Apple Tops Google in an Unexpected Way
Just last week we were reminded that Google's (NASDAQ: GOOG) strategy for smartphones – which includes licensing its mobile OS, Android, to everyone who wants it – is still very effective. The company is beating Apple (NASDAQ: AAPL) by commanding nearly 47% of the market. While Apple is hugely successful in a multitude of areas, it currently holds just 28.7% of the smartphone market.
That's right, when consumers decide to surf the Web while on the go, they choose to use an iOS device. This, according to NetMarketShare, has allowed Apple to score as much as 61% of the mobile browsing market in October 2011 (up from 46.56% in February). Apple dropped somewhat in November and December but still managed to close the year with 52% of the mobile browsing market.
As TechCrunch points out, this battle might not be a fair one considering the fact that nearly half of the iOS browsers are using an iPad. But that implies that consumers can't find an Android-equipped tablet. On the contrary, there are just two iOS-equipped tablets available: the iPad 1 and iPad 2. Meanwhile, there are dozens of tablets that use Android. Consumers have simply elected not to buy them.
But that's not the only detail worth noting. Google's share of mobile browsing is just 16.29%. This means if you take away the iPad (as well as the iPod Touch), the iPhone would still enable iOS to come out on top.
How is this possible when Android commands nearly half of the entire smartphone market?
Let's look at the very first iOS devices: the original iPhone and the original iPod Touch. Both were brilliant Web-surfing creations. Consumers bought into these items after being wowed by a couple of clever commercials that demonstrated the true potential of mobile browsing. For most consumers, it was a fresh concept they never saw coming. For me, it was the device I had been waiting years to obtain – a pocket-sized beauty that would allow me to surf the Web from virtually any location.
Knowing the power of surfing (and how much time it can kill), consumers instantly recognized the value in being able to explore the Web while waiting at the airport, while riding the bus to school or work, or during any other mundane task that life throws our way. In essence, Apple had brought us a handheld revolution.
Android's debut was a bit different. Were there any innovative commercials to accompany the launch of the OS? No. Instead, Google chose to promote the mobile OS with a series of TV ads promoting a campaign that claimed “Droid Does” this or “Droid Does” that. While these ads clearly caught the attention of some consumers, they were a far cry from the innovation-filled commercials from Apple.
Further, Android sells a cornucopia of handsets that cannot support full Web browsing. This is great for Sprint (NYSE: S), Verizon (NYSE: VZ) and even AT&T (NYSE: T) customers who don't want to spend $80+ on their monthly phone bill. But it means that hundreds of thousands – if not millions – of Android customers are walking around with cheap phones that can't load more than the most basic (mobile) version of a particular Web page.
As someone who has experienced this nonsense firsthand using the LG Rumor Touch, I can tell you that it is anything but a fun or intuitive Web browsing experience. In fact, it barely feels like an “experience” at all. That's why people who use these phones can get a so-called unlimited data plan at a reasonable price: first because the bandwidth demands are greatly limited by the phone's weak capabilities, and second because mobile carriers know consumers won't actually want to use this feature. Thus, Sprint and co. will happily give customers a cheap data plan. When it comes to iOS, however, cellular carries know that consumers will want to surf the Web, so they charge a lot more.
AT&T and Verizon have gotten away with their ridiculous monthly fees because they know that consumers would have a hard time walking away from the mobile Web (or e-mail, for that matter). Have you ever tried to send an e-mail using a cheap Android phone? It is a sluggish nightmare. My iPod Touch is more than four years old and it still trumps all but the most expensive Android phones.
With all of that in mind, it actually isn't that surprising to learn that Apple leads the pack of Web browsing.
But no matter who comes out on top, Google still wins. When we want to search for something, we still go to Google's search engine. And on the Windows/Mac OS side of the spectrum, more and more consumers are choosing Chrome over Firefox. Thus, the Android maker can sit back and allow Apple to maintain its lead in Web browsing – just as long as Google is the site consumers most frequently visit.
Traders who think that Apple will maintain the top spot in mobile browsing should:
- Look to companies that are benefitting from Apple's continued success, such as AT&T and ZAGG (NASDAQ: ZAGG).
- Consider corporations (like Google) that have websites that will do well regardless of who leads mobile browsing.
Traders who believe that Apple's dominance is a problem should:
- Wonder what Android users are doing if they aren't surfing the Web. With more than 10 billion Android apps sold, Glu Mobile (NASDAQ: GLUU) could be worth a look.
- Remember that you can't short Microsoft (NASDAQ: MSFT) on its lousy Web browser alone. But it's worth noting that while consumers seek out and intentionally use Chrome and Firefox, people only come to Internet Explorer because it's built-in to Windows.
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