Despite Apple Inc. (NASDAQ:AAPL)‘s increase in shipments year-over-year, the mobile world is increasingly becoming Android-centric. Apple’s best efforts may have increased the amount of iPhones in the world, but its OS market share has dropped and Google Inc (NASDAQ:GOOG)‘s Android has only grown.
Moving ahead, while falling behind
Apple Inc. (NASDAQ:AAPL) and its investors should be nervous about this. There’s no debating the company makes great products and has been one of the most innovative technology companies of the past two decades, but at some point these numbers will come back to bite Apple.
It’s not that other competitors are pushing Apple out of its spot. Nokia Corporation (ADR) (NYSE:NOK) shipped more than 20 million Windows Phones since it launched the OS on its devices, but Windows just now took the No. 3 spot away from Research In Motion Ltd (NASDAQ:BBRY). Meanwhile, BlackBerry shipped over 1 million BB10 OS devices in the past quarter. Both of the increases in OS market share for Windows Phone and the amount of shipments for Research In Motion Ltd (NASDAQ:BBRY) are good news for those companies, but it’s not really impacting the Cupertino company. What’s hurting Apple Inc. (NASDAQ:AAPL) is that despite making great phones that people buy, Android is still moving further ahead.
Market share matters
Investors know that market share isn’t the only consideration in assessing how well your company is doing. Revenue, profit margins, dividends, free cash flow and a host of other financials paint a fuller picture when they’re all added together. But market share is a great metric for showing what customers want.
You’ve probably read a lot about Apple Inc. (NASDAQ:AAPL)’s need to update its operating system, and with the IDC’s latest numbers this appears more imperative than ever. Android has amassed a global smartphone OS market share of 75% in the first quarter, and Apple’s was 17.3%. It’s worth noting that Android has many OEMs that boast the OS, so it’s not just a one-man shop like Apple is. But that argument doesn’t add up when you consider Apple Inc. (NASDAQ:AAPL)’s iPad dominated the tablet market with 60% market share at the beginning of 2012, and still had 40% this past quarter. That shows me the company is able to have a take-no-prisoners approach to a market, but that it’s simply not able to do that with the iPhone right now.
One of the only ways to reverse this trend is for Apple to bring out a completely new iOS. Apple Inc. (NASDAQ:AAPL) has some of the most amazing hardware, but to really make gains against Android, the iPhone maker is going to need to revamp its software in such a way that mobile users want to make a switch. This may be obvious, but until Apple does something about it, I don’t see how it can make significant gains against Google Inc (NASDAQ:GOOG)’s green machine. Premium hardware and solid — but aging — software isn’t enough to take on Samsung and a host of other Android-touting companies. A change to the iOS needs to be made, and it needs to be made soon.
The article Apple Should Be Nervous About This originally appeared on Fool.com and is written by Chris Neiger.
Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
