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Time bombs

Fred Wilson today updated and reiterated his suggestion to develop on Android first:

Roughly six months ago, I put up a blog post suggesting Android was going to be the dominant mobile phone operating system and that developers interested in the largest user bases ought to start developing for it in preference to iOS.

As you might expect, I got a lot of heat from Apple fanboys for that post and one of the strongest points they made was that we had not yet seen the effect of the Verizon iPhone on market share numbers.

Well now we have.

I don’t think so. The Verizon iPhone has only been out for two months, and it has shown steady daily sales, comparable to the GSM model in the U.S., but without a massive bump up front. My theory is that most people willing to jump carriers (and break contracts if necessary) for the iPhone already did so sometime in the last three years (onto AT&T), and the remaining mainstream Verizon customers interested in the iPhone are far more likely to wait for their contracts to expire before switching.

So it’s far more accurate to judge the Verizon iPhone’s significance after this segment of the market is likely to have made their next buying decision: over the next 18 or so months.

There’s more in the post, but the approximate conclusion is:

I believe the mobile OS market will play out very similarly to Windows and Macintosh, with Android in the role of Windows. And so if you want to be in front of the largest number of users, you need to be on Android.

I disagree, which shouldn’t surprise Fred since he probably thinks I’m an Apple “fanboy”. (I can’t believe he used that word, and I hope he doesn’t really think of Apple’s customers like that.) There are a lot of reasons why I don’t think the desktop-OS battle is relevant to this market today, but that’s another discussion well-covered by others.

With Fred’s argument, there’s a problem with numbers: if being in front of the largest number of users was of the utmost importance, Fred should be urging startups to develop BlackBerry apps before iPhone apps. But that’s obviously a bad idea, because BlackBerry’s marketshare is (slowly) tanking, development economics1 are hindered by severe fragmentation and poor payment integration, and it’s not generally used by most of the influential people needed to spread the word on new services.

But, I digress. We’re talking about Android… which has terrible development economics hindered by severe fragmentation and poor payment integration, and is not generally used by most of the influential people needed to spread the word on new services.

So marketshare isn’t everything. But, I digress again. Let’s talk about Android’s marketshare, which is currently impressive.

There are a number of potential time bombs that would be irresponsible for someone making a long-term bet to ignore.

First, those mainstream, non-geek, smartphone-interested, carrier-prioritizing Verizon customers — the buyers that will be slow to move to the iPhone because they’re waiting out their contracts — are a very large portion of Android’s U.S. marketshare.2

It’s important to consider why they bought Android phones in the first place. Was it because they tried their friend’s Droid and had to have one because it was so good? Or was it because they went into the Verizon store for their next contract renewal, they wanted an iPhone but knew it wasn’t available on Verizon, the sales guys told them this was just as good as the iPhone, it looked a bit like an iPhone, and it had a buy-one-get-one-free sale?

We don’t really know, of course. But it’s worth considering. Were they choosing to buy an Android phone, or were they choosing to buy the most iPhone-like option in the Verizon store? If the latter, what are they likely to choose next time?

If Android phones were delighting their customers and building loyalty after the purchase, it would be reasonable to conclude that a lot of their existing customers are likely to continue buying Android phones in the future. So how is that after-purchase experience? How much do mainstream buyers like their Android phones?

From the ways I hear such people casually talking about them, this is a pretty weak area for Android. Satisfaction surveys consistently show a big gap between Apple and its competitors.

So while Android’s currently doing well, investing heavily in it for anything with long-term costs and obligations should be carefully considered. If you’re not in a rush to make such predictions, I’d wait and see what the market looks like 18 months from now.

(I limited this post’s scope to phones, not tablets, because Android tablets might as well not exist today. And we probably shouldn’t ignore the “I got an iPad so now I want a real iPhone instead of this Droid-whatever” factor. Another day.)


  1. In Fred’s context as a VC, presumably speaking to other companies who are either following the VC model or hoping to, he probably doesn’t care that BlackBerry and Android users don’t pay money for apps nearly as much as iOS customers do. But it’s highly relevant for anyone who wants to set an app price of more than free. 

  2. It’s important to distinguish Android’s U.S. marketshare because it sells a lot more here than internationally. When compared to countries in which the iPhone and Android devices have always been sold side-by-side from the same carriers — or simply by looking at how well it sells on AT&T — Android doesn’t do nearly as well, which further supports most of my arguments. 

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