Android Becoming the King of Mobile

According to new Nielsen data, not only is Google's (Nasdaq: GOOG  ) Android the most sought-after smartphone operating system among U.S. consumers, but recent buyers are also choosing it 2-to-1 over Apple's (Nasdaq: AAPL  ) iOS handsets.

The data marks a reversal for the Mac maker. Last fall, 33% said they wanted an iPhone, versus 26% for Android and 13% for Research In Motion's (Nasdaq: RIMM  ) BlackBerry. Today, 30% want an iPhone and 31% want an Android handset. Only 11% say they desire the BlackBerry.

More discouraging is Nielsen's survey of recent buyers:

Talk about daunting. Android's broad array of choices has made it the Windows of the U.S. mobile market, and a legitimate challenger to Nokia's (NYSE: NOK  ) status as top dog worldwide. Apple remains a strong yet niche supplier.

But is that really so bad? Here are three reasons why I think Apple shareholders can sleep comfortably:

  1. Apple's share of the U.S. installed base (27%) is roughly in line with its share of new purchases (25%). Android may be nibbling at iOS, but that's about it.
  2. According to recent Gartner data, smartphone sales soared 72% last year, yet still accounted for just 19% of the total market.
  3. In-Stat predicts that half of all handsets sold in the U.S. next year will be smartphones. Most of those sales will be for Android-powered handsets, but there's no indication that those sales will come at the iPhone's expense.

Unless they do -- which, again, I think is unlikely given the data -- Apple should sell tens of millions more iPhones into a rapidly expanding market, just as it did last quarter.

Do you agree? Disagree? Tell us what you think about the war for smartphone market share, the rise of the Mobile Web, and the iPhone's competitive positioning using the comments box below. You can also rate Apple in Motley Fool CAPS.

The Motley Fool recently introduced a free My Watchlist feature that allows users to stay ahead of the curve, receiving up-to-date news on companies like Apple and Google. You can add both stocks to your watchlist today:

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Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. 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 owns shares of Apple and Google. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy can do the robot, but not the Android. Wait. Is the Android a dance?


Read/Post Comments (7) | Recommend This Article (8)

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 April 28, 2011, at 8:13 PM, DefunctAcct wrote:

    I work on both Android and iOS, so they are both viable business opportunities for us. That said, it is unclear what this "King" title really means. It is an empty claim that does nothing for an investor.

    Apple revenue from smart phone sale now eclipse Nokia's total revenue and profit.

    Apple, according to NPD, is now third largest phone seller in the US at 14% behind LG at 18% and Samsung at 23%.

    Apple revenue and profit are more than that of Microsoft.

    Apple sold 18 million iPhone 4's and 4.6 million iPads to Motorola's 4.6 million combined-Android-based phones and 250K Xoom. There is significant iPad 2 backlog that will be counted for this quarter.

    NPD further claims that iPhone 4 and iPhone 3GS are the #1 and #2 device in sales in the US over the past quarter.

    So, is Motorola Mobile experiencing rapid growth in revenue and profit margin? Is HTC? Is LG Mobile? Is Sony-Ericssion? Is Samsung Mobile?

    I cannot invest in Android, nor do I measure my GOOG shares in terms of Android, so I must look at Motorola and the rest individually. How does Android being KING or NOT-KING help me in such analysis?

    SOmeone could argue that the market share could tip the developer towards Android. I find two large flaws in that argument.

    We are a software house making custom software for clients who service end-users. We are not seeing any decrease in demand for iOS apps and Mac OS/X applications. If anything, iOS surge has caused a corresponding surge in OS/X adoption in Asia. So at the street level, iOS is doing fine and will push developers to respond. They cannot possibly ignore 100+ million iOS users.

    Second, Apple has paid out $2 BIllion to developers. How much has Google paid? Motorola? HTC? Sony? Samsung?

    Developers cannot ignore a huge market; especially one that pays so well!

    In conclusion, it is clear that Android dominating the market means very little. Just like Nokia dominating the market means little to nothing and RIM dominating the market also means squat. In the end, it is about growth and profit margin.

    Who is growing in leaps and bounds over the past 20 quarters? Who is seeing a healthy profit margin all through those quarters?

