Android vs iOS: Revisiting Q3 2015

The world is going even more mobile with the boost in high-speed connectivity which has made the adoption of smartphones easier. Almost eighty percent of the population in the U.S. now owns multiple smartphones and it is expected that by 2018, smartphone adoption in the developed world will hit the ceiling with seventy to eighty percent penetration. A similar trend is also expected in the Tablet market since the industry has witnessed an increase of about thirty percent in the ownership of tablets by Americans from third quarter 2014 to third quarter 2015.

Apps are ruling the devices. When compared with mobile websites, appearance and ease of accessibility of displaying data are optimized in apps, and that is why they are popular. When more people have the devices that use apps, more apps are downloaded from app stores and app economy soars. The giants in the app industry remain Android and iOS and we would be tracking and revisiting their performance of the third quarter of 2015.

Since we will soon be approaching the end of the quarter four of 2015, the mobile app developers need to look back and assess the mobile landscape up till previous quarter, so as to craft better mobile strategies and exploit all the opportunities unfolded in the quarter three. Below are several points to ponder that can help you assess the what, why, who, and where of mobile app development.

Device Activations

The dynamic landscape of the mobile app economy requires developers and other stakeholders to have a regular pulse of the industry. That is why it is important to have an overall look at the mobile ecosystem. Mobile ecosystem remains dominated by the two giants Google and Apple. Trends from quarter two continue to be the same in quarter three. There has been a growth of about 15.5 percent in total device activations as compared to the same period in 2014, almost 353 million units of smartphones were reported to be sold to end users in quarter three 2015.

The worldwide market share of Android smartphones was 83.3 percent in quarter three 2014 which increased to 84.7 percent in quarter three 2015. Overall, there was an increase of 1.7 points on a year-on-year basis. On the other hand, worldwide market share of iOS smartphones was 12.5 percent in quarter three 2014 and it increased to 13.1 percent in quarter three 2015; annual increase being 0.6 points. With the simultaneous launch of two new models by Apple this fall, the overall position of iOS has strengthened. However, Android still leads the total device activations whereas the industry activations are lead by iOS.

Global Industry Activations

It is important to know the landscape in which the apps flourish. Device activation number is a useful metric for developers and other stakeholders so that they can understand the trends and plan their app strategy for the future. It is important that they pick up the subtle nuances and interpret data wisely from the device activation numbers of each quarter.  

Devices from iOS have succeeded in winning a big part of enterprise market share in quarter three 2015. Apple’s device activation in the third quarter went up 2 percent from the second quarter with the help of its latest devices. The iPads and iPhones grew from 64 percent to 66 percent in the third quarter for enterprise activations.

Other mobile systems saw their activation rate go down in this quarter. Android’s share fell from 32 percent to 31 percent and Windows’ share saw the decrease of one point too as it went from 3 percent to 2 percent. The activation rate of Windows’ phone remains unchanged at 1 percent.

If we talk about activation across different verticals – 83 percent of activations were for iOS in the public sector, 77 percent in the financial sector, and 77 percent in the education sector.

Surprisingly, iOS witnessed a positive trend in terms of activations in public sectors, whereas the trend didn’t change much in the financial and education sectors.

Tech sector favored Android devices where the activations were at about 52 percent. In the energy sector, Android pulled ahead by two points with 50 percent activations compared to 48 percent in the previous quarter.

Tablet Market

These are challenging times for tablet market. The tablet market is witnessing year-over-year decline for four straight quarters - a full year now. Sales have been low in the third quarter of this year; only about 48.7 million units were shipped in the third quarter of 2015 as compared to 55.7 million units shipped in the third quarter of 2014. The tablet market fell at the rate of -12.6% year-on-year basis as per the data received till the third quarter of 2015. One of the major reasons identified for these falling figures is the saturation in more mature markets like North America, Western Europe, and Asia-Pacific that have more than 100 million active tablets per region.

