Apple and Google Are Running Away With It

Research In Motion (Nasdaq: RIMM  ) is losing it. Microsoft (Nasdaq: MSFT  ) feels that it can buy its way in. Nokia (NYSE: NOK  ) is willing to switch allegiances -- at the right price.

These are just some of the many losers in the quest for market share in the booming smartphone market.

Fumble through your pockets until you find your smartphone. Is it an iPhone? Is it an Android? If not, you're probably cradling an endangered species.

Two kingdoms rule the world
Fresh data out of tech tracker IDC leave little doubt that we're living in a world of Apple's (Nasdaq: AAPL  ) iOS and Google's (Nasdaq: GOOG  ) Android.

Of the 152.3 million smartphones shipped during the first three months of the year, according to IDC's Worldwide Quarterly Mobile Phone Tracker, iPhones and Androids accounted for 82% of the market. To put this into the appropriate mind-blowing perspective, the two platforms combined for just 54.5% of the units shipped during last year's first quarter.

Didn't it seem as if Apple and Google were already cornering the market a year ago? Yes, but the growing global popularity of iOS and Android at the expense of older mobile operating systems is finally starting to take its toll overseas.

Nokia-championed Symbian -- a former fave around the world -- has seen its market share slip from 26% a year ago to less than 7% today. RIM's BlackBerry has seen its share of smartphone shipments cut in half to 6.4%. There were more devices powered by Linux and Windows shipped than there were a year ago, but neither platform is growing as quickly as the smartphone market itself. In other words, they too are surrendering market share.

Apple vs. Android
It's hard to complain about Apple. The world's most valuable technology company is the only one making some serious money in mobile since Google pitches Android as an open-source platform to handset manufacturers.

However, even though Apple and Google combine for 82% of the market, there really is just one company that's a threat to run away with the market on its own. In terms solely of market penetration, Android is the Simon to Apple's Garfunkel.

Android accounted for 89.9 million -- or 59% -- of the 152.3 million smartphones that were shipped this past quarter. That's a 145% surge over the past year.

Apple's no slouch. The 35.1 million iPhones it sold during the first three months of this calendar year -- a figure confirmed by the company in its fiscal second quarter -- represents an 89% improvement. Over the past year Apple has seen its share of the smartphone market grow from 18% to 23%. That's great, especially in a growing market, but the chin-scratching reality is that Apple's now a more distant silver medalist.

Apple fans don't care, and rightfully so. Apple's the one making most of the money in mobile. Google's giving it away. However, Apple isn't going to be happy if the Android continues to pad its lead. The moment that developers turn their attention to Android apps first may be a game changer.

Mr. Softy's Hail Mary pass
Windows may be a forgotten sixth-place finisher with just 2.2% of the market, but no one should be surprised if Microsoft pole vaults its way to the bronze medal in a year. Microsoft is rewarding Nokia handsomely to champion Windows Phone instead of Symbian. RIM is on a downward spiral. Linux may have its fringe fans, but there's no one financially backing the platform the way that Microsoft is invested in mobile.

If you've been watching TV over the past few weeks you've been bombarded with ads for Nokia's Lumia 900. Microsoft is taking this seriously, and it's never afraid to cut a big check. Reports earlier this year surfaced indicating that the world's leading software company is paying developers of hot iOS and Android titles to make sure that they back its fledgling platform.

The market seems to be carved in two right now. Apple has the well-to-do and fashion-forward markets covered. Android is gunning for the masses. If Microsoft succeeds -- and that's a big "if" right now -- it remains to be seen if it will simply come at the techie expense of BlackBerry or if it will be truly successful and disrupt Apple and Google.

Then again, why rain on the parade. This is the moment to shine for Android and iOS. Everyone else at this point is just jealous.

Apple jacks
The next trillion-dollar revolution will be in mobile, but the best investing play isn't necessarily Apple. 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.

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

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.


Read/Post Comments (29) | Recommend This Article (91)

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 May 26, 2012, at 5:08 PM, gilsh wrote:

    Apple sure had the lead, but it is obviously losing it to the android herd. The entry of the MSFT-NOK alliance is not something trivial. for MSFT this isn't just a small market share - it is a struggle about its place in the future of computing. NOK clearly sees this as a do or die situation. Considering the way both these players are judged by the business community, it is safe to assume that two years ahead we'll be talking about a 3 eco-system smartphone world, at least.

