Smartphones are a relatively recent phenomenon, yet you can find one just about anywhere you look. You could be reading this on your smartphone right now. Chances are, you have one in your pocket. The time that you spend looking at your respective smartphone goes up day by day. These multifunctional little computers have connected the world in ways never thought possible. While the US may be flooded with a myriad of devices, however, global smartphone penetration is still tiny. When you look at the numbers, it becomes evident that Google (NASDAQ:GOOG) is leading the pack in terms of capturing new markets.
The smartphone market is still very undeveloped, even domestically. While it might seem like everyone you know has a smartphone, this isn't even close to being the case. Smartphone penetration only managed to hit 50% here in the United States back in February 2012.
This might come as a surprise, considering the United States is one of the most developed smartphone markets in the world. Our smartphone penetration is the highest worldwide, yet has been creeping past 50% for less than a year. It's easy to see that more of the US will have a smartphone as time goes on. If there were any statistic that proves this, it would be smartphone penetration by age group. A quick breakdown of smartphone users for January 2012 shows that younger people are more likely to have a smartphone. Now that younger people have been exposed to the technology, they will keep buying smartphones for the rest of their lives. To not do so would go so far as to make you irrelevant in today's technology-driven culture.
As some of us may forget, however, the United States is not the world. Smartphones have yet to saturate the global market. According to a model made by Pyramid Research, global smartphone penetration won't hit US levels for years.
What does this mean? It means that there will be massive opportunity for capitalization. The firms best situated to move handsets globally will profit the most. Google has made itself a serious competitor through its open-source Android platform, and has found itself in the wake of a global smartphone revolution.
Google's strategy is unlike that of its competitors. While Apple (NASDAQ:AAPL) is focused on creating a powerful and refined standalone product, Google revels in diversity and volume. Since Google charges nothing to carriers for installing their operating system, the carriers can slash prices on their phones. The result is a smartphone for everyone's price range. Often a carrier will subsidize an Android smartphone, selling it to a customer free of charge with a two-year contract. Evidently, this strategy has worked: Google's Android operating system has taken close to 70% of the global market share by Q4 2012.
It's evident that Google is doing something right.
Looking at the situation macroscopically, Google is currently top dog in the global smartphone game. Their volume of sales, as well as their market share, is massive. Over the next decade, the technological pulse of the world will change, with people in enormous markets like India and China striving to get their hands on the latest device. And chances are that device will be powered by Android. Based on data at the current moment, Google will take a significant share of the global smartphone market as it continues to grow, and generate profits as a result. Going long Google is a safe bet.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.