Google's Android: The Unstoppable Force

Little changed in Q3 for the top two smartphone OS providers in the world. Proving you don't have to like each other to successfully compete in the same market, Google (NASDAQ: GOOGL  ) and Apple (NASDAQ: AAPL  ) continued to rule the mobile OS universe. Android and iOS remained a solid first and second in Gartner's most recent report detailing worldwide mobile phone sales results in Q3.

Even their respective lawyers are pretending to get along, as Google's Motorola Mobility division and Apple wind up their ongoing legal discussions involving the alleged misuse of patents. Google's head attorney, Kent Walker, said, "We have long sought a path to resolving patent issues and we welcome the chance to build on the constructive dialogue between our companies."

Apple's head legal eagle, Bruce Sewell, echoed Walker, "Apple's goal has always been to find a mutual and transparent process to resolve this dispute on terms that are fair, reasonable and non-discriminatory without the threat or taint of exclusionary remedies."

How dominant is dominant?
Now that the two industry leaders are close to sweeping the legal issues under the rug, they can get back to squashing the pretenders in the mobile OS marketplace. Even before the latest numbers were released, Google's Android was far and away the leading OS in the smartphone world. Google owned over 52% of the OS market in Q3 of 2011, with nearly 62 million units running Android (out of the 115 million mobile phones sold). Apple's 17.3 million iOS units was a solid, -- albeit distant -- second, earning 15% of the market.

This year? Of the 169 million mobile phones consumers gobbled up in Q3, over 122 million -- or 72.4% -- were Android devices. Apple's share of the OS world rose by volume, but shrank to a still solid 13.9%.

As Nokia (NYSE: NOK  ) continued phasing out its once-dominant Symbian OS, and Microsoft  (NASDAQ: MSFT  ) did the same with its Windows 7, the BlackBerry OS from Research in Motion (NASDAQ: BBRY  ) leapfrogged to No. 3, selling just under 9 million phones running its BlackBerry system. RIM gained share, but overall sales declined as it bides time until the BlackBerry 10 OS hits, scheduled for release on Jan. 30, 2013.

With the acquisition of Motorola Mobility, and the release of the Nexus 4 in partnership with LG, Google's made it clear it intends on making a splash in the mobile manufacturing scene. Like all smartphones, some features impress, others receive less-than-favorable reviews, but the fact remains -- Google is going to be a force in smartphones. And it's the Android Jelly Bean OS that will drive Google's rise to a leading smartphone builder.

Android's nice, but what about Google as an investment?
Entering the mobile manufacturing market with a splash is well and good, and expanding its OS dominance is impressive, but does that make Google a buy? You bet. Record revenue in the recently completed third quarter, along with adding to its already stellar balance sheet, were great to see. What made the Q3 financials more impressive are the results came even as Google increased research and development costs, and took a restructuring hit for the Motorola acquisition.

With over $2.5 billion added to its cash position compared to Q2 of this year, Google's now sitting on $45.7 billion. Acquisitions are hardly out of the question, but I'd like to see Google give some of that given back to shareholders in the form of a dividend, much like Apple did recently.

Google's continued transition from an old-school search engine, to a diversified technology provider, sets it apart. For a mid to long-term addition to a portfolio, you could do a lot worse than Google -- with or without a dividend.

There is absolutely no argument that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Read/Post Comments (6) | Recommend This Article (6)

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 November 19, 2012, at 9:06 PM, H3D wrote:

    "...Proving you don't have to like each other to successfully compete in the same market"

    Android isn't in a market. Since its not yet good enough to charge for, they have to give it away.

    And giving things away isn't a market.

  • Report this Comment On November 19, 2012, at 9:23 PM, Foolorama wrote:

    While I appreciate your point, there are security holes in the Android open approach and little or no QC to insure that those holes are plugged. Android is a really capable system, but the open strategy does not lend itself to the Enterprise market where security is a top concern. If you were a business and needed a tablet/custom app solution, would you choose to use an Android device? For a paltry $150 per unit - or fast forward to the next iPad Mini - a $50 per unit difference? I'm not thinking so...

  • Report this Comment On November 19, 2012, at 9:50 PM, applefan1 wrote:

    Seems like someone invested in Nokia and is afraid to lose money.

    Q3 was a low quarter for Apple due to impending releases of the iPhone 5.

    The next two quarters are the crucial ones to judge Apple, not the last two.

  • Report this Comment On November 19, 2012, at 10:50 PM, JaanS wrote:
  • Report this Comment On November 20, 2012, at 8:56 AM, magnaman1969 wrote:

    Google's Android OS should be applauded for pushing smartphones into the hands of Joe Average....however that same open source code that gave them the critical mass they have now will be the same thing that drives them into the ground.

    Security will be the pillar of any OS as the market moves to the next stage....leaving the fart apps and mind numbing useless Apps and using their phones for more serious mobile wallet payment tools etc. As more and more personal data is stored and used on our phones....the more security will be an issue. As it stands...Droid is the Malware king and 2013 will see an increase in cybercrime....with Droid as the most vulrenable....and BB10 the most secure.

  • Report this Comment On November 22, 2012, at 4:12 AM, chinaman8 wrote:

    CaEv: Amazon & Google tablets are not eating iPad market share anymore, quite the opposite, the iPad mini is quickly eating Amazon & Google 7" tablet market share.

    Also very few people are buying Lumia's in the USA or China and Nokia has had to drop the prices and will lose money on them, 2% of the market with few apps. Windows 8 in phones or tablets has been a failure so far, and underwhelming on PCs.

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