Only Apple Inc. (AAPL) Can Stop Google Inc (GOOG)

