To Celebrate

Recent data has shown that Android commands up to 80 percent of the global smartphone market share. This revelation has some Android Fans rejoicing, and some even say this figure is "the death of Apple." However, they are sorely mistaken, and misunderstand the data.

Market Share means percent of devices sold, not the percent of devices in use.

If you look at the total number of devices sold in Q2 2013, 79 percent of them were android devices, whereas Apple held 13 percent. At first glance, an observer may think that Android the dominant OS by far. However, the breakdown of devices sold tells nothing about growth or dominance in the marketplace. It's very possible for a certain vendor to outsell another but still have fewer products in use. Since Apple got the jump on Google selling devices, Apple has had an advantage for quite some time and Google has had to work extra hard to keep up. Also, just because Android sold 187 million devices last quarter and Apple sold 31 million doesn't mean that the Android commnity grew by 156 million more than the Apple community. Market share fails to take into account the replacement rate. For example, many of those devices sold are upgrades and replacements for people already in the Android community. If 100 million of those devices sold were replacements for older devices, then Android didn't grow nearly as much as it seems. Also, due to the high prices of Apple smartphones, many users tend to hold on to them longer than Android users, who can now upgrade to a high-end phone for $350 instead of $650. Therefore, chances are that a higher percentage of Android's market share was going for replacement than was Apple's.

When we look at the percent of devices in use in the U.S, the numbers are more modest.

Android is still ahead, but not by the enormous margin implied by the Market share figure. In the U.S., Android users account for just under 52 percent of users, whereas Apple holds 41 percent. The hardware breakdown is even more revealing: Apple is the largest seller of Smartphone hardware with the previously mentioned 41 percent. Android devices, on the other hand are split between different manufacturers, not all of which are experiencing growth stateside. Samsung, the largest Android manufacturer, holds the largest share with a quarter of users on its devices and is quikly growing. However, its next three competitors, HTC, Motorola, and LG, each take up only 7 percent, and none of them have been growing in the 3rd quarter. Also, in the past few months, it is Apple who is growing more in America, not Android.

Apple still holds a large chunk of the world in the U.S., especially in the U.S.

Apple's 41 percent of user share in America is higher than most countries where its $550-$650 phones don't sell as well without subsidies, but it still holds a large enough share of the Mobile Pie to not be hurting, even if its percentage is shrinking.

You can lose both market share and usage share but still be experiencing growth.

If the size of the Pie (the total market) is growing, you can still sell more products and expand your user base while losing percentages of the market. For example, say Apple went from selling 100m devices to 120m devices, but the total market grew from 1.5b to 2b. Apple would have lost market share but still have grown 20 percent.

Apple also has the majority of the profit share with only 13% of the market share.

That means that it is making more money per device and profiting more efficiently off of its devices. 53 percent of the mobile profit from Q2 is going straight to Apple, while Samsung receives 50 percent. No one else profited that quarter.

As you can see, the issue of market share, usage share, and profit share is more complicated than some may think. Android is a rapidly growing, thriving OS with billions of people using its devices every day. Google is expanding and innovating every year and fighting for every piece of the Mobile Pie available. However, Apple is anything but defeated. It is growing as well and is showing no signs of slowing down. Although Android fans triumph over the defeat of Apple, our friends from Cupertino are going nowhere but up. I love Android and prefer it over iOS any day, but let's get the facts straight: the battle is still raging with no clear victor yet. Save the celebration.