Seeking Alpha
Portfolio strategy
Profile| Send Message|
( followers)  

Last October, venture capitalist Fred Wilson predicted that Google's (NASDAQ:GOOG) Android mobile operating system would become the dominant one, and that mobile app developers ought to focus on developing for it instead of for Apple's (NASDAQ:AAPL) iOS operating system. Fred followed up on that post last week, and pointed to the table below, showing market shares of the different mobile platforms after Apple's iPhone became available on Verizon (NYSE:VZ), as support for his original prediction.



Fred went further in his follow-up post and argued that,

the mobile OS market will play out very similarly to Windows and Macintosh, with Android in the role of Windows.

Tim Knight made a similar point on Slope of Hope earlier this week, speculating that Apple's shares were starting to weaken due to the surge in Android's market share relative to iOS. Tim posted the chart below with the following commentary:

Perhaps this is why AAPL is starting to weaken. It broke its ascending trendline last month (magenta circle), recovered to the "kiss of death" just beneath the same trendline (green circle), and has been pretty much falling ever since. Apple has basically been incapable of having any bad news for the past eight years. That had to end sometime.

Click to enlarge:

Tim Knight

Tim and Fred both noted the strong surge in Android smartphone subscribers, but Martin Hill, commenting on Fred's post, made a couple of strong counterpoints. First, he noted that Apple's iOS platform doesn't just cover the iPhone (its smartphone) but also its iPad and iPod touch. That's something I'd become more aware of recently myself. I use the Porfolio Armor iOS hedging app on an iPod touch, and I received an e-mail last week from a new user who uses it on his iPad. As Martin pointed out, the ability to run apps on these three different Apple devices broadens the potential reach for iOS app developers.

Another point Martin made in his comment was that, despite the recent surge in Android users, Apple's mobile app store revenue dwarfs that of Android's:

  • *App Store Revenue 2009 - 2010* (Source: IHS data):

  • iOS App Store grew from $769 million to $1.782 billion = $1.013 billion increase

  • Android Marketplace grew from $11 million to $102 million = $91 million increase

  • So annual Android developer income is a meagre 6% of iOS with an annual rate of increase only 9% as large as iOS. The gap between the two is 1,000% and getting far larger every year.

Fred Wilson's Windows-Macintosh analogy fits at least in the sense that this is increasingly looking like a two-horse race between Android and iOS, with other mobile operating systems by HP/Palm (NYSE:HPQ), Microsoft (NASDAQ:MSFT), and RIM (RIMM) lagging. But it seems that Android has a couple of signicant hurdles to climb before it can establish a Windows-like dominance.

Source: The Battle for Dominance Among Mobile Operating Systems