Does Europe Hate the iPhone?

We're loving Apple's (Nasdaq: AAPL  ) shiny new iPhone here, but it's a different story throughout continental Europe.

A study by Kantar Worldpanel ComTech shows that sizable market share gains in the United States, Australia, and the UK since the iPhone 4S debut are being partly offset by significant declines in Germany, France, Italy, and Spain.

The iPhone's market share in France for the 12 weeks through the end of November slipped to 20%, compared to a 29% slice a year earlier. Apple's iconic handset's market share in Europe has slipped from 27% to 22% over the past year.

When IT research firm Gartner published global smartphone sales metrics for the third quarter, it was easy to take Apple's share of the handset market slipping to 15% from 16.6% a year earlier with a grain of salt. The iPhone 4S was delayed from Apple's historical summertime release. Who cares if Google's (Nasdaq: GOOG  ) Android saw its market share more than double to 52.5% in that time? Things would change when the new iPhone hit the market.

Well, the iPhone 4S is out, and Android is still the top dog. Google's operating system is cornering between 46% and 61% of the market in individual markets according to Kantar's research. Even in the U.S. and UK -- where the iPhone 4S has helped Apple nab roughly a third of all smartphone sales -- Android is still the operating system of choice.

Apple bulls will argue that it doesn't matter. Who needs Europe and its sovereign debt crisis? Android is a profitless open source initiative. Apple is the one with the lion's share of the market's profitability. However, Android's success is coming at an expense to Apple.

There are now more Android devices being activated than iOS gadgetry on any given day, drawing developers to Google's less restrictive app marketplace. Wireless carriers are embracing Android-fueled handsets that they don't have to break the bank to subsidize the way that they do with the costly iPhone.

Even in China, where Apple's growth is booming among the well-to-do, things are about to get interesting now that search engine leader Baidu (Nasdaq: BIDU  ) has teamed up with Dell (Nasdaq: DELL  ) for its own modified Android smartphone.

It's safe for Apple to write off Research In Motion (Nasdaq: RIMM  ) as a threat, but don't dismiss Microsoft (Nasdaq: MSFT  ) now that it's forking over billions to have Nokia (NYSE: NOK  ) -- the world's largest handset maker -- champion its Windows Phone 7 cause.

There's a big world out there for Apple, but it can't afford to shrink in key markets.

The next trillion-dollar revolution will be in mobile, and it's easy to spot a winner. If you want to cash in on the upcoming trend, a new report will get you up to speed. Yes, it's as free as this article, but it won't last forever so check it out now.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

The Motley Fool owns shares of Apple, Microsoft, and Google. Motley Fool newsletter services have recommended buying shares of Google, Microsoft, Apple, Baidu, and Dell. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (17) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 22, 2011, at 1:42 PM, techy46 wrote:

    Europeans are much more open minded are very less likely to follow American based fads and hype epecially since they lead the US in adoption of technology. The best software engineering company in the world is based in Germany; SAP.

  • Report this Comment On December 22, 2011, at 1:55 PM, jelp2 wrote:

    Sounds like the beginning of Apples downfall, apparently since RIM said the same thing about the US, "who needs them" and everyone jumps all over them, Apple is on the same trajectory. Apple needs to keep looking over their shoulder because RIM will be getting closer.

  • Report this Comment On December 22, 2011, at 2:06 PM, yogaman101a wrote:

    What do you suppose will happen when Siri learns German, French, Italian, and Spanish?

  • Report this Comment On December 22, 2011, at 2:16 PM, wise2u wrote:

    Yes, SAP is a great company..but a different market focus than Apple.

    RIM, seriously ???

    France, Love em' but really ...does Fiat make a phone? they are not known for technology knowledge, are they??

    Apple is Smart, Cautious, and Calculating and make a seriourly Quality product !!

  • Report this Comment On December 22, 2011, at 2:23 PM, lucasmonger wrote:

    @jelp2

    I don't agree. RIM had smartphones and enterprise servers as their only revenue model. Apple is much more diversified with Macs, phones, music players, tablets, software, music, video, app stores, ads, etc. If Apple sells zero iPhones in 2012, they're still in better shape than RIM's financial outlook as RIM has lost their smartphone footprint and they're scrambling to maintain their enterprise server presence with their newly announced Fusion server.

    Since this is an investing site, think about which company has more value. Google is giving their OS away hoping to make money back from ads through an enhanced mobile experience. Apple is making healthy profits off of their iOS endeavors, not only the phone but the entire ecosystem. From an investing standpoint, you might as well invest in both Google and Apple as both are creaming RIM, Nokia, and Microsoft. It doesn't matter whether you're #1 or #2, just don't be #3 thru #10.

  • Report this Comment On December 22, 2011, at 2:24 PM, deemery wrote:

    There are two pieces of data to consider, and this article addresses only one of them, the proportion of growth for the iPhone. But how fast is the European smartphone market growing? Apple can still make lots of money if it captures a decreasing share of a market that grows faster. In other words, look not only at proportions, but at the growth in number of products sold, to determine the income, and at the profitability per product sold, to determine the profit. Under those terms, I suspect Apple continues to do quite well.

  • Report this Comment On December 22, 2011, at 2:26 PM, rlcato wrote:

    @jelp2: you forgot to put the "/sarcasm\" at the end of your post. You do know that there are vultures circling overhead waiting for a RIM buyout- (and THAT's NOT sarcasm.) Check-out their earnings for the last 3 quarters.