    The only unknown variable is RIMM. On the one hand, the BB10 alpha seemed quite impressive to me. unlike many commentators who expected to be wowed, I was looking forward to a ripe and mature productivity tool, and the samples RIMM spread around appeared to be the right thing for those who appreciated the brand in the past. And yet, if RIMM fails to deliver a final product to the market till october, when Apple is expected to announce iPhone5, then RIMM is toast.

  • Report this Comment On May 26, 2012, at 8:08 PM, dasstc wrote:

    I know Apple makes money through hardware and App sales. How does Google make money on the Android lead over iOS? Is it purely through a cut from Google marketplace App sales?

  • Report this Comment On May 26, 2012, at 9:11 PM, techy46 wrote:

    The world's most valuable technology company is the only one making some serious money in mobile since Google pitches Android as an open-source platform to handset manufacturers.

    More Appls sauce and cherry picking by Apple fans. Samsung's running away with the smartphone market. Apple's second and Nokia a up and coming third. It's a long way from over and 5 years in the PC race Apple and Microsoft were neck and neck. Welcome to the 2nd PC race.

  • Report this Comment On May 26, 2012, at 10:15 PM, H3D wrote:

    ", Apple isn't going to be happy if the Android continues to pad its lead. The moment that developers turn their attention to Android apps first may be a game changer."

    No sign of that happening.

    No money in Android Apps.

    Android is the system for people who want something for nothing, and place no value on their own time.

  • Report this Comment On May 26, 2012, at 10:28 PM, bsimpsen wrote:

    Android developer numbers are growing far slower than iOS developer numbers. Follow the money, not the units.

  • Report this Comment On May 26, 2012, at 11:44 PM, accelerando wrote:

    As a developer I can say why developers favor IOS. It's simple. The power of one. One OS. One marketplace. One company to deal with. With android it's a gawdawful mess. Each phone has a slightly different version of android than each other phone meaning each app has to be custom tailored to each specific phone. Even amongst samsung phones the OS is not always exactly the same. Updates are handled idiosyncratically. It's a big mess.

    Money is to be made in IOS apps. Much more difficult to make money in android apps. The way I see it, eventually apple will actually win this war. Google would probably do best to cut a deal with apple so that search is done the way google needs it to be done (which is all they care about) inside IOS. If they don't cut this deal, they are going to lose big-time and google's dominance in search based advertising will be a thing of the past (as well as it's 200 billion valuation).

  • Report this Comment On May 27, 2012, at 3:45 AM, alexkhan2000 wrote:

    techy46, you sure are in a clueless denial. This is not the 2nd PC race. The smartphone market of now has nothing at all in common with the PC market of the 80's and the 90's. The comparison is just so absurd that this isn't even debatable.

  • Report this Comment On May 27, 2012, at 3:48 AM, alexkhan2000 wrote:

    @ techy46, one more thing:

    If you were running a business of selling something, would you prefer to make 100 units of something and make $1000 or 1000 units of the same kind of thing and make $100?

    Basically, Apple is doing the former and all the Android makers combined are doing the latter.

  • Report this Comment On May 27, 2012, at 8:04 AM, H3D wrote:

    I think that in 5 years people sill look on the smartphone market as Apple and Samsung and will have forgotten that Google was ever involved.

    Samsung have won the battle as dominant Android supplier, and the rest will fade away.

    Samsung will fork their own version of Android, as Amazon have done, and will gradually migrate it into a proprietary OS.

    But critically, Samsung will sell default search engine and location services to the highest bidder.

    Google will get no return on their Android investment.

    Apple and Samsung are running away with it.

    Google is impotent to do anything about it

  • Report this Comment On May 27, 2012, at 9:00 AM, jafutral wrote:

    I would be more interested in looking at Android broken down, since everyone else you mention are handset makers.

