Google may, paradoxically, be making the world a better place to sell iPhones
You might think that the almost viral spread of Google’s (GOOG) free and open-source Android operating system would eventually drive down smartphone prices and put pressure on Apple’s (AAPL) proprietary iOS — and on Steve Jobs’ enviable profit margins.
But an analysis of the eight largest mobile vendors’ average selling prices posted overnight Monday by Asymco’s Horace Dediu suggests that something quite different is happening.
Apple’s average iPhone prices have actually gone up since Android was introduced, and although there has been some price erosion among the other top vendors (orange line in the chart above), it is surprisingly small.
What’s going on?
According the Dediu, the smartphone market is growing so rapidly (90% per year), that there is limited direct competition between smartphones and a lot of competition between smartphones and so-called feature phones. It’s the feature phone makers who are having to slash their prices to compete.
Dediu has long argued that the phone market should be studied as a whole because the competition is not between platforms but between smart and non-smart. “Android,” according to Dediu, “is expanding the market without crushing pricing.”
Maybe letting Google CEO Eric Schmidt sit on Apple’s board of directors wasn’t such a bad idea after all.
[Follow Philip Elmer-DeWitt on Twitter @philiped]