Android Crowding Apple, RIM

Google's Android operating system will see the largest growth rate of the three mobile platforms this year, research firm says.
As the U.S. smartphone market grows this year, Apple and Research in Motion will see their shares fall as phones built with Google's Android operating system attract a growing number of users, a research firm says.

RIM's BlackBerry will hold on to its leadership position in the U.S. this year, while Apple's iPhone is expected to remain in second place, Canalys reported Friday. Android phones, however, will see the largest growth rate, 169.2%.

Manufacturers will ship 65.1 million smartphones this year, a 38% increase over 2009, according to Canalys. Many consumers buying smartphones for the first time are expected to favor Android phones that are less expensive than the BlackBerry and iPhone.

Lower-priced Android phones will help drive market share of the platform to 18.9% from 9.7% this year, Canalys said. On the other hand, the BlackBerry's share will fall to 43% year over year from 49.2%, while the iPhone's share drops to 21.3% from 23.1%.

Of the major smartphone platforms, only Microsoft's Windows Phone is expected to see a drop in the number of units shipped. That's because Microsoft is not scheduled to ship its upcoming Windows Phone 7 until shortly before the holiday season.

"Windows Phone 7 Series represents a major improvement to the platform that was badly needed from Microsoft," Canalys analyst Chris Jones, said in a statement. "However, the delay between announcement and expected commercial availability in Q4 2010 will make this year a tough one."

Shipments of Windows Phone-based smartphones are expected to fall 1.3% year over year to 4.7 million units. Nevertheless, the devices will account for 10.1% of the market, coming in third behind the BlackBerry and iPhone.

With the number of smartphones growing, the demand on carriers' data networks is expected to increase, causing problems for subscribers.

"Overburdened existing network capacity has fast become a substantial concern for carriers," Canalys analyst Daryl Chiam said. "With smartphones becoming cheaper, more customers will want to consume data services over carriers' networks."

While carriers continue to build out networks to increase capacity, a process that will take years, Canalys expects them to introduce new data pricing models this year. In addition, handset makers are likely to improve data efficiency in their devices.

While Canalys did not list possible new pricing models, carriers, such as AT&T, have indicated that usage-based pricing, rather than the flat rate offered today for unlimited use may be an option. AT&T, which is the exclusive U.S. carrier for the iPhone, has seen its network struggle in some high-traffic markets, such as San Francisco and New York.