    The only sustained growth seems to be coming from Samsung. HTC poked its head back up a little this past quarter, IIRC, but no one knows how sustainable that is. Since the only Android maker growing and profiting, really, is Samsung and Samsung makes more than Android handsets plus Samsung is investigating other OS options, possibly to escape the ridiculous Android IP fiasco, what does all that mean to Android, except it probably is a pretty darn good thing that Google bought Moto as that may be the only future Android has.

    I do wish someone would really analyze the Android market and find out who really is growing and who isn't as obviously not everyone there is. In other words, since there is no such thing as investing in Android (unlike investing in iOS or Windows Phone via Apple and Microsoft respectively; Google makes money from ads, not its OS), which companies are worth my money?

    Joe

  • Report this Comment On May 27, 2012, at 6:56 PM, ybsofoolish wrote:

    If you are trying to understand this market without checking out Horace Deidu's Asymco blog you are really missing out on some great analysis. Here is the link www.asymco.com

    I think there is a consensus among the readers here that the battle currently is between Apple and Samsung. The income and IP assets currently that this is definitely what is happening.

    There is no doubt that Google is running scared right now. They lack control over the Android platform. There is no other way to explain the $12 Billion that was spent to buy Motorola. According to Horace's break down of Google revenues and expenses for Android, Microsoft already makes more per Android phone then Google does. Google may even lose control over search with it's decision to take on Apple. The beta versions of iOS 6 have shown no google maps included in the software. This is now a strong trend with the Siri beta, and now the Maps beta removing Google from their basis bread and butter: search.

    Google is not dead yet (cue the Holy Grail comment), but no one has yet come back from losing as badly as they are currently losing and taken control of this market. It is the most valuable of all the business markets in the whole world. The largest market with over $1 Trillion in sales per year and still growing rapidly. The bodies littering the field of play include: Sony, Ericson, Motorola, Research in Motion, Nokia, and Microsoft. It is a brutal war with no long term winners. Just 6 years ago 2 of those players were so entrenched and profitable that no one was predicting their demise and Apple was not even a player in this field.

    No one is really running away with this market. The current leaders all could be dead in 5 years without even knowing what hit them because someone else has changed the game on them.

  • Report this Comment On May 28, 2012, at 10:32 AM, Melci wrote:

    Another reason Developers aren't going to switch their attention to Android is that the app platforms are much larger than just smartphones.

    With 6-8 million iPod touches and 11-15 million iPads added to Apple's 35 million iPhones, Apple's iOS platform unit sales are far closer to Android, and with an installed base of 365 million iOS devices versus only 300 million Android devices, the platforms are neck and neck.

    However, the important numbers are developer income, app download numbers, ad income, content and media Marketshare and web browser usage share. By these numbers iOS absolutely slaughters Android.

    94.64% of all tablet web traffic comes from the iPad according to Chitika.

    25% of all mobile web traffic comes from the iPhone versus only 16% from all Android tablets and phones combined according to NetMarketshare.

    69% of all mobile web browsing occurs on iOS devices versus only 27% on Android devices according to Chitika.

    63.2% of mobile web browsing is iOS while only 19.3% is Android according to NetMarketshare.

    7.5% of total web browsing share (including desktops) is iOS versus 3.5% for Android according to WikiMedia.

    90% of mobile purchases were made on iPads and iPhones according to Rich Relevance.

    80% of mobile devices activated by businesses last quarter were iOS devices according to Good Technologies.

    73.9% of business smartphones in use were iPhones.

    The iPad accounted for 97.3 % of business tablet activations for the quarter.

    84% of mobile gaming revenue is now captured by iOS according to NewZoo

    iOS developer revenue is 6x greater than Android according to Distimo.

    New iOS app starts increased from 63% to 73% marketshare while Android declined from 37% to 27% in 2011 according to Flurry.

    What do Android users do with their smartphones and tablets? They certainly don't seem to actually use them.  Evidently the majority of Android smartphones are being used as dumbphones and all those small 7" tablets are obviously no good at web browsing, gaming, app usage, business usage, mobile commerce etc by any of the actual usage metrics available.

  • Report this Comment On May 28, 2012, at 2:34 PM, infektu wrote:

    Appl' and Googl' can not "run away with it", for the simple reason that nothing is permanent today except change.

