Android wins the battle, but iPhone still winning the war

Given the ever-expanding lineup and ever-increasing popularity of Android-powered smartphones, it was inevitable that the Google-backed mobile operating system would trump sales of Apple's (NASDAQ:AAPL) rival iPhone sooner and later, and that time is now. Android devices accounted for 27 percent of U.S. smartphone sales in the U.S. during the first half of 2010 according to data issued this week by The Nielsen Company, four percentage points higher than the iPhone--Android now makes up 13 percent of the U.S. smartphone market as a whole, trailing Research In Motion's (NASDAQ:RIMM) BlackBerry (35 percent), iPhone (28 percent) and Microsoft's Windows Mobile (15 percent, down from 27 percent only a year ago).

It appears likely Android will surpass WinMo sometime during the current quarter, especially in light of Google CEO Eric Schmidt's announcement Wednesday that sales of Android devices now total about 200,000 each day, double the number of units sold daily just two months earlier. "People are finally beginning to figure out how successful Android is," Schmidt said during an appearance at the inaugural Techonomy conference in Lake Tahoe, Calif. "It looks like Android is not just phenomenal, but incredibly phenomenal in its growth rate. God knows how long that will continue." Schmidt added that the leap in Android activations corresponds with increasing revenues resulting from mobile search growth both on and off the platform. "Trust me that revenue is large enough to pay for all of Android's activities and a whole bunch more," he said. "I should also say that we love the success of the iPhone because the iPhone also uses Google's search and we get a chunk of that revenue when people search on the iPhone."

The continued growth of Android and iPhone means continued trouble for its rivals--RIM this week attempted to reverse its declining fortunes by unveiling the long-awaited BlackBerry 6 operating system revamp, promising a redesigned user interface optimized for both touchscreens and trackpads, a new WebKit-based browser, expanded messaging features to simplify social media and RSS management, an upgraded multimedia experience and a new Universal Search tool. Analyst reviews were more or less positive, but ABI Research isn't even waiting for BlackBerry 6 to reach consumers before declaring the battle for mobile software supremacy all but over--the firm anticipates Apple's iOS will account for 52 percent of all mobile application downloads in 2010, followed by Android at 26 percent. ABI calls the availability, variety and novelty of applications in both the App Store and Android Market "unmatched by any other smartphone platform," adding competing efforts like BlackBerry App World and Nokia's Ovi Store are "hampered by a lack of variety and fragmentation among both manufacturers' many devices."

But even though Android sales are surging, the iPhone remains the apple of the consumer eye. Nielsen notes that 89 percent of current iPhone users plan to remain loyal to the iOS platform when the time comes to upgrade to a new device, with 29 percent of existing BlackBerry users and 21 percent of Android owners mulling a move to the Apple smartphone--by comparison, 71 percent of Android users and just 42 percent of BlackBerry users plan to stick with their current platform. Android may be closing the gap in terms of market share, but it still has some distance to go to catch the iPhone in terms of consumer mindshare. -Jason