Despite the negative growth and shipments for tablets, iOS continued to lead this market with about 20.3 percent share in the third quarter of 2015. The rest of the market is highly fragmented between the many other Android based players.

Vendor Highlights

  1. Apple: Apple holds the top position, but iPad does not. It did drop its market share by 1.8 points. Increasing competition and Apple’s self-cannibalising strategies have hastened the decline of iPad from the pole position. iPad Pro is in the pipeline. Its tablets operate on iOS system.
  2. Samsung: Samsung is closing the gap between itself and Apple. Its Tab S2 with an optional keyboard looks promising. Its market share in third quarter 2014, however, was 17.4 percent and by third quarter 2015, it dropped by 0.9 points and is 16.5 percent now. Samsung uses Google’s Android KitKat 4.4 and Android 4.4.2 KitKat as an operating system in its tablets.
  3. Lenovo: Lenovo is almost steady in a slow market. It did see a few happy quarters of positive growth earlier. It gained 0.8 points in third quarter 2015 with a market share of 6.3 percent, which was 5.5 percent in third quarter 2014. Lenovo’s IdeaPad P1 tablet operates on Windows 7 and its ThinkPads and K1 tablets operate on Android 3.1.
  4. Asus: Asus has managed to secure its position in the Top 5 players in the tablet market mainly due to its low-cost Android tablet portfolio. It struggled with its momentum when its transformer lines didn’t do as well as expected. Competition heated up too as other vendors were able to provide similar devices at comparable prices. Asus dropped 2.1 points on Year over year basis and now in the third quarter 2015 holds 4 percent of market share. Its tablets run on Android, but it did experiment with dual OS with its dual - OS transformer Book Duet which had both Windows and Android. The experiment wasn’t successful.
  5. Huawei: Huawei appeals to users who want to use their tablets for voice calls and the tablets are generally popular in markets that have a low broadband penetration. Compared to last year, in third quarter 2015, it gained 0.5 points and has 3.7 percent of the market share. It also uses Android.

iOS also dominated the enterprise tablet market and sustained a top rank with a total of 71 percent tablet activations, gaining from 64 percent in the second quarter of 2015. Android, which was earlier seen as closing the gaps, witnessed a fall in total activations from 25 percent in second quarter 2015 to 21 percent in the third. Windows share also fell from 11 percent activations in the second quarter 2015 to only 8 percent activations in the third quarter. There was a reverse trend in the last quarter with iOS losing its share to Android and Windows, but in the third quarter, iOS again made a dramatic top entrance.

App Downloads

There are over a billion Android users spread mostly in emerging economies like India and Southeast Asia. Apps from Google play are immensely popular – the majority of which are free. In the second quarter of 2015 worldwide downloads on Google play were about 85 percent higher than iOS App Store. This increased to 90 percent in the third quarter of 2015.

Games are the most popular app category that users download, followed by business and education apps. The downloadable games app industry has drastically evolved during the past few years and is striding gleefully as the cash registers joyfully sing. A stable group of games developers and publishers like Tapinator, Activision Blizzard, Electronic Arts Inc., Microsoft Corp., and Sony will rule the space for a few years now.

Google Play’s download figures are ever increasing and this gain is seen as a function of the growth and popularity of Android’s easy-on-pocket handsets in emerging markets like Brazil, Mexico, and India.

App Revenues

In quarter three 2015 both iOS and Google Play continued with the trends of quarter two 2015. Global revenue of iOS App Store was about 70 percent higher than that of Google Play in quarter two. This difference increased and in the third quarter, global app revenue of iOS was about 80 percent higher than that of Google play. The global launch of two new models iPhone 6s and iPhone 6s Plus helped the matters. In China especially, new iPhone models have been doing well and that has improved the bottom-line in the number sheets showing revenue from iOS App Store in the third quarter and in maintaining a lead over Google Play.

