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230K activations are clearly not enough for Apple–Android numbers poised to shoot through the roof [Opinion]

By Alok Saboo on September 6th, 2010

Steve Jobs shared some impressive numbers in his recent keynote address. Apple is activating 230,000 devices per day. Android had around 200,000 activations per day a few months back (a number that must have gone up by now). Google also clarified that their numbers do not include upgrades and hence are comparable to Apple’s figures. Without getting into details, there is no debate that Android is now very close, if not ahead of Apple. However, as I will argue later, Android’s numbers are poised to explode and Apple may not be able to claim that “they are ahead of everyone” in the very near future.

Let us look at the activation numbers in a little more details.

Without a doubt, out of the 230,000 iOS activations, a significant number comes from iPads.  Since Apple introduced iPads, tablets have become the hottest category in consumer electronics. Just to give you a clue, Apple sold about 4.2 million iPads in the months of July and August, i.e., about 70,000 iPads per day.

Incidentally, tablets are a category where Android does not have major (or rather any) presence at least yet. Given the number of Android tablets that are lined up, things change completely in the future. While the iPad is the only tablet available at this point, there are at least a dozen in the not-so-long pipeline. Several big names, including LG, Samsung, ViewSonic, Motorola, Archos are (almost) ready with their devices and lot more should be available by the end of this year.

What is the common thread across these upcoming tablets?

Other than the fact that they all want to gain the maximum shares, almost all of them are Android based. Not a single day passes by where you do not hear something new about Android Tablets. Google is already activating upwards of 200,000 Android units per day. Given that there are currently no Android based tablets, one can only imagine the explosion in these numbers once Android tablets start shipping out.

Upcoming Android Tablets

More Android devices mean good things for almost everyone (other than Apple, obviously).

Mobile platforms are very good examples of products that benefit from network externalities where the utility that a user derives from using a particular platform (e.g., Android) increases with the number of other users on the platform. This can be due to several factors:

1. Consumers may benefit directly due to the number of other users of the Android devices. For example, the utility that a user derives from Apple’s Facetime depends on the number of other users who can use Facetime. As firms develop more of such utilities (e.g., Facetime, Game Center), consumers will surely benefit from more users on the platform. 

2. More devices will increase developer attention towards Android. Although the Android store already has great apps, the increased potential will attract more developers and consequently more and greater quality apps on the platform.

3. For Google, tablets provide an opportunity to take Android to the next level. Google can use this opportunity to increase the momentum that it already has. Instead of focusing on smart phones alone, Google can now improve the OS so that it supports (more demanding hardware) tablets as well. For consumers, this could mean more stable, polished, and feature rich mobileOS.

In all, the ultimate value that consumers derive from being on the Android goes up as there are more users on the platform, creating a virtuous cycle. This virtuous cycle has worked for Apple so far and will continue to work for some time. However, given the sheer number of devices that will be running Android in the near future, chances are that these effects will have a greater effect for Android than for Apple iOS going forward.

What are Apple’s options?

Since Apple is unlikely to license out its OS, Apple will continue to be the sole manufacturer producing iOS devices. Despite the great products that Apple has, it will become increasingly difficult for Apple to compete with a bunch of companies that are working with Google on Android.

This is not to suggest that Apple has run out of options. The competition does not necessarily have to eat into Apple’s share. They can expand the overall market and which is what is happening. However, it is going to be an uphill task for Apple from here on. If it were not for the early contract expiration by AT&T, Apple’s iOS activations would have been much lower, since a lot of iPhone 4 users are not first time iPhone users.

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