  • Report this Comment On December 22, 2011, at 2:35 PM, CraigNotGreg wrote:

    The iPhone's market share dropped in France, Germany, Italy, and Spain. In the U.S., it rose from 25% to 36%, in Great Britain it rose from 21% to 31%, and in Australia it also rose. Which one of these trends is more significant? Well, we certainly won't know by reading your vacuous story.

    You actually had the opportunity to write an interesting article, but instead took the usual route of putting up a sensationalised headline (which easily could have read "Does America love the iPhone 4S?") and doing no analysis at all. This is a site that focuses on investing, right? I can't wait for your headline after Apple blows out earnings for fiscal Q1. You'll surely find something negative on which to focus: "Apple ONLY sells 30 million iPhones..."

  • Report this Comment On December 22, 2011, at 2:40 PM, bugnuts wrote:

    Typical of Rick's ongoing anti-Apple bias. Nothing wrong with that except he's pawning off his work as journalism.

    Instead of analyzing the situation, he attributes the decline to Europing hating the iPhone. How over-the-top and simplistic. And by the way, last time I checked England has a part of Europe.

    So much for gross generalizations.

  • Report this Comment On December 22, 2011, at 2:46 PM, 1984macman wrote:

    Let's see - not as popular in non-English speaking countries. Hmm. Could it be that Siri doesn't work yet in French, German, Italian, and Spanish?

    DOH!

  • Report this Comment On December 22, 2011, at 2:51 PM, 1984macman wrote:

    Oh, and BTW, Apple can't make the 4s fast enough to keep of with demand as it is. Oh, and eventually, Siri will be available in other languages as well, at which point your vaunted Android phones will once again start eating Apple's dust.

    Apple has one problem and one problem only; how to increase production fast enough to match the growing demand.

  • Report this Comment On December 22, 2011, at 3:09 PM, mmsfo wrote:

    are any of you nay-sayers actually in Europe?? I ride the buses and metros of paris every day, and when you look around you see nothing but iPhones. True, many are 3GS, but many many 4 and 4s. The android phone, regardless of the flavor, is odd man out--especially amongst the young. The Apple store by the Opera iis a non-stop party. Open your eyes people: Apple and iPhone are what every wants & uses in the City of Light, and I'll bet people on the ground in London, Berlin, Rome, and other similar points will concur. Get out of your cubicles my friends, and smell the apples.

  • Report this Comment On December 22, 2011, at 4:58 PM, UralBas wrote:

    The World hates IOs, its too expensive.

    When you make 200 dollars a month and have to pay four months of your salary for an iPhone and you can have a 50 dollar Android phone. You will choose a 50 dollar Android phone.

    Then you realize it does more than an iPhone. The only people that purchase iPhones are those who have money to spare and just want to fit in and be cool. Thats less than 20% of this world.

    Now I ask all those iPhone fans, how cool is it, if everyone like you has an the same... ehhh.. blah!

    Now on Android you have choice, sizes, keyboard, swype, more processors, faster speed, real multitasking. Enjoy!

  • Report this Comment On December 22, 2011, at 4:59 PM, UralBas wrote:

    If everyone has the same phone (iPhone).. how cool is it. Not cool.. it resembles communist Russia. Everyone had a volga or a lada.

  • Report this Comment On December 22, 2011, at 10:12 PM, jelp2 wrote:

    @rlcato-

    I'm not being completely sarcastic. I know what RIM earnings are and they were inline this past quarter. Their phone shipments were inline also at 14.1 million units and their subscriber base grew from 70 million to 75 million in the past quarter. EPS aside, which we all know is being driven by investors and the media, RIM is a profitable company going through some major restructuring. Building a brand new OS for the devices doesn't happen over a few months and like any other project in the world, you are bound to run into some obstacles. They've been battered in the past by rushing devices out to the order of the service providers, (Verizon,Storm line) so what's not to understand if they want a perfect device for launching. Keep in mind that RIM has the biggest gain seen among all mobile platforms last month. So their products do speak to the public outside of the investment world. BB7 is a vast improvement over older OS's and is catching on worldwide with the help of the Curve line of phones which also is the #2 phone worldwide right behind the iPhone, like I said before, Apple better keep looking over their shoulder.

  • Report this Comment On December 22, 2011, at 11:12 PM, ajaykc wrote:

    Well, you can think it as a rumor or truth and it depends on your choice. It will not change the buyer’s behavior but it would certainly cause anxiety among Apple stock traders and they will defend as much as they can. Same thing could be said for BNP paribas analyst predicting NOKIA Lumia failure and a lot of bearish traders love Nokia bashing. I maybe wrong but it could be because of Nokia lumia’s launch. Think about it, a lot of Nokia fans might have chosen other platforms in absense of a good smartphone from Nokia in past few years. Now they got hugh marketing and the sentiment might be changing.

    Above all, maybe iPhones are really not all that cool anymore. Apple dominated the space and bagged huge percentage of smartphone profits because their competitors didn’t offer better products with competitive price but now that is changing.

    Consumers will stick with Apple only if it can keep its products far superior than others or cuts the iPhone prices to compete with others. Apple had already seen its iPhone glory and future will not be all that easy. IPhone margins will drop slowly as this space gets commoditized.

  • Report this Comment On December 24, 2011, at 9:58 AM, cyworld wrote:

    Question: is there any possiblity that NOK can ship not only Windows Phone but also Andriod phone like Samsung?

    I know there is the agreemtent with MS. Just wondering.

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