This Cyber Monday Sale Is the Best Way for Google's Android to Surpass Apple's iPhone

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The Moto X, the flagship handset from Google's (NASDAQ: GOOGL  ) subsidiary Motorola, will be on sale this Cyber Monday. Motorola will sell an unlocked version of the Moto X for just $350, the same price as Google's own unlocked Nexus 5. T-Mobile (NASDAQ: TMUS  ) subscribers should find the deal especially enticing, given that their carrier no longer subsidies smartphones.

Although Google's Android dominates the globe, in the U.S., Apple's (NASDAQ: AAPL  ) iPhone remains the premier smartphone platform. Selling cheap, unlocked Android smartphones would be the easiest way for Google to change that.

Apple's iPhone dominates the U.S.
On a worldwide basis, Android absolutely crushes Apple's iPhone in terms of raw numbers. More than 80% of recently shipped smartphones ran Google's mobile operating system, while about 13% were Apple-made handsets.

In the U.S., the gap is decisively smaller, but there, too, Google's Android has the edge: about 52% to 40%. Yet in terms of quality, Apple remains on top -- Western mobile developers still seem to favor the iPhone; hit apps such as Tinder and Plants vs Zombies 2 remained iOS-exclusive before eventually being ported to Android.

Usage statistics seem to suggest that Apple's iPhone is preferred by more affluent, tech savvy users; analytics data from IBM and Adobe showed that iPhone owners spent more money shopping online during Black Friday than did their Android-handset owning counterparts (via Business Insider).

Moreover, once a consumer becomes an iPhone customer, that consumer is unlikely to switch. Recent studies from both Yankee Group and Consumer Intelligence Research Partners found an unprecedented level of loyalty among Apple's customers.

T-Mobile subscribers don't like Apple's iPhone
But there's one way this could change: more quality, unlocked Android smartphones. For a subscriber on a major carrier, choosing between Apple's iPhone 5c and Motorola's Moto X is a toss-up: Both phones boast similar specs and cost about the same on a two-year contract. Unless you really want a custom paint job, or a 0.70-inch larger screen, you'll probably go with Apple's device.

But when there are no subsidies involved -- when customers have to pay the full cost of their handset upfront, or else in varying monthly installments -- they seem to be much more likely to go with a phone sporting Google's operating system.

Last quarter, just 21% of the smartphones T-Mobile sold were Apple-made. In comparison, more than half the smartphones Verizon Wireless sold were iPhones. One plausible explanation for the discrepancy seems to be the difference in subsidies -- Verizon Wireless subsidizes phones, and T-Mobile does not.

A new T-Mobile subscriber opting for the iPhone 5c can either purchase the phone upfront for $550, or pay for it in installments over two years (in addition to their regular bill). But either way, they must ultimately pay the entire cost of the phone. Buying a cheap, unlocked Android handset, then, would be a much better deal for a T-Mobile subscriber -- either Google's own $350 Nexus 5, or Motorola's Moto X on Cyber Monday.

T-Mobile is the smallest of the nation's largest carriers, but it's growing the fastest. Investors in the sector should closely watch its continued rate of growth, and the percentage of iPhones it sells.

Will Google push unlocked Android?
Offering cheap, yet quality, unlocked Android handsets would be the easiest way for Google to overtake Apple in the U.S. market. As long as consumers remain dependent on carrier subsidies, they're likely to chose Apple's iPhone. Yet when they're responsible for their handset's entire cost, they seem much more willing to consider Google.

It's only one day, but as a subsidiary of Google, Motorola's unlocked Moto X sale is notable. If Google continues to push this strategy, Android could eventually overtake Apple's iPhone in the United States.

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Read/Post Comments (9) | Recommend This Article (1)

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 01, 2013, at 2:05 PM, spyfly2 wrote:

    More of the same predictable fluff from Sam.

  • Report this Comment On December 01, 2013, at 2:27 PM, TheWick wrote:

    Is this an analysis or a sales and marketing strategy recommendation for Android handsets. What exactly is the purpose of this article?

