The iPhone is a real hit; there is no doubt about that. "Duh," you say. So do you think Apple is just going to run away with the smart phone market? Not so fast...
The Boy Genius Report (or BGR as it prefers now) on October 28th of last year produced a nice graph that shows the iPhone quickly growing it's market share in the smart phone market to 30% in September of '09. That's pretty respectable; so what's to keep that growth in market share from just going and going and going? There is one good reason, Google and their new Andriod OS for smart phones.
The Android OS has been out for over 2 years now but the handsets that use them have only been around for about a year. Though 2009 there were a few new offerings of smart phones that sported the Android moniker but there wasn't a lot of attention focused on it until Verizon began their Droid ad campaign. The media blitz really put Android on the map and has raised the level of exposure. Verizon offers the Motorola Droid and the HTC Eris handsets, both running Android. The Droid runs Android Eclair 2.0.(.1) and the Eris runs Android 1.6.
The Android 2.x release is the break out winner in the marketplace and Google has added fuel to this fire by releasing their new HTC based phone the Nexus One. The Nexus One does the Droid one better because it is using the latest Android 2.1 (not 2.0.1) OS.
Enough background and history about Android. Why is it going to overtake the iPhone? The answer is simple, the iPhone runs the MacOS and like everything Apple, they control everything about the iPhone from the materials that go into it, to the OS, to the carrier that can offer it.
Google on the other hand has taken the approach that any phone maker can take and use the Android OS on any phone. This is very similar to what Microsoft did in the early 80's with DOS and then later with Windows. Back then any PC maker that made an IBM compatible PC based on the Intel (and later the PowerPC) microprocessor could run
This created a commodity market for the PC and allowed market forces to drive down the price of the IBM compatible PC. The Mac on the other hand was still a PC that was completely controlled by Apple. To this day it means that if you want a Mac and the MacOs, you have to go to Apple and pay whatever they ask for that PC.
Given the fact that the Mac architecture (both hardware and software) is completely controlled by Apple, the environment is very stable. There are very few compatibility issues because there are relatively few permutations of the Mac hardware and software. This is one of the major reasons that people are willing to pay up to 50% more for a Mac today than a PC.
As the market for smart phones heats up over the next few years Apple will continue to market the iPhone the same way they market the Mac. And like the Mac, they will continue the policy of asking the consumer to pay a premium for the Apple name.
Google on the other hand is giving away the Android OS to all who want it without charge. Manufacturers can even add proprietary enhancements to the OS without releasing the source for those enhancements, thus giving them differentiation in the smart phone marketplace. This will contribute to the flood of Android phones in the marketplace with the phone hardware becoming a commodity, much like IBM compatible PC hardware.
The standardization of Android smart phones also has the potential of offering some degree of portability for users. The use of the phone and the applications developed for it will work on multiple phone models from multiple vendors giving the consumer a wider choice of phones to choose from. In a few months when Verizon Wireless comes out with it you can pick up a Nexus One if you don't like the Droid.
This is the beginning of the Android era of smart phones. Within the next three years the Android OS will become the dominant OS in the smart phone market. Apple will still have the iPhone and who knows, maybe by then all the major carriers will offer it on their new 4G, LTE networks.
As I said before, the best days for the iPhone are here and now.