Who's Buying What in SmartphonesWho's Buying What in Smartphones

Android and Apple stay strong, but the big surprise is Microsoft.

I came across an interesting piece of research from market researchers comScore regarding both the growth and direction of the US smartphone market. First off, the research covered the month of April 2012 when nearly half of US feature phone users who got a new device switched to a smartphone; that's an increase of 9.5% from last year. "Within the year, we expect to see smartphone owners become the mobile majority," noted Mark Donovan, comScore SVP of Mobile.

While we have long expected smartphone owners would eventually surpass basic mobile phones and feature phones (i.e. the ones with the pop-up or slide out qwerty keyboards), what those buyers are switching to provides some interesting insight in the shifting marketplace.

As shown in the table below, comScore tracked the percentage of existing feature phone and smartphone users that chose each of the four major smartphone platforms. As expected, the Android juggernaut continues to chug along with both feature phone converts (61.5%) and those who already owned a smartphone (54.2%). Samsung continues to lead in that segment, and somewhat surprisingly Motorola, which was acquired by Google earlier this year, posted a loss of $86 million on sales of $3.08 billion in the first quarter.

US Smartphone Acquisitions in April 2012 by OS

Source: comScore

Price and selection remain key to Android's success, but user satisfaction may be a different story. One Techcrunch article claimed return rates on some Android models were as high as 30% and 40% versus 1.7% for iPhones. The author doesn't cite a source for the Android number, but the 1.7% for iPhone came from an Apple press conference in July 2010. However, I have heard of numerous Android returns in my circle of friends (most of whom had gotten the Android recommendation from a "geek friend"), while virtually no one I know has dumped an iPhone.

First-time smartphone buyers went for an iPhone 25.2% of the time and former smartphone buyers went for them 33.5%. Of course, anyone who has been listening to the news knows the next-generation iPhone 5 is due out in the September timeframe, and that overhang inevitably slows sales of current models. The big difference in Android and iPhone sales of first-time versus replacement buys is significant, however.

The adoption of Windows Phone is also surprising and should be encouraging for Microsoft. With far fewer models to choose from than with Android, Windows Phone pulled in 7.1% of first-time buyers and 3% of replacement buyers. So it appears that those who are just now entering the smartphone market are more than willing to give Microsoft a look.

RIM is still managing to pull in 4.8% of first time buyers, which is one result I did not expect. However, the fact that 9.6% of replacement buyers were going with RIM is a testament to the grip the company's products continue to have on some part of the market. I would hazard a guess that a very large percentage of those replacement buyers were former BlackBerry users whose employers still require that BlackBerry iron-clad security, or those who simply like the solid keyboard and BlackBerry experience--or just don't want to bother mastering another smartphone and simply aren't into all that "app business".

With such a percentage of sales tied to the release schedule of new smartphone models, a one-month snapshot doesn't really do justice to a market as complex and dynamic as smartphones, however there are insights to be gained. The big two (Android and iPhone) continue to rule the roost, but there may still be a place for Windows Phone to squeeze in. There still may be hope for a resurrected BlackBerry line based on the BB 10 operating system (now due out in 1Q13), but all indications are the first models will be keyboardless, which might wind up driving away even more of the BlackBerry faithful.

We live in interesting times.