  • Report this Comment On December 01, 2013, at 3:54 PM, iphonerulez wrote:

    It is true that the big investors do favor Google over Apple by a wide margin. I have not seen one fundamental metric that would indicate Google's share price should be worth nearly twice Apple's share price, so I suppose Google was able to convince investors though lobbying to pay twice as much for one share of Google rather than buy Apple.

    Google has become the high tech darling of Wall Street while Apple has become just another toothless old hag. Market share seems to mean everything to big investors and Android is drowning iOS in a flood of cheap devices. That's what Wall Street likes to see. They're sure Apple is going out of business because Google and Android can do no wrong and Android devices will eventually have 95% of global mobile market share if the devices are sold cheaply enough. High quality products mean nothing to Wall Street. They want consumers to buy cheap junk and I feel sorry for America with people like that in power.

    I still see Apple struggling to survive with a $500 billion market cap and $146 billion in reserve cash. Apple appears ready to collapse at any moment as soon as the next unlocked Android smartphone is sold.

  • Report this Comment On December 01, 2013, at 4:30 PM, cullendugan wrote:

    There's a lot of mention of T Mobile service and the iphone as in reference to sales and preference. Just a side note but T Mobile just this year started offering the iphone as a supported platform with the exception of porting an iphone 4s or later model from another carrier prior to this year. And remember that the iphone was initially an at&t exclusive only gradually leading into Verizon and now on to T Mobile. So it really hasn't appealed to a much larger audience especially since T Mobile was apart of one of the largest International telecommunications company Deutsche Telekom.

  • Report this Comment On December 01, 2013, at 5:10 PM, chadlowe1000 wrote:

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  • Report this Comment On December 01, 2013, at 9:51 PM, chuckhall wrote:

    u pay all that money 4 a iphone an u can,t put wat u want on it without iTunes wit android u can do that wit out I tunes movies music and u canmake them ur ringtone if u like no progrm

  • Report this Comment On December 02, 2013, at 12:37 AM, symbolset wrote:

    Hey, Sam

    I'm a big Android fan too. And T-Mo. But there is no way on Earth Moto has built and positioned enough resources to sell enough phones in December to move the iPhone share needle a significant amount. They just don't have that kind of money.

    All the Android builders together may achieve something magical this month, but let's wait and see those January reports before we say what they hold. It has never been trickier to call a race.

  • Report this Comment On December 02, 2013, at 2:31 AM, johnestromjr wrote:

    Apple doesn't "cook" their specs like Samsung, HTC and several other who were found to have cheated to make it appear they DID meet their specifications.

    There will always be people who think buying cheap is being smart. Most end up regretting that decision. Apple still gives THE best experience - or so say the experts who survey customers of Android and iOS.

    There in nothing wrong with the Google Moto X but if you want the best experience, the highest trade in when you go to buy a new device, more apps, better apps and the most value for your money - you buy Apple. If you're cheap or you just can't afford an Apple - you buy Android. But there is NO Android device that stands up to Apple. None. And the world is not clamoring for the newest and latest Android device. In fact there is hardly a ripple when a new Android device is released since they have a new one about every week. Android is perfect for the 'herd' or those that can't [or won't] pay for the best.

  • Report this Comment On December 02, 2013, at 5:42 AM, brownyamiga wrote:


    There in nothing wrong with the Google Moto X but if you want the best experience, the highest trade in when you go to buy a new device, more apps, better apps and the most value for your money - you buy Apple


    Hmm, you seem out of touch with the reality. Currently, Android devices exist in much more variety and much better specs than anything that Apple offers. If you want a device with a really big screen? Apple does not have it.

    Want OLED for display technology (better than LCD, less power usage, no lag, no reduced view angle?)

    Again, Android is the only choice, Apple has no products that can do it.

    Want to use NFC to scan smarttags, for access control? Same thing.

    Apple has been trying to sue Samsungs behind off, because they know that they cannot compete on technology anymore, they are too far behind.

    So you think that Android is for cheap devices only? Nope, not so, I am owner of a Galaxy Note, a 5.3 inches smartphone, that has a wacom digitizer tablet built in, so you can take notes on it (pressure sensitive), this is by no means a low end device, quite on the contrary) and again, I couldn't have gotten this with iOS from Apple even if I wanted: Apple is not offering much choice really. This might satisfy the simpletons that have little or no clue about what they want to do with a phone, but not somebody that is a little more demanding.