    And Google has yet to make money off Android, so I would hold my breath to see the quality and frequency of the next OS releases.

    Following this line of thought one could have said in 2007 that the iphone was too little, too late, or the same about the ipod in 2001, just the umpteenth mp3 player.

    (don't get me wrong, I am not saying that Apple is a great company that has invented the sliced bread)

  • Report this Comment On May 29, 2012, at 4:40 AM, Melci wrote:

    @happypoordays

    The freight train is here already and it is iOS.

    90% online e-commerce marketshare, 94% tablet web browser share, 74% smartphone web browser share, 6x the developer revenue, 97% business tablet Marketshare, 74% of the entire cellphone industry's profitshare, etc etc etc.

    Android is a fragmented, low usage, low margin, malware-riddled platform that Apple doesn't have much to worry about.

  • Report this Comment On May 29, 2012, at 4:13 PM, Lumia900 wrote:

    Anyway, Nokia Lumia 900 is the best smarphone you can have.

  • Report this Comment On May 29, 2012, at 4:23 PM, Lumia900 wrote:

    Nokia is a Windows phone and with it you can use your normal work software like MS Word, Excel, Powerpoint and other Windows applications. Notify free navigator around the world. Cristal clear screen is also wonderful.

  • Report this Comment On May 30, 2012, at 6:34 PM, Rover3321 wrote:

    Only one problem with Apple iPhone is that their data security is so porous that any half competent hacker could run a truck through it. So far the hacker community has not shown much interest but when more financial transactions start taking place using smart phones this vulnerabilty will be exploited. RIM may be about to die but their back end is far more secure than either Android or Apple phones and will have some value as an acquisition for some major player

  • Report this Comment On May 30, 2012, at 8:42 PM, erniemink wrote:

    Apple iPhones are proprietary and bloated crap. So are Google androids. I have used the Nokia Lumina and HTC Titan II Windows 7.5 phones with Mango installed through AT&Ts 4G LTE network and they beat the pants off ANYTHING Google and Apple puts out. I have not even bought anything Apple since I was 12 years old and I am going to be 42 in June! Apple is CRAP. Google is a luciferian based company and I dont even use their browser or Gmail anymore.

  • Report this Comment On May 30, 2012, at 9:47 PM, subcientifico wrote:

    As a developer using MIcrosoft platform I am very anxious to use their superior technology on the smart phone platform, now that the partnership with Nokia is growing. Visual Studio is a premiere development environment that supports the smart phone, and the Express version is free. If you are are an attentive analyst you know that Microsoft's revenue from developer products is growing more rapidly than other divisions. The productivity of developers using Visual Studio and NET is outstanding. This is not a messy open source nightmare or verbose ios stuff. So don't be surprised when the bronze that goes to MSFT is a serious win.

  • Report this Comment On May 30, 2012, at 11:10 PM, tnk4800 wrote:

    Of the two, one of them is running straight off a cliff.

    Only the one that buys VHC will win.

  • Report this Comment On May 31, 2012, at 4:23 AM, john795806 wrote:

    Indeed, this is an Apple-Samsung competition. I own Apple stock, but was considering purchasing an Android phone--most likely a Samsung. Why? Well, less expensive, dual SIM. Fact is, Samsung has many many many more phone styles than does Apple. Not everyone is going to want the same screen size, single SIM phone, and Apple effectively offers---ONE.

    Now, if IPhones diversified into say 4 or 5--like they have with their Ipods (not Ipads!)--then I might be interested.

    Truth is, a lot of people buy Android devices without a clue as to how to use them. Not so with Iphones and Ipads--if you shell out the bucks, it's more than a fashion statement.

  • Report this Comment On May 31, 2012, at 12:57 PM, FoolishDIY wrote:

    It is a nit to most people here unless you're trying to understand what drives the underlying technology. The article states "Linux may have its fringe fans, but there's no one financially backing the platform the way that Microsoft is invested in mobile."

