Is Android a Threat to Apple?

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As many iPhone users will reluctantly admit, trying to send or receive data over AT&T’s (NYSE: T) network during peak usage hours can be a real headache. Partly, this is a problem of Apple’s (Nasdaq: AAPL) own making.  After all, it was the company’s decision to launch the iPhone exclusively with AT&T Wireless. Given the popularity the iPhone has enjoyed, it’s no wonder the AT&T network is struggling to keep up.

Now that the latest generation of smartphones powered by Google’s (Nasdaq: GOOG) Android operating system is set to hit the market, that problem may become a bigger headache for Apple. Google has taken a horizontal strategy, and smartphones of all shapes and sizes will be making use of the Android OS. Most importantly, these phones will be available across all four major U.S. carriers.

That’s good news for beleaguered Verizon (NYSE: VZ), which has been making a big marketing push with the “iDon’t”-themed advertisements. That company’s Android offering, the Motorola (NYSE: MOT) Droid, appears set to launch on Nov. 6. Some analysts have also reported that Google will be releasing a self-branded phone by year’s end -- proof that the search giant will not leave its fate entirely to third-party manufacturers.

These new entrants will be competing in a smartphone market that is flush with growth. Smartphone sales grew by 27% in the second quarter of 2009, despite mobile phone sales worldwide dropping by 6.1% compared to the same quarter a year ago. Nokia (NYSE: NOK) owns the largest portion of smartphone market share, mainly because of its numerous product offerings and international strength. Apple has been slowly but surely chopping into that market share by increasing movement of the iPhone overseas. Its European market share increased to 13.6%, up from only 1.3% a year ago.

Nokia still maintains a healthy lead in global market share, but research from Deutsche Bank shows that Apple now claims 20% of the operating profit in mobile devices as of 2008, even though iPhone sales only amounted to a little over 1% of the market. BlackBerry maker Research In Motion (Nasdaq: RIMM) also enjoyed 15% of the profit.

Clearly, high-end smartphones can generate a great deal of profit. With Android 2.0 devices coming to market, Google will soon be partaking in that windfall. By limiting its killer product to AT&T, Apple allowed an opening for the competition -- an opening that Google seems well-prepared to exploit. I’d say that’s a threat.

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  • Report this Comment On October 30, 2009, at 2:34 PM, InfoThatHelp wrote:

    iPhone and Android share the same Unix heritage but differnet OS kernels, iPhone OS is pre-empted from kernel hashing but Android OS allows customizations layer for limited hardware/firmware specializations. It is obvious that iPhone is perfectly suited for rapid agile software development, which is now the global standard for IT and commercial application development - if you cannot deliver the solution within a week then you are out the door. Popularity of tools like Ruby on Rails is ample proof of this rapid agile software development ability. iPhone wins hands down in this category simply because of homogeneous OS stability eliminating multiple versions of the same software, and the clear advantage of advancing the OSX without losing any forward and backward compatibilities without going through tedious and highly destructive consensus needed to change Android being the common platform across multiple implementations often at odds with each other. The growth of OSX in both scope and size is far speedier and smooth than Android can ever be. Of course, by sheer modern technical elements, openness, power and robustness Android is miles ahead and far superior to blackberry OS can ever be.

    The strength in Android is the ability to allow internal specialization that are compulsary for eneterprises. Enterprises must not depend on single sourcing of either hardware or software vendors, Rim's business model has been violating this enterprise requirement for a long time and enterprises large and small are abandoning this Rim stranglehold as soon as they can. Android allowing enterprise specialization is the messiah enterprises have been hoping for. Contrary to commercial products and services which address general purposes, enterprises look for establishing their own strategic advantages by differentiating their product and service offerings in order to competeand survive, this requires customizability and specialization inherant in open source Android, not OSX, and most definitely not Rim blackberry.

    The future will not change, Apple will be very dominant for general purposes with very strict frameworks for custom programming perfectly suited for rapid agile software developmental application needs, and Android will be very dominant for enterprise level specialization infrastructural needs addressing behind the firewall enterprise applications, interfaces, enterprise services. That means Rim is definitely out.

  • Report this Comment On October 30, 2009, at 2:46 PM, daveshouston wrote:

    Google's direct competitor is Microsoft. Phone manufacturers like Motorola and HTC can choose between Android and Windows Mobile. Google should win that one because has Linux underpinnings and is open source. Android is the better platform for developers and for users. It's also comes with a much more attractive price tag. It's free whereas Windows Mobile is not.

    Microsoft knows they're playing catchup and they've announced Windows 7 Mobile. They're going to have to make it a whole lot better than the current version 6.5 to have much of a shot. And time is working against them.

