Apple-Google War Shows Customers Feel Pricing

By Steve Anderson December 21, 2012

A note released earlier this week from Needham & Co.'s Charlie Wolf held some fairly obvious truths, but with some distinct surprises involved in its application. The note made it clear that in terms of market share, Google's Android platform is utterly destroying Apple's iOS operations.

Revenue, however, is a different story, and may well suggest a future course of action for Apple going into the new year.

Wolf's note showed that Google's Android system was currently in charge of about 72.4 percent of the market in the third quarter, while Apple came in at a comparatively dismal 13.9 percent. This, however, represented a drop for Apple, which in the second quarter held firm to 18.8 percent of the market on its own.

Naturally, this doesn't consider the release of the iPhone 5, which will likely put some punch in that bottom line number again, but even with the second quarter numbers, it was still quite clear that iOS was well behind its main competitor.

This naturally led to a certain amount of speculation. After all, it's widely known that consumers are tightening their belts in the face of economic uncertainty and have been doing so pretty much non-stop since about 2008. While the numbers were a bit different coming from comScore, which put Google ahead by a much narrower margin at 52.5 percent of the United States market to 34.3 percent for Apple, bringing the whole world's numbers into the picture might generate results more closely aligned to those from Wolf.

But while the numbers may move around a bit, it's still clear that Google has market share quite clearly on lockdown.

What does that mean for the market as a whole? Well, it's becoming quite clear that a winner-take-all approach won't happen here. Apple will continue to sell to its base and be sufficiently diversified that it doesn't particularly care that Android is jammed into more cheap phones than a SIM card. Microsoft will carry on trying to get a chunk out of both markets, with varying degrees of success, and the future doesn't look at all good for RIM and BlackBerry.

Dominance here is simply unlikely.

Yet there are some analysts out there that believe that Apple won't just shrug and accept its second-place finish, and make a more significant move toward getting its hands on the low-cost market. Piper Jaffray's Gene Munster, for his part, thinks it's only a matter of time before Apple brings out the "iPhone for the masses" and gives the cost-conscious a shot at the Apple experience. Given that the growth of smartphone use is much higher than Apple's sales rate, that's a whole lot of market that Apple's missing out on.

And considering the rate of smartphone adoption in emerging economies makes the idea of pricey iPhones even harder to swallow.

Whether Apple even wants that market is a point of some contention, but it's still clear that Apple is missing out on a lot. There's even a handy basis for comparison with the success of the iPad Mini, showing Apple that low cost doesn't have to mean low quality or low class and giving them a toehold in the small tablet market dominated by the Amazon Kindle Fire.

Apple's future plans are, as ever, quite unclear, but a cheap iPhone, so to speak, may well prove part of the firm in 2013.




Edited by Braden Becker

Contributing TechZone360 Writer

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