    Another example? I flew to Europe recently. Took my Samsung Galaxy Note with me and 4 charged batteries, that I replaced during the flight, so I could use the phone nonstop, during all 18 hours of flight. And then of course, you do know that Apple does not allow you to change the battery of course.

    A little detail that makes Apple much money (you have to throw away the phone once the battery dies, which we all know is after like 2 years), but as a customer this only annoys and hinders me to use the device.

    Another detail: SDcard slot. No Apple device has it.

    And so if you want to buy an iPhone, you pay 200 dollars extra for 48 GBs of storage.

    In my Samsung, I got this for mere 50 bucks, and that was for 64 GBs. Secret? I just go to Frys or newegg and buy a SDcard, it is all standardized. Once bigger cards come out, I can easily use them.

    So it is not just a matter of higher quality for Apple devices, no, many times, as seen in my examples, it is just PLAIN SIMPLE RIPOFF, where you get storage but you pay more than 4 times more for it.

    People are not stupid and can do the math. Doing a bad business deal and buying an overpriced underpowered product does make you feel stupid and so people avoid it.

    Besides the high level devices, what about the low level? How about having a smartphone that costs little? Apple only offers expensive devices, they don't give you a choice. So if I want a backup phone, for the car, why would I want to invest lots of money in a Apple product when I can get something sufficient for half the price?

    Apple is a little bit like Rolls Royce, they keep their products expensive and they only cater to the high level luxury level. And Toyota makes a lot more sales, because their cars are affordable. And like Apple, most people maybe think of buying an iPhone, but when they see the price, the get an Android and it performs exactly as well, because these people really don't care, it just has to be good enough. And with the last (not even the currentl) release of Android, it is a truely excellent OS that frees you from many restrictions of the Apple Ecosystem and apps are cheaper too across the band, while they do exactly the same.

    If you are a dyed in the flesh Apple fan and love the brand, that is good and right for you, but don't pretend that you are objective and that you talk for the majority of global smartphone buyers.

    And I wonder when and how, but the shrinking share of market of Apple devices might become a huge problem for them. They might work themselves into a niche, very much like a luxury brand. With a loyal following, but very very marginal and small.

    By keeping profit margins record high and prices too, and "milking the market" Apple is killing more and more market share that goes to Android.

    And why is the Apple market share so high in the USA? Well, for me it is clear that their marketing is strongest here and without it, you can see what happens when the magic goes away, when you don't have a voice telling you that Apple products are magical and more than just a device. When people find out, that well, no, they are not more than a simple phone and mobile computing device. No, it does not make you a better smarter wiser person if you buy Apple, no, it won't improve your life and solve all your problems ;-)

    And I wonder what will happen when devices get cheaper and cheaper, when you eventually have as much computing power in a mobile phone as you will ever need and more, in a 100 dollar device (the same happened with desktops and laptops) and the profit margins of Apple will constantly shrink and paying double or tripple as much for an iPhone becomes more and more absurd.

    Apple won't die in a long time, that I am sure. They got a cult following, excellent branding that reaches cult levels, a thing that usually is not possible for electronic devices. And the fact that their devices are stagnating is not being noticed by the crowd that buys them. They will buy it anyway, will stand in line even if the device is the exact same thing as last year with no improvements. They listen to the marketing and the marketing tells them that it is better and so it is.

    And with that and all that money in the bank, they can hang around another 10 years without doing any new innovations that are now pretty much done on the Android front. And people will keep buying them. But then, eventually, when the fame and momentum has run out, we got a Blackberry or Palm at our hands, a Yahoo, a company with a lot of past fame, but no current relevance or achievements.

    I'm surprised at what happened when Jobs died. I would have assumed that the company would keep going, that he trained and indoctrinated staff to follow in his footsteps, but that might not have been possible and even though I would not have expected this, it might be that Apple has now lost their spark and this time for good, as Steve cannot ride back to the rescue, like back in the nineties, when he had to save Apple from breaking thanks to unimaginative managers that ran the company into the ground.

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