iPhone Still Just 1.5% Of Mobile Market

Apple’s (AAPL) iPhone business is great for Apple: It’s providing the company’s strongest source of growth, it’s a technology leader, and it’s very profitable. But it’s still very small, all things considered.

Mobile research firm ABI Research estimates 258 million mobile phones were shipped worldwide in Q1. With 3.8 million March quarter shipments, Apple’s iPhone represented just 1.5% of the market, if ABI’s estimate is accurate.

That means that there’s lots of room for Apple to grow. But it also means that the vast majority of the world’s population are choosing non-Apple phones. Not all of them have the opportunity to buy iPhones, but many do.

We believe that the mobile market is going to become more like the desktop market: As software becomes more important, people will be more loyal to mobile platforms. BlackBerry users will be more likely to stay with BlackBerries, iPhone users will be more likely to stay with iPhones, etc. So at some point, Apple will want to build its market share.

Yesterday, we outlined a few things Apple should to do to keep its iPhone business growing. And you left some great comments.

  • Keep its iPhone software platform ahead of the competition. This is already happening via the iPhone 3.0 software Apple announced last month, which will roll out this summer.
  • Keep making better iPhones. That’s going to happen this summer, too. Apple will likely unveil a new iPhone (or multiple) in June at its Worldwide Developers Conference. It’s probably not going to be insanely different than the current iPhone, but will be faster and better.
  • Keep lowering iPhone prices. The $199 iPhone is selling more than twice as well as the $399 iPhone. How about a $99 model? We think we’ll see one this year.
  • Keep expanding iPhone distribution. Apple says China will happen this year. More U.S. carriers would be nice, too, but that’s not going to happen for a while.
  • Keep expanding the iPhone OS platform. The iPod touch is awesome. How about a bigger tablet-like device that’ll sit between our iPhone and iMac?

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