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Apple (AAPL) is at risk of losing one of its key competitive advantages over Google’s...
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Thursday, December 27, 2012, 5:05 PM ETApple (AAPL) is at risk of losing one of its key competitive advantages over Google’s rival Android system as application developers say they are becoming more constructive with Google's (GOOG) Android smartphone platform. GOOG's app store has long lagged AAPL's iPhone, however the sheer scale of Android, which now accounts for three out of every four smartphones sold, is commanding developers’ attention, despite their continuing difficulties in monetizing the platform.
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Android will be simplified as it progresses anyway, the Android ecosystem is more valuable and the players thus more interested for more and more apps and developers to work for Android.
Source: http://cnet.co/Uwwlgf
Two classes of Android users:
1) People like my Aunt, who bought the cheapest phone possible, which happens to run Android. She can't even tell me what model the phone is, or how to visit a website, since she does even know how to open the web browser. She does not download applications unless someone else does it for her. Take a look at this article: http://bit.ly/ZErcXG. 54% of Android users still using an OS that's almost 3 years old! 54%! This is mind boggling as a developer. And I doubt these users, like my Aunt, have the slightest clue how to upgrade their phone OS, even if they wanted to.
2) A few friends with more modern Android phones like the S3. Their phones are bursting at the seams with apps. Tons and tons of pages of apps. I asked why they are wasting so much money on apps! They said they're not wasting any money, they've rooted the phone and are stealing all the apps.
So I can choose to develop apps to a group of people who
a) don't have a clue how to use their phone beyond making phonecalls
b) are too cheap to purchase any apps whatsoever
c) are more technically sophisticated and will root their phone and steal my apps
Or I can go with iOS which is about 300x easier to developer for, reaches the vast majority of app users who already have their credit cards linked to iTunes and are a click away from spending money (and willing to do so), and will not steal my apps.
Which would you choose?
http://seekingalpha.co...
Also have a corresponding article where I did an interview with a mobile development house
http://seekingalpha.co...
Developing Apps for Android is a financial lost cause.
The money to be made is in developing iOS Apps.
I see the majority of Android users having no idea how to use their phones vs 99% of iPhones being used almost non-stop. On top of that, most Android users keep their phones in their pockets because 9 out of every 10 phones I see are iPhones.
I'd venture to say that most people are proud to own an iPhone and ashamed to own an Android.
Here is a "fact." 88% of all mobile ecommerce is conducted on ipads. Add in the iphones and you are 90% plus of all mobile commerce being done on AAPL devices. Now, ask yourself, if you were developing apps, would you want to develop them for a single standard where all of the people who spend money on apps reside, or would you want to develop them for a fragmented OS that requires many permutations to satisfy multiple hardware manufacturers so that people who don't have money and don't spend money could access your apps?
Now, please answer my question. Can you provide a link to a news source that has actually surveyed Andriod developers and has found that they are more "constructive" on developing apps for Andriod?
It is quite presumptions (at the very least) to suggest that AAPL is "at risk of losing one of its most important competitive advantages over Andriod" without providing a source for the basis of such an incendiary claim.
FYI, for future reference:
I think you meant "presumptuous."
Great comment though.
The proliferation of the Microsoft platform was perpetuated by IT professionals in large organizations dealing almost exclusively with desktop machines. The machines were mostly used for dedicated and repetitive tasks trained and executed under the watch of corporate IT - mostly buying machines on behalf of users who had little if any say in the matter.
Apple's POV was much more appliance-like - a tight integration between hardware and software. And Apple had far greater success in selling environments where IT had less clout or was non-existent: schools, homes, very small businesses...places where people had to use their machines to do multiple tasks and did not have extensive IT bureaucracies.
Another great Apple success was in mobile machines - where IT is not in physical proximity and help is not easily available. Thus the tremendous success of PowerBook in the early to mid 1990s.
A smartphone is the ultimate personal appliance - and the more people who are out there doing increasingly complex and high-value tasks with those devices, the more the tight integration of Apple hardware and software will be an advantage vis a vie Android.
Google bought Motorola Mobility as an entree into the physical device market - but that puts them in direct conflict with other manufacturers who use Android-based phones. It's hard to have it both ways - either you open your platform and give manufacturers a lot of leeway in what they build, or you dictate a consistency between apps and devices in order to make the customer experience easy and seamless.
This is Apple's game. And instead of being the niche player in a market controlled by people buying for other people, they have the dominant market share and are selling to people who are buying for their own use.
An IT guy thinks "I can save $20 a seat over XXX seats by buying solution B and it fits my budget." An end-user thinks, "Twenty bucks? The cost of a couple lattes for the most important device in my personal and professional life."
Nailed it!
GOOG predicts that it will make 4 billion next year in mobile advertising. Soon that money will go into AAPL's coffers and a lot more as they continue to control mobile search and commerce.
Please pose that same question to Jeff Bezos. Unfortunately, I'm afraid his response will be: "a 3000 p/e."
Consumers are not going to pay for another consumer item which is inexpensive, but at the mercy of malware and spyware running wild in an uncurated store.
Unlike desktops, a phone needs to work when you need it, and work every time, and this partially explains Apple's success with the iPhone.
Just like Google Voice. Beat skype with Free.
Even though Android phones cost much less than AAPL, the sheer number of available apps in future for Android could be a competitive DISADVANTAGE for Apple. It means that some of the sophisticated users of iPhones who are cost conscious might migrate to Android sometime in future if they are tempted to go with the large number of apps available for Android. This is one of the reasons why AAPL may lose some buyers (not the diehard followers) and could lead to Apple cutting the price and losing out a little on the margin front.
Irrespective of how many Android users may be at the low end of the spectrum (who are referred to as masses), the large number using Android is a potential danger for an AAPL investor. This little article rightly draws our attention to this aspect that has a consequence for investment decisions.