    Apple will compete indirectly with Google. Overall smart phone market growth is expected to be so strong that both companies have plenty of room to succeed. Apple has several advantages that seem somewhat overwhelming to me: 1/ The App Store ecosystem already offers 100,000 apps for download and there have been 2 billian downloads to date. Talk about momentum. That's huge. 2/ The iPhone offers developers an attractive proposition. Apple takes care of sales and marketing and takes a 30% cut leaving developers the lion's share at 70%. So far there is only one version of the iPhone so developers only have to develop one version. The Android and Windows Mobile markets are going to fragment with many different phone models and manufacturers and cell phone service providers all trying to differentiate their offerings. This will mean many different versions of most software apps. That's not nearly so attractive to most developers.

    The iPhone is the standard now. Customer satisfaction is way higher than any other smart phone. The ecosystem is well established and they are years ahead of the competition. It's the iphone against a confusing and fast changing list of also-rans. Even Sprint's CEO was quoted to say, "The iPhone is the Michael Jordan of smart phones." That's a high complement from a competitor.

  • Report this Comment On October 30, 2009, at 2:49 PM, tgauchat wrote:

    @InfoThatHelp -- terrific comment! You really highlighted the differences in the platform.

    But keep in mind that such differences can change pretty quickly. Remember how quickly Mac's changed from PowerPC to Intel !

  • Report this Comment On October 30, 2009, at 2:49 PM, InfoThatHelp wrote:

    OSX, Android, webOS, and a host of rapidly emerging technologies are speeding up the obsoletion and demise of Research in Motion, from both commercial and enterprise business segments. Rim has no future, or alternatives without suffering losing at least 98% of its assets and client bases. Rim is going bankrupt, perhaps it would re-emerge as a hockey team (non NHL) called the Kitchener Blackberrys?

  • Report this Comment On October 30, 2009, at 3:23 PM, silivalley wrote:

    How does an OS become a threat to a product?

    Android is an OS that allows manufacturers to customize and adapt to their devices. Android by itself is not useful.

    The questions should be whether these new devices created by Motorola, Nokia, Sony and any and all Android users will begin to truly address consumer needs. These are the devices that will compete with iPhone.

    The competition then will depend on what these companies bring. Motorola started with RAZR but failed in having an overall strategy. It shipped a phone and left it at that. Does Motorola have a solid tract record in delivering consumer grade software solutions based on a coherent encompassing long term strategy? Nokia? Sony? HTC? LG?

    All but Nokia are incapable of building their own mobile OS. None, including Nokia, are known for their software prowess. How do their products suddenly become threats to iPhone?

    Competitors, yes; threats, no.

  • Report this Comment On October 30, 2009, at 4:01 PM, InfoThatHelp wrote:

    Hardware is the body, software the spirit, OS is the mother of all software binding all software with the underlying hardware which is just a corpse without spirit. Case in point: blackberrys have a small screen because the blackberry OS provides only up to a small amount of pixels from the graphics chip controlling the screen. The storm requires a separate version of OS to bind the hardware to the software making the majority of existing blackberry software inoperable on the storm. Even the browsers for the bold and storm are different from the curve. With Rim pumping out 'new' models like popcorn, Rim has introduced a wild out of control for its engineers, developers, and even system integrators and 3rd party partners. Therefore Rim created the huge mess of storm with hundreds of bugs and problems, tour with 50% return rate, Rim servers crashes hanging thousands of email users, Rim's RMA customer return blackberrys is by far the busiest Rim application and its costliest because of hardware/OS/software/security defects. You tell me how important the OS is!!!

    Apple's super smooth, powerful, robust, scalable, portable, extensible, flexible OSX is the envy of IT and high tech industry, with OSX Apple can commend hardware the size of a nanobot, all the way to super complexes the size of Cape Canaveral NASA Space Center as well as grid supercomputing clusters spanning intergalactic planet systems concurrently. Unix is the power behind hardware, firmware, software, applications, tools, utilities, and services. Do not misunderstand what an OS is, it gives life and meanings to all things electronic.

  • Report this Comment On October 30, 2009, at 4:34 PM, sgmsg wrote:

    Funny Article

    A guy ask a question , and bring his analysis.

    But commenters, gave them "Is Android a Threat to Apple?"

    After that commenters make the jobs for the "journalist". Pretty vicious ways to analyse a stock.

  • Report this Comment On October 30, 2009, at 7:57 PM, silivalley wrote:

    We need to be careful with the OS focus. There has been too much misunderstanding already like BLOG claiming how cloud computing is "replacing OS" and how WebOS is the "best". Both are wrong.

    Too many BLOG and "analysts" and media type are posing questions or voicing opinions without first understanding the basics of what they wish to discuss. They are misusing terms and mixing concepts.

