updated 10:55 am EST, Mon December 13, 2010
Asymco study shows Verizon down despite Android
(Updated with ITG methodology) The popularity of Android on Verizon hasn't been enough to stop AT&T from walking away with the US smartphone market with the iPhone, Asymco's Horace Dediu said Monday. Basing his information on potential insider info from ITG Investment Research's Matthew Goodman compared with AT&T's recent results, the analyst noted that Google's platform wasn't stopping Verizon's smartphone sales from declining and was mostly preventing an even steeper drop. They were mostly feeding on other platforms at the carrier rather than attracting new customers, Dediu said.
"Android is barely enough to keep the battle with AT&T from becoming a rout," he said, noting that the drops began in earnest in August, as the iPhone 4 reached healthy enough supply to overcome some early shortages.
The researcher added that Android could ultimately be a liability as it was creating a lack of diversity. Despite doubling the number of companies offering smartphones, 75 percent advanced devices on the network were now using Google's OS and could increase to 90 percent if RIM or another alternative didn't step in. Google isn't necessarily aligned with Verizon's goals and could work against it by forcing Verizon to agree to Google demands if it wants to keep its sales alive, Dediu argued.
It was also implied that any sudden loss of favor for Android could lead to a rapid fall-off in Verizon's total smartphone business. AT&T has already been building up a diversity of smartphone platforms like Android and Windows Phone 7 as a hedge against an expected loss of subscribers once the iPhone reaches Verizon.
The figures, if leaked from Verizon as suspected, would support notions that the carrier was switching attention to Apple after determining that Android wasn't having the intended effect. AT&T as of the summer was now growing at about 2.5 times the rate of Verizon, owed almost entirely to the iPhone, and at four million iPhones per quarter on average, was moving more Apple handsets alone than Verizon's entire smartphone base.
Dediu expected Verizon could sell as many as eight million to 12 million iPhones in 2011 but added that it wasn't clear Apple would necessarily cannibalize Verizon's existing platform. However, Verizon often sets aside marketing money as a percentage relative to sales and thus has only limited resources to promote its phones. Any marketing Verizon spends on Apple is money that doesn't go towards Android, the analyst said.
Losing Verizon's primary attention could cost Google significant market share. Although its Android activations are up to 300,000 per day based on tablets and sales outside of the US, Verizon remains the single largest Android-supporting carrier. The provider has made Google dependent enough that it was willing to compromise on its net neutrality policy to keep pleasing its most important US partner.
Update: An ITG spokesman said the data came from independent resellers in the US and not, as originally suggested by Dediu, leaked information. The information thus wouldn't include Verizon's own stores but could still be reflective of actual trends.