Apple's decision thus far to stick with AT&T as the sole wireless carrier for the iPhone seems to be costing the company market share as Google's multi-carrier Android operating system eats up an increasing slice of the smartphone pie, new data suggest.
A survey on first-quarter 2010 smartphone sales by NPD Group found that Android-based phone sales edged past Apple to become the No. 2 system, with 28 percent, behind Research In Motion, which leads with 32 percent of the market. Apple's share was 21 percent of the market.
AT&T Leads The Pack
The survey also found that AT&T is responsible for the most devices in use, at 32 percent nearly neck and neck with Verizon Wireless' 30 percent. Trailing are T-Mobile with 17 percent and Sprint/Nextel with 15 percent.
With the addition of Palm's Pre and Pixi phones, AT&T is now the only carrier to feature plans on all five top operating systems: Apple's iPhone, Palm's webOS, Research in Motion's BlackBerry, Microsoft's Windows Phone Series 7 and -- with the new Motorola Backflip -- Google's Android.
"As in the past, carrier distribution and promotion have played a crucial role in determining smartphone market share," said Ross Rubin, executive director of industry analysis for NPD. "In order to compete with the iPhone, Verizon Wireless has expanded its buy-one-get-one offer beyond RIM devices to now include all of their smartphones."
An AdMob survey two weeks ago also found that Android phones are gaining ground, with 46 percent of the U.S. market, beating iPhone's 39 percent, while globally, iPhone reigns with 46 percent compared to 25 percent of Andoid phones.
The AdMob survey was based on impressions on 180,000 Web sites monitored by the mobile advertising firm, while NPD Group's research is based on 150,000 online monthly surveys of consumer users.
"The biggest single thing that Apple can do to increase advertising impressions is to come off being on only one carrier in any country," said Gerry Purdy of MobilTrax. "If they were to migrate to Verizon and Sprint, that would open up over 100 million new subscriber prospects."
Purdy said the rivalry will test the locked versus unlocked models of cell phone marketing.
"Google and Android are promoting an open model vs. closed by Apple," said the analyst. "Google will likely end up in a few years with more handheld units but Apple may also be growing so they will both gain on Nokia. It's not clear yet whether open model will be the ultimate winner."
A spokesperson for Apple didn't immediately respond to our request for comment.
But with the 4G iPhone expected this summer -- already generating intense interest as seen by the attention paid to a wayward prototype last month -- and an App Store with 100,000 more offerings than Google's Android Market, company executives aren't likely losing much sleep over their place in the smartphone market.
"I expect Apple to do what they always do ... make some significant improvements to ensure that they maintain growth," said Ken Dulaney of the Gartner Group. "With 525 million smartphones shipped by 2012 we expect both Apple and Android to have significant shares of the market. There is plenty of room for growth. Android should ship more than Apple simply because they license their phones while Apple doesn't."