    From strictly engineering point of view, operating systems, be it UNIX, OS/X, WIndows, AIX, Hp-UX, Linux or whatever "X" there may be, are all useless unless they are on a machine that can do real work to solve real problems.

    The software and the hardware must work hand in hand, one is useless without the other.

    Over the past 30+ years, we have seen how hardware limited software development (12 Mhz CPU, 64K memory) and then software hampering hardware capabilities (multiple CPU, multi-core architecture). One pushes the other and both must advance hand in hand.

    The same is happening now in mobile devices. We have Android, iPhone OS and WebOS competing against each other.

    The best OS under the hood is useless if the UI is bad. Imagine OS/X Snow Leopard with Grand Central running on a multiple CORE 3+ Mhz box with the UI of a plain vanilla old-style UNIX console. What is the use of having a thoroughbred OS under a UI that supports only command-line operations and shell scripts?

    People used to tout how fast INTEL PC's were when Apple was shopping its old OS on PowerPC's. A host of us continued to buy Mac's. Why? Because the UI on the Mac was efficient and simple and let us focus on our tasks. As end-users, with a powerful UI, we could afford to ignore the OS underneath. This is a complement to any engineer who builds OS and UI.

    Windows at the time had a UI philosophy of ceaseless dialog boxes for everything. Doing a simple task could result in having to answer 10+ dialog boxes on the screen. I had to build our product for it but I hated that sort of stupid UI.

    This article's title asks if "Android is a threat to Apple", it is a meaningless question because it is too broad. What was the intent of the author of the article? Was it to cover the very broad issue of a new operating system threatening Apple as a whole? Or are we comparing individual products?

    Discussing Android against Apple would mean discussing the technical details of Android and how that could impact Apple's OS and products. Is that the intention? I doubt it.

    So we need to clarify the terms and definitions and understand the scope of our discussions. Otherwise, it is a lot of hot air and readers not familiar with these technical terms will become more confused.

  • Report this Comment On October 30, 2009, at 10:30 PM, InfoThatHelp wrote:

    In today's market consumers need to be equipped with a short list of important ingredients that help them choose which smartphone to buy otherwise Verizon would lure them into buying a blackberry and getting a free blackberry convinced that it's a good deal yet he truth is anything but.

    It's important to know how a smartphone relates to an OS because everything you want the smartphone to do for you would be dictated by what OS you use on your smartphone. To keep it simple, an OS is the essential processes within the smartphone which start, respond to your actions, and shut down your smartphone. You act on the smartphone by manipulating the controls and icons on the screen, your actions on the controls and icons are dictated by the OS behind the controls and icons. Messages and statuses caused by your actions are direct results from the OS. The controls and icons are merely conduits.

    iPhone has its own OS, blackberrys has its own, Android is created for any smartphone which can use as its OS. Apple or blackberrys can use Android as OS if they choose to, that choice would make the controls and icons on the iPhone and blackberrys to look and behave the same as other Android smartphones with very little differences.

    The reverse is also true for blackberrys to use the iPhone OS and iPhone using the blackberry OS, the only process that is needed is called 'porting' where the developers would make changes to adapt the OS to the hardware while maintaining the way the controls and icons behave. The major concern is legality. Android has waived its restriction from smartphone makers in using Android as the OS but Apple would sue you if you use iPhone OS without Apple's legal consent. Because of the direct relationship between the controls and icons and the OS, buying a smartphone is heavily dependent on which OS the smartphone is pre-installed with. Most programs and apps are written for one and only one OS, these programs and apps are downloaded and self-installs by your action, the programs and apps show up as icons once they make their presences known to the OS, and you can get to use them after the smartphone boots up with the OS being fully operational.

    Blackberrys are old outdated, inflexible, limited, and buggy with only a few apps because the blackberry OS is old outdated, inflexible, limited and buggy. The iPhone is cool, powerful, easy to use, lots of apps, because the iPhone is cool, powerful, easy to program with. So you would want to buy the iPhone mainly because of the iPhone OS. The blackberrys are too yesterday and it is almost impossible to rewrite the blackberry OS.

    I hope this helps.

  • Report this Comment On October 31, 2009, at 11:27 PM, UralBas wrote:

    Admob results prove that Android G1 is better for surfing the net compared to Iphone 3g or 3gs.

    Even though T-Mobile is the only significant player in September 2009, they had 5.5% of the requests with the Magic in the US/UK and internationally, yet they represented 17% of the Traffic (3.0 Traffic per Request). On the other hand Apple controlled over 28% and handled only 48% of the Traffic (1.7 Traffic per Request).

    Which clearly shows that the G1 handled more traffic per request.