    Actually, there is a Linux phone and it's called Android, and its major back is Google. The high performance applications on Android (i.e., nice graphics, video) utilize "native code" in addition to Java; to do so, they rely on the Linux foundation of the phone. Calling it "Linux Mobile" somehow just wouldn't have the same appeal.

  • Report this Comment On May 31, 2012, at 1:52 PM, jvgfool wrote:

    I really like my Windows Phone. MS may not have all the apps compared to Apple, but they have all the ones you’d want (i.e. SoundHound, Spotify, Slacker Radio, Stocks, MS SkyDrive, etc.) You can also access the camera faster than the iPhone.

  • Report this Comment On June 01, 2012, at 12:11 PM, berylrb wrote:

    @jvgfool, same apps on iPhone just different names, heard of pandora and iCloud, also the camera is accessed by a single swipe when phone is sleeping.

  • Report this Comment On June 01, 2012, at 1:08 PM, TheOthermfa wrote:

    Keep in mind, when looking at recent sales figures, there is still no 4G iPhone for Verizon, which owns a pretty big piece of the market. I bought an Android phone to take advantage of Verizon's 4GB-for-the-price-of-GB promotion earlier this year, but will switch to the iPhone when it becomes available. Having used both, I am sold on the iPhone. If we weren't restricted to carrier plans, I would have switched long ago.

  • Report this Comment On June 01, 2012, at 1:09 PM, SirBStardtheVII wrote:

    iHi,

    I read this article, agree with some of it and know I have further useful information to contribute.

    Apple is precisely 2 years away from being totally blown out of the water and then sunk 5000' below the surface of the ocean. They will chucking their phones out apple store doors with $50 bills stapled to them, just to free up shelf space and comply with civic health standards. no joke, this happening for sure. Approx the same time their bottom line is reduced to 1/3 or less of what they got today. Anyone holding Apple stock will have a head full of "really have sold this stuff last week, made a tremendous profit, very smart investment. now how i gonna get rid of this useless paper?

    Why I am certain of this, is that I've been in this buisness for 37 years now, was internet 5 years before it was publicly available to anyone, with 0 academic creds and no military research creds or clearance what so ever. Basically I was born to shred computers till there is smoke billowing out and imminent danger of very dangerous onfire situation. Again, no jokes, just metaphors. And in 2012 there is 1 rule in this buisness. Anything blocking progress at all must be 100% killed ASAP by the cheapest, 100% guaranteed method. 1 mistake, you die. So in this instance, apple had a tight product very high quality for 2 year, still not completely obsolete. But they made 1 mstake the fascisted out and decided to be the supreme quality controller. Instantly 1/2 a dozen wickedly devious ingenious hackers sat down and figured out the most prolonged agonizing death for Apple they could come up with. Then they got busy coding. Now it's done. They can roll it out any moment now. within 3 months everyone who has an income above pure survvabilty mode on the planet will have it crystal clear that anything Android in 10,000x better than anything Apple, and all atleat 1/3 the price of what's coming out of Apple. So everyone ditches apple. Everyone. I scenario, that's it. So hear is so very useful advice, if you have any significant retirement idea involved in Apple, dump all Apple stock now. You made a very smart investment, lots of profit. great. Otherwise your retirement plan will hopefully include a decent quality sleeping bag.

    I am keeping an eye on this site now, I'm hoping to gleam some useful info and provide some useful info.

    Have a great day everyone.

  • Report this Comment On June 01, 2012, at 10:30 PM, IPhonesRule wrote:

    IPhones Rule Period. Use it for everything even collecting credit card sales for my business without a terminal.

  • Report this Comment On June 01, 2012, at 11:29 PM, 4AarvarkBassoon wrote:

    Microsoft views the mobile space as the next "PC". They have a strategy to be the leading player in phone/tablet by 2015. They want your virtual server in the cloud (Azure), work desk top, laptop, home PC, XBox, Media Center, and Smart Phone all to tie together using Win 8. They will be leveraging their desktop monopoly for all its worth to make this happen.

  • Report this Comment On June 08, 2012, at 10:01 PM, 78rpm wrote:

    The MF articles are getting more boring and ignorable. They used to be good. I'm dropping out of this. Who could not have said the same thing and provide a counter argument with themselves?

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