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Apple Inc. (AAPL), Google Inc (GOOG): The Next Phase of the Smartphone War Is About to Begin

Android’s open system could dominate

Given its move into autos, and its partnership with NIKE, Inc. (NYSE:NKE), Apple Inc. (NASDAQ:AAPL) appears to have the upper hand in this sector. But in the long run, Google’s Android could be poised to dominate.

Take the aforementioned smartwatch. Like Apple’s iPhone, consumers have a limited choice when it comes to device. Sure, the Pebble works with the iPhone, but because of Apple Inc. (NASDAQ:AAPL)’s built-in limitations, third party connectivity is limited.

Someone who owns an iPhone and wants a smartwatch will likely have one choice: Apple’s iWatch. In the immediate term, that’s good for Apple Inc. (NASDAQ:AAPL)’s bottom-line, but limits the growth of iOS.

Contrast that with an Android user. They may not like the look or feel of Sony Corporation (ADR) (NYSE:SNE)’s SmartWatch 2, but that’s fine, because they’ll have other choices — options from Samsung and Google Inc (NASDAQ:GOOG) itself.

Another roadblock for BB10

As for how this turn of events affects other operating systems, it will be devastating over the long term. A company like Research In Motion Ltd (NASDAQ:BBRY) is already facing an uphill battle when it comes to convincing consumers to adopt its BB10 operating system.

BB10 lacks the robust app ecosystem of iOS or Android, and thus many consumers who otherwise might have adopted it are loathe to make the switch. The rise of device connectivity will make the gap between the dominant mobile operating systems and upstarts like BB10 even wider.

Going forward, not only will potential customers lose out on Candy Crush and Snapchat, but they’ll also lack the freedom to buy a smartwatch or other connecting device.

Investing in the smartphone sector

Over the last year, smartphone stocks have disappointed investors as growth in the space has slowed. Yet, the sector appears to be on the verge of a radical new shift. Over the next few years, device connectivity will become a major selling point — if the phone doesn’t connect to a consumer’s watch or car, it isn’t going to be purchased.

Apple’s iOS seems to have the advantage right now, but Android’s open nature could become more attractive over time. Meanwhile, alternative operating systems like BB10 have an even tougher road ahead of them.

Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends Apple Inc. (NASDAQ:AAPL) and Google. The Motley Fool owns shares of Apple and Google Inc (NASDAQ:GOOG).

The article The Next Phase of the Smartphone War Is About to Begin originally appeared on

Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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