    The Month of September also showed that Apple's Gains did not increase, yet Android (more so G1) traffic and requests increased.

    So, what this shows, is that once the public realizes that Android is a better system to surf the net on, they will start using it more. Large corporations and four major telcos in the US have recognized this and have offered their support. 2010 will show this trend, where Android will cut into Apples share along with RIM and once that momentum starts, Apple will find it hard to stop.

    On to of that you add usefull applications like Google Navigation, Google Map, Google Voice, Google Wave for google phones, and Apples Itunes (which will appeal for those who collect movies and songs) will become insignificant. Specially when you can have any song you request over the internet on services like Imeem, YouTube, etc.

    Luk Luk offers movies on demand, you can watch TV with a rusian app. You can natively tether and android phone, pdf reader is there and Flash is here now.

    And when you consider that most apps for the Android are really useful and today has 14608 applications and a lot of others that are not on the Market like onetouch root and PDANet. This only with the G1/Magic/Hero ~ 2 millon handsets Worldwide.

    Once this number goes up to 20+ millon in a few months. The lead that Apple has will vanish and the momentum will be with Google with services that no other company can provide now. Apple and Microsoft maybe able to accomplish this medium term, but not now.

    You finally add the possibility to use your phone as a credit card, and then the explosion will begin and whom ever gets there first, will have gained global dominance that will be hard to overcome.

    Apple is about to loose a battle it had won, hard to believe, but it will happen.

  • Report this Comment On November 01, 2009, at 2:08 AM, InfoThatHelp wrote:

    Android has the same problem as blackberrys. Most blackberry owners has briefcases full of blackberrys because the storm only runs some storm programs, the curves don't have a full browser like the bold and the storm. The old blackberrys cannot run new blackberry programs because blackberrys only have backward compatibility not forward.

    Android handsets will have the same problem. App 'x' would work on HTC only while app 'y' only on Moto, app 'z' only on Samsung etc. Android users who want to use apps 'x' 'y' and 'z' would have to buy HTC, Moto, and Samsung. Or they would have to figure out a combination of which apps matching which Android handsets to buy.

    There is only one iPhone which has both backward AND forward compatibility, plus all iPhone apps are written once, run forever on any past and future versions of iPhone, whether if old or new iPhone apps, plus the iPhone apps are great gems that are dirt cheap so automated and easily downloadable from the App Store supported by millions of ever getting cheaper but more capable and always available programs + increasingly big professional software houses, the Apple software is big, always running with fresh stars and classic workhorses from all over the world using the same fantastic OSX and SDK, Apple's class act software show is impossible to beat which comes with a foolproof future that is quickly becoming the universal standard for mobile applications for all kinds of purposes and all kinds of customers. iPhone apps are going to be in the billions, and the App Store downloads will be in the trillions very soon.

  • Report this Comment On November 01, 2009, at 10:39 AM, UralBas wrote:

    LOL... InfoThat doesnt help... I do that and more... with a G1 thats why the 3gs was scrapped and is used as a paperweight.

    Now if you want to play games... yeah.. have fun with your Iphone. As a serious phone for business, it just doesn't cut it.

    As a game machine or a machine that plays videos... Kudos to it.

  • Report this Comment On November 01, 2009, at 2:38 PM, Timerline wrote:

    It would appear that google is getting reaqdy to do the same thing to apple in the smart phone market that microsoft did to apple in the pc market back in the nineties.

  • Report this Comment On November 01, 2009, at 8:09 PM, InfoThatHelp wrote:

    Actually I specialize in porting existing Unix and Linux application systems from AIX, Solaris, HPUX, Red Hat, SuSe, BSD, OS 9, System V, AS/400 to OSX first, and some of them to iPhone OS. These are production systems running on many minicomputers but due to the outragiously cheaper Mac and iPhone platforms thousands of these application sytems are being ported to OSX and iPhone machines. My business is booming experiencing 1600% growths. But since porting is very labour intensive effort requiring very steep expertises, my business clients have to wait as we port the Unix systems one at a time with rigorous testing and integration.

    No, the Apple machines and iPhones are full fledge Unix machines that make the blackberrys look like Nintendo toys that happen to send and receive emails and messages.

  • Report this Comment On November 02, 2009, at 9:08 AM, srpfool wrote:

    Silivalley misses the point entirely.

    Yes, everything you say is technically correct, but you are being far too literal.

    When people say 'is android a threat to iphone' they mean the new series of devices running android. Android is a useful tag for this conversation because it groups devices into an identifiable set that is recognisable by consumers.

    The question is, are all these android powered devices a threat or not. I think they are, and it's not because of the steering wheel or the clutch or the leather or the radio. It's because of the car.

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