A Wave of Android Smartphones Outsells Apple

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Last November's launch of the Android-powered Droid improved Verizon's fortunes in the smartphone market. The Droid, with its sleek design and ability to run many downloadable apps—and backed by a highly visible marketing campaign—is helping Verizon catch up. In the past several months, Verizon Wireless has proven that if it does get the iPhone, "it won't be out of some pressing need," says Tavis McCourt, an analyst at Morgan Keegan & Co. (RF), who has an "outperform" rating on Apple shares.

Rising shipments of Android phones could also spur developers to create additional apps for the platform. "Market share is a contributing factor to which operating system developers want to support," says Ross Rubin, executive director of industry analysis at NPD. On Apr. 15, the Android Market app store carried 38,000 applications such as games, calendars, and e-books. Apple's App Store has more than 200,000 apps, the company says.

Android taking share from most

The smartphone market is experiencing a flurry of activity. Apple is expected to introduce a new version of the iPhone this summer. Hewlett-Packard (HPQ) on Apr. 28 announced it would buy Palm (PALM) for $1.2 billion. And Microsoft (MSFT) is expected to release a new smartphone operating system called Windows Phone 7 in the second half of the year. NPD analyst Rubin says consumers aren't likely to hold off on buying iPhones in anticipation of the new model. "We don't tend to see a lot of purchase delay," he says.

In the third quarter of 2009, Android phones claimed only 3 percent of the U.S. smartphone market. In the first quarter, Android phones have taken market share away from Apple, RIM, Microsoft, and Palm, according to NPD. RIM's unit share of U.S. smartphone sales slipped a bit from 37 percent in the fourth quarter, when the Droid and several other Android phones went on sale, to 36 percent in the first quarter, according to NPD. Microsoft Windows' share dropped from 13 percent in the fourth quarter, to 10 percent in the first quarter.

Verizon's Android line up includes Motorola Droid and Devour phones, plus the new Droid Incredible from HTC. "There's no question Apple's done a great job with the iPhone," Verizon Chief Financial Officer John Killian said during the company's first-quarter call with investors on Apr. 22. "But look at our results."

Kharif is a reporter for Bloomberg Businessweek in Portland, Ore.

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