Up to now the price difference between iOS devices and Android devices hasn't been decisive but this feels like the point at which Android starts to eat away the bottom 2/3 of the iOS market.
I don’t think cheap Android phones are going to eat away the bottom two-third of the iOS market. They will be much more attractive to the many people who currently don’t own a smartphone and wouldn’t buy an iPhone or a high-end Android phone because they are too expensive. (In other words: I expect the market for iOS phones to continue to grow, albeit slower than the overall smartphone market, particularly slower than Android.)
He does say iOS rather than iPhone, so he could be talking about expansion into markets that currently have an iPod Touch and a dumbphone, or no phone at all due to youth or poverty.
The iPod touch is currently not two-thirds of the overall iOS market, it’s 38 percent (10 million units in Q1 2011 vs. 16 million iPhones). Non-iPhone devices (iPod touch and iPad) were a bit more than 50 percent of the overall iOS market.
In the best case scenario for Android, cheap phones can completely obsolete the iPod touch (I think that’s very unlikely), but even then they would only take 38 percent of the iOS market.