Google has more than 1.4 billion active Android users. The majority of its users are from developing economies and they spend less on apps. Though iPhone users in the world are less, Apple scores big on the account of revenue. Most of the iPhone users are from rich nations who do not hesitate to buy from App Stores. In spite of having more than a billion active Android users, Google play lags behind in revenue because very few of its Apps are paid apps and generally it relies on ads and in-app purchases for revenue. Apple takes a 30 percent cut in every transaction that is enabled through the AppStore and still manages to secure a big lead over Google Play when it comes to revenue.

Loyalty

Loyalty is a sensitive criterion to be considered and handled with care by developers. The sticking or switching rate to an OS makes the foundation of platform sensitive or market sensitive decisions. About 80 percent of the smartphone users remain loyal to their operating systems when going for an upgrade. Around 82 percent of Android users go for better Android models and 73 percent of iPhone users go for better iPhone models, if available.

Retention -2015-Q1 – 2015-Q3

New OS Previous OS
  Android iOS Windows
Android 82% 25% 60%
iOS 16% 73% 15%
Windows 2% 1% 20%
Others 0% 1% 5%
Total 100% 100% 100%

Android to Android loyalty has remained unchanged in quarter three of 2015, whereas the iOS to iOS loyalty has fallen by five percent from 78 percent in the second quarter to 73 percent in the third quarter. Although, these figures see an increase when a new Apple phone is launched during the falls each year. Nonetheless, the retention rates for both Apple iOS and Google Android are almost equal.

From the above figures, it is implied that when buying a new phone, an Android user is more likely to stay with Android than the chances of an iOS user to continue using iOS. Also, out of those who previously owned iOS, 25 percent switched to a new Android OS; and 16 percent of the users who in the past had Android switched to iOS when buying a new phone.

Key Takeaways

Overall the app industry is having its moment. The app age is upon us and the app economy, which is driven by software and enabled by mobile connectivity is deciding the future of the industries. Companies need to be smart and deliver high quality and secure experiences to their customers. Enterprises are more willing to embrace apps now.

Here are some points to ponder to help you strategize your platform specific decisions.

  1. iOS dominates the revenue landscape with almost 80 percent higher revenues than Android, increasing the gap by 10 percent this quarter. This growth was termed as ‘creased’ up till second quarter but looks like iOS has worked their way to make it ‘enormous’ by the end of quarter four.
  2. The app download gap has witnessed a positive trend again in favor of Androids’s Play store with 90 percent more downloads than Apple’s Play Store. This trend is expected to remain unchanged in coming quarters since more and more Android based vendors are joining the mobile landscape.
  3. Despite the launch of two new iOS phones this fall, Android is multiplying in device activations. The worldwide market share of Android smartphones is now 84.7 percent, which is bigger and greater compared to quarter three of 2014 and also quarter two of 2015. This growth in global share is majorly because of more fresh players launching Android-based smartphones. The Android landscape, however, has grown even more fragmented than before.
  4. The market expected to have more share for iOS after the launch of iPhone 6S and 6S Plus, but iOS market share turned out to be only 13.1 percent in the third quarter of 2015, which is slightly less as compared to the previous quarter.
  5. Both Google Play and iOS App Store played to their strengths and widened the lead from their competitor in quarter three of 2015. Google Play remains the App store with most downloads and iOS App store is the App store with the most money as it gets more revenue from its Apps.
  6. 80 percent of smartphone users remain loyal to their operating systems when upgrading to a better model. This ratio, however, gets skewed in favor of iPhones, whenever new iPhones are launched.
  7. iOS is more popular in industries that demand a closed ecosystem to operate like public sector and financial sector.
  8. iOS seems to be working on rebound strategies for enterprise tablet activations and gaining back its lost shares from Android and Windows devices. Apple’s workaround strategy to regain its lost shares with the iPad pro just worked well.
  9. Android’s loyalty base is slightly more than iOS, and also, it is evident from the above figures that the users purchasing their first smartphone are more likely to choose Android OS over iOS.
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