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Phone Sales: It's Not All About Apple
In the middle of April, the market started to hear some bearish sentiment about Apple (AAPL), and really for the first time in years the stock began to come under scrutiny. All seemed to be forgiven after its stellar earnings report but once again, the stock has only been trending back down since then. Now, we find ourselves with AAPL stock down modestly again today, and it's fallen back to where it was before that great Q1 report.
I thought today's 1Q mobile phone sales report from Gartner was somewhat telling as why Apple is not the end-all-be-all of the tech space. Of course, the company drives profits and cash flow like no other, but the fact is it is being outperformed the mobile market. In terms of smartphones, the iPhone accounts for 22.9% of the market, and that's nicely up from 16.9% last year. However, the market share gain in Google's (GOOG) Android is much more impressive, rising to 56.1% from 36.4%. As it turns out, Google could start to grow even faster from here, as it is changing up the way it delivers its operating system to phone makers in order to get it to the market faster.
Of course, Android has an advantage over Apple in terms of operating system share, because it is spread across several phone brands, and is not limited to just its own phone as Apple is. But once again, while Apple's share of overall handset sales did grow to 7.9% from 3.9%, Samsung is pulling ahead a little quicker, to a share of 20.7% from 16.1%. If you haven't seen Samsung's brand new Galaxy S III, it's very impressive, and one could argue that it's the better phone than the iPhone 4S. Given the growing threat of Samsung, perhaps it's no wonder that today Apple decided to drop them as a DRAM supplier in favor of Elpida (Samsung shares fell more than 6% on the news). That said, we all know the iPhone 5 is coming this year and it could be a game changer, as is always the case with Apple products.
We're not saying Apple is getting beaten up by any means, but stats like these go to show that perhaps Apple isn't untouchable, and that other companies have learned to develop equally good, or even better systems. Thus, when you see other companies enjoying better market share growth you have to second guess the AAPL premium.
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