Recently released mobile internet usage data from the Middle East raises the possibility that Apple's (NASDAQ:AAPL) iPhone is being replaced for the key online browsing activity by the company's iPad. If this pattern holds beyond Saudi Arabia and the Gulf, it will have a significant negative impact on Apple's profitability.
With iPhone sales already under Android pressure, loss of a key activity revolutionized by the device further weakens its market position. The much expected iPad 3, meanwhile, is being accompanied by rumors of price cuts (and reductions in profit margins), so picking up some of the iPhone's market will not necessarily translate into similar profitability.
It should also be noted that the data specifically relates to users in the Middle East. Expectations of Apple's performance in the non-Western markets, particularly (but not only) in China, has been a key factor in the stock's pricing in recent months, and trouble in these markets will have a magnified impact on share prices.
The data from the Middle East was released by business and finance website nuqudy.com, which analyzed devices used by the region's users for mobile internet. These data show 75% of Arab mobile internet users access the site using Apple products, but also showcase a marked shift from the iPhone to the iPad.
Measuring actual use by its Middle Eastern audience base over the past 5.5 months, Nuqudy reported that iPad usage rose from 42% to 58% of users (growth of 38%).
In the same period of time, Apple's iPhone saw its market share steadily dwindle from a high of 34% of all users in September 2011, to a low of 15.51% in January 2012 (a drop of 49%).
Use of legacy iPods for internet browsing dropped to just 0.33% of total users.
Apple's total market share remained relatively steady throughout the period, accounting for three quarters of Arab mobile internet surfers.
A key competitor, Samsung, has not seen significant results despite massive advertising and customer interest being seen in the GCC. Use of all Samsung products combined dropped from 11% to 8% of total users in the same period.
Internet access using Nokia (NYSE:NOK) products grew from 2.13% to 2.95%, SonyEricsson (NASDAQ:ERIC) use grew from 0.48% to 0.74%, and RIM (RIMM) BlackBerry products rose from a scant 0.15% to 0.50% of mobile internet users.
Data was compiled from over 120,000 unique users over the past 5.5 months who were using mobile devices for web browsing (and not for messaging, entertainment, apps, etc.).
Of these users, 54% came from Saudi Arabia, 13% from the United Arab Emirates, 9% from Kuwait, 3% each from Qatar, and Lebanon, and 2% each from Oman, Jordan, and Egypt.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.