The U.S. Department of Homeland and Security has a problem (link opens PDF) with Google Inc (NASDAQ:GOOG)‘s Android. Thanks to open-source architecture, the platform is highly susceptible to mobile malware. The difference in the number of malware threats affecting Android compared to Apple Inc. (NASDAQ:AAPL)‘s iOS isn’t subtle — it’s enormous. Android accounts for 79% of mobile malware threats. iOS? 0.7%. This government report highlights yet another reason I’m betting on Apple for the long haul.
The integration of hardware, software, and services
Technology stocks, for the most part, are unpredictable. That’s likely why Warren Buffett’s portfolio is home to just one: International Business Machines Corp. (NYSE:IBM). But I propose there’s at least one more that should endure for decades: Apple Inc. (NASDAQ:AAPL).
Center to my thesis that Apple Inc. (NASDAQ:AAPL) is built to last is the company’s seamless integration of Apple-branded hardware, software, and services.
The intersection of these three important aspects of the company’s products is what sets Apple Inc. (NASDAQ:AAPL) apart from its competitors. It’s one of the reasons the company has been able to build a competitive OS without making it open source.
The benefits of a closed OS
Without dependence on other original equipment manufacturers, or OEMS, the company doesn’t need to worry about adapting its OS for other brands. Without any need to make iOS open source, Apple Inc. (NASDAQ:AAPL) gets more control over the operating system. As shown in this report from the government, security is one benefit of Apple’s greater control over its operating system — but there are more.
1. Less fragmentation. As the government report notes, 44% of Android users are using a version released in 2011. And of course the 2011 version is far more susceptible to malware. If Google Inc (NASDAQ:GOOG) had hardware, software, and services all under one roof, the company would likely see higher update rates. At Apple’s Worldwide Developers Conference this year, CEO Tim Cook said 93% of its users are using the latest version of iOS.
2. Higher customer satisfaction. iOS also easily surpasses competitors in customer satisfaction — an achievement that would likely be much harder to achieve if iOS was spread out in different versions among different devices.
Apple’s competitive advantage
Valid arguments are made for both open and closed operating systems. And when viewed in isolation, an open operating system may certainly have more convincing arguments. But when a closed operating system is built the Apple way — with complete integration of hardware, software, and services — there are very real benefits that many customers appreciate.