Why Apple and Samsung are the Coke and Pepsi of smartphones in the U.S.
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America’s smartphone market is stuck.
More than 70 percent of the smartphones that Americans bought this year have been either an iPhone or a Samsung device. Smartphone brands other than those two are selling less each year, according to data that the research firm IDC compiled for me.
Many other countries are dominated by some mix of the Coke and Pepsi of smartphones, too, but analysts told me that the U.S. is a bit odd for the lack of a relatively strong third or fourth competitor.
It’s a cornerstone idea in America that it’s good to have more choices. In principle, when multiple strong car manufacturers or grocery stores are fighting for our business, we get better products or services for less money.
So why do we have just two popular smartphone brands in the U.S.? Samsung and Apple make great phones, but so do other companies. Some of them sell pretty well, too — just not in the U.S.
Yes, many product categories tend to be dominated by two or three big companies. Until recently, most Americans bought razors or mattresses from a tiny number of dominant companies. Then upstarts like Dollar Shave Club and bed-in-a-box companies like Casper helped shake things up.
I’ll talk over the peculiarities of smartphones in the U.S., the benefits and drawbacks of how it works here, and whether there could ever be a smartphone Dollar Shave Club.
The American smartphone market is weird.
Globally, roughly 80 percent of smartphones are powered by Google’s Android operating system, and Apple sells pretty much all the rest. But the U.S. has been more like a 50-50 split. Samsung is by far the top seller of Android phones.
Many other countries where most people own smartphones — including Britain and South Korea — are ruled by Apple and Samsung, too. But in other places, there tends to be more choice and competition in smartphone shopping, often from Chinese brands like Xiaomi, Oppo, Realme and (until recently) Huawei.
Why is the U.S. like this?
It’s complicated, but I’ll offer two explanations: America’s wireless providers like AT&T are the kingmakers of which phones win in the U.S., and they’re fine with the status quo. Second, smartphone sellers other than Apple and Samsung aren’t trying very hard, sometimes because they know it’s tough to break through in the U.S.
Wireless carriers sell about three-quarters of the phones that Americans buy, and they have a good thing going with Apple and Samsung.
Apple and Samsung pay phone service providers huge sums to help advertise their new devices. Sometimes they offer commissions so that the salesperson in a Verizon store will push their models to shoppers. Phone companies also require extensive testing of new phones and technical requirements specific to the U.S.
This isn’t necessarily nefarious or unusual. But this system favors the established smartphone makers, which can afford the costs and rigmarole of teaming up with the wireless providers. It’s also a risk to buy a smartphone from a brand we’re unfamiliar with, and many Americans who buy a new device stick with whatever smartphone they’re used to.
Some potential smartphone challengers are also pretty meh. LG, which had been a solid No. 3 in the U.S., recently gave up on smartphones. Chinese smartphone brands have an extra hard time in the U.S. at times because of government sanctions and fears by U.S. officials that their phones might be gateways to Chinese spying.
Google is (maybe) starting to put more oomph into hawking its five-year-old line of Pixel smartphones with wireless carriers, and the company slashed prices to far less than comparable iPhones. (Did you know that Google makes smartphones? Yeah, exactly.)
Is having two dominant smartphone makers good or bad for Americans?
Yes.
Two strong options may be plenty. Samsung and Apple make good phones at a range of features and prices. Americans are also benefiting from a customer war among the U.S. phone companies, which are dangling steep discounts on expensive devices. (Prices for mobile service, however, are higher in the U.S. than in most other rich countries.)
What I wonder is what fresh ideas don’t have a chance because the U.S. smartphone market is frozen. Dollar Shave Club didn’t necessarily make better razors than Gillette, but it did make buying them far more pleasant and cheaper. Casper and its peers let people skip mattress stores and made foam mattresses massively popular.
What’s the equivalent in smartphones that we might be missing?
Before we go …
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Google wants to work with the Pentagon, again: Three years after protests by employees stopped Google from selling technology to the U.S. military, the company is trying again by pursuing the Pentagon’s multi-billion-dollar cloud computing contract, my colleagues Dai Wakabayashi and Kate Conger report.
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The online information war in Myanmar: Reuters writes about the military in Myanmar using social media to monitor soldiers to prevent defections, spread false claims of election fraud and denounce citizens who are opposed to military rule.
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Google Street View is memories: A writer in The Observer explores the ways that Google’s Street View feature gives us a unique glimpse of places and loved ones from our past. “On Street View, we have a panoptical view of the world and all the mysteries, non sequiturs and idiocies that are part of everyday life,” Sirin Kale writes.
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I know that Halloween was days ago, but I’m a sucker for videos of animals munching on pumpkins. Here are some juvenile squirrels digging into pumpkin innards.
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