Apple Can't Let Google Win

Google's (NAS: GOOG) Android continues to gain market share in the mobile race. Gartner is out with a fresh report on global mobile trends, and the industry tracker reveals that Android smartphones are running away with the gold.

That in and of itself isn't really a surprise. Google's open-source platform has given the smartphone niche wings. Handset manufacturers can make more cost-effective devices. Wireless carriers have cheap phones that they can use to reel in activations with meaty data plans.

However, do you realize how wide the gap is growing between Google and the Android-nots? Let's take a look at Gartner's market-share numbers for smartphones over the past year.

Q2 2012

Q2 2011










Research In Motion (NAS: RIMM)






Microsoft (NAS: MSFT)






Source: Gartner.

We're living in a world of Androids
Android and Apple's (NAS: AAPL) iOS have seen their combined market share of grow from 61.6% to 82.9% over the past year, but it's essentially Android that's doing all of the heavy lifting.

Symbian -- the operating system that Nokia (NYS: NOK) championed until recently -- and Research In Motion continue to fade into obscurity, though they have yet to be passed by the advancing baby steps of Samsung's Bada and Microsoft.

Then again, anyone who's been reading about the legal fisticuffs flying between Samsung and Apple knows that Samsung isn't just about Bada. Samsung actually sells more handsets than Apple does through its pole-position leadership when it comes to Android.

Gartner has Samsung's Galaxy line of Android smartphones selling 45.6 million units this past quarter. Apple reported last month that it sold just 26 million iPhones during the same period.

iPhone 5, don't fail me now
Apple fans will rightfully counter that it's their company raking in the lion's share of the profitability in the booming smartphone market. Google's decision to make Android freely available merely opens up the opportunities for indirect monetization through app marketplaces and mobile search.

However, that argument misses the point. Every person who decides to choose an Android -- and we're now talking about nearly two-thirds of the smartphone buyers out there -- isn't buying an iPhone. That's an opportunity cost that Apple would love to get back.

Maybe the iPhone 5, reportedly coming out next month, will change that. Gartner and many analysts have argued that Apple iPhone 4S sales have slowed as consumers know that the world's most valuable tech company is due for a substantial update. Why buy an iPhone 4S now when the better iPhone 5 will be out in a few weeks, or when history suggests that Apple will discount the 4S when the new handset comes out?

This is clearly a big part of what fueled a rare quarterly miss at Apple this past quarter, and it's also the same reason Apple's stock shrugged off the disappointing quarter in anticipation that the class act of Cupertino will raise the bar yet again with the upcoming iPhone 5.

Apple can't afford to blow this. The iPhone has become Apple's top product, accounting for 46% of Apple's revenue mix in its latest quarter.

Silver in sales, but gold in profitability
Apple doesn't need to catch up to Google. There's clearly more than enough money to be made with a fifth of the smartphone market, given the company's margins.

However, we can't forget that Symbian had a bigger chunk of the global smartphone market a year ago than Apple does today. We can't forget that RIM's BlackBerry has grown from a market darling to a popular death-pool candidate in a handful of years.

Apple is smart enough to sidestep those pitfalls. Fans will argue that it's Apple's success that has made Android so successful. However, Apple can't get too cocky. It needs to get hungry.

The next two quarters need to be Apple's moment to grab some serious market share.

Apple jacks
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