    Whose product is sold out yet again, on the first day of release, in Asia? Whose product is seeing lines in Japan, even after a recent traumatic experience?

    Does Android being King really matter?

  • Report this Comment On April 28, 2011, at 9:03 PM, kramsigenak wrote:

    Thank you silivalley. It's amazing when the comments below the article are more cogent analysis and better insight than the column above. Stop trying to compare android "sales" to iPhone. Doesn't work that way. Do you think lg or samsung would eager be Apple?? ah-yuh.

  • Report this Comment On April 28, 2011, at 9:04 PM, kramsigenak wrote:

    Would "rather" be Apple (curse that auto-spell:)

  • Report this Comment On April 28, 2011, at 9:19 PM, Fungpee wrote:

    I'm in the Help Desk of a Fortune 500 company and I can tell you that we've switched over half of our smartphones from the Blackberry to the iPhone. We didn't even bother to consider the Android because it's so fragmented and there so many different versions out there that it would be a support nightmare. In a large company, you want uniform standards and Apple gives us that. Plus, the interface is so intuitive that even an executive can work it (sorry boss). So look for growth not only in the consumer sector but also in the business sector as more and more companies begin to adopt the iPhone (and iPads too) as their standard mobile device.

  • Report this Comment On April 28, 2011, at 10:28 PM, zymok wrote:

    Fungpee -

    You can dictate the use of an iPhone or Blackberry, but you can't dictate the use of a particular Android phone? How does that work?

  • Report this Comment On April 29, 2011, at 11:44 AM, daveshouston wrote:

    What you need to understand about Android is that Google gives it to manufacturers for free (really for a guarantee that their Google search advertising will be on those phones). Google doesn’t really make much money from smart phones - just the ad revenue. Each of the many Android manufacturers is competing against each and every other Android manufacturer in addition to Apple, Blackberry, Nokia, Microsoft, and HP/Palm. Android is open source so they can make modifications to try and differentiate their version from other Android competitors. The result is a lot of fragmentation. An app designed for a touchscreen, for example, can’t run on a phone with a physical keyboard without modification, and vice versa. Because they’ve tweeked the basic Android O/S they’ll unwilling or unable to promptly make available each new release fro Google. This means different phones are running different versions of the OS — another big problem for App developers who would like for their apps to run on all Android phones. Apple’s app store is curated. This means that someone from Apple must look at and approve each app. Anyone can put up anything on one of the many diifferent Android app stores. All of this means that Android devices are much more complicated for the user than iPhone/iPads. The user needs to have some technical skills to administer the Android devices. The Apple devices are dirt simple and even grandma can easily manage them.

    Since there are so many different Android manufacturers, so many different features, and so many different price points, Android probably will end up with a larger combined market share than Apple. However, it isn’t really Android’s market share. You have to break it down further as in 9% for Samsung, 2% for Dell, 1% for LG, 3% for Motorola, 6% for HTC, 7% for Sony, etc. Apple will retain 50 to 80 percent and will enjoy huge economies of scale and purchasing power that the fragmented Android crowd won’t have (Google has nothing to do with the hardware). Also keep in mind that the total market is growing like a weed. Even if Apple’s percentage share drops a bit, their total unit sales will still be skyrocketing. Almost everyone on the planet will be exchanging a dumb cell phone for a smart phone over the next few years.

    Android developers aren’t making much money from selling apps on the Android platform. They’re having to settle for a piece of Google’s advertising revenue. Apple, on the other hand, has paid out over $2 Billion to developers already. Developers have a much higher $$$ incentive to develop for Apple’s platform and it’s much easier because they don’t have to deal with all that fragmentation.

    We’re seeing incredible apps on the iPad and iPhone as compared to what’s available on Android. Take a look at a couple short video examples.

    http://www.apple.com/ipad/guided-tours/

    Click on Garage Band and also on iMovie

  • Report this Comment On April 29, 2011, at 12:27 PM, Borbality wrote:

    Apple sells devices that come with its own OS. Google sells advertising, and gives away an OS for third party smart phones. Big difference.

    Apple also has only ONE phone, whereas any old phone could use Android.

    These stats are basically meaningless.

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