Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is This Statistic a Sufficient Catalyst for Apple Inc. (AAPL)?

Page 1 of 2

It is no secret that on a global basis, Google Inc (NASDAQ:GOOG) Android has run away with the smartphone operating system market, commanding a 68.3% share in 2012, according to research firm IDC. Google has created explosive growth in its market share, which registered at only 48.7% in 2011, largely through its dominance in the cheap end of the market. While Apple Inc. (NASDAQ:AAPL) has thus far refused to play in this particular sandbox, the company was able to do something that had eluded it since 2008: sell more smartphones in the critical U.S. market than Samsung. The question you must now ask is whether reclaiming the top U.S. sales spot will be a sufficient catalyst to get Apple Inc. (NASDAQ:AAPL) shares climbing again.

Apple Inc. (NASDAQ:AAPL)

Reclaiming the top spot at home
Last Friday, Reuters reported that according to data from Strategy Analytics, Apple Inc. (NASDAQ:AAPL) was the top seller of mobile phones in the U.S. in the fourth quarter of 2012. This honor, which has been held by Samsung in every year since 2008, went to Apple as its U.S. market share for the quarter increased from 26% to 34%. Samsung also increased its market share from 31.8% to 32.3%, but was outpaced by Apple. It is worth noting that Apple released the wildly popular iPhone 5 during the quarter, which clearly gave Apple Inc. (NASDAQ:AAPL) numbers a significant boost.

For the entirety of 2012, however, Samsung was able to hold on to the top spot, commanding 31.8% of the market; Apple claimed 26.2% of the U.S. market for the full year. While fourth quarter U.S. sales did increase by 4% to 52 million units, sales for the full year slumped by 11% to 116 million units. Given the fact that global smartphone sales for 2012 grew by an estimated 45.1% on a year-over-year basis while global mobile phone sales grew at only 1.6%, the structure of the market itself must be considered.

If mobile phone sales are plateauing but smartphone sales remain robust, the critical product cycle at play is among consumers upgrading from feature phones to smartphones. It is specifically this phenomenon that has led to many of the rumors that Apple Inc. (NASDAQ:AAPL) is seriously considering the release of a “cheap” iPhone. Currently Samsung and other manufacturers of Android phones — including Google’s own Motorola — have been successfully attracting users looking for low-cost smartphones.

A study conducted by the Internet & American Life Project at the Pew Research Center revealed that Android is actually skewed toward a lower-income demographic, both domestically and on a global basis. A recent story on Gizmodo summarized the findings nicely: “[T]he less money you have, the more likely you are to opt for an Android phone over something more expensive.” Whether you applaud Google’s approach or not, the reality is that the strategy is working.

If you carry the demographic argument one more level, it helps to put the global sales data into even more perspective. As was noted above, the conclusion from mobile phone sales growth versus smartphone sales growth is that the bulk of sales are from individuals upgrading from feature phones to smartphones. This means we are not talking about economically mobile consumers who are on their third iPhone when looking at smartphone growth. The likelihood is that this group is largely comprised of lower-income people for whom the research suggests an Android option is the most likely choice. If we now consider the global market share for Android, which, as noted above, grew from 48.7% in 2011 to 68.3% in 2012, it is easy to see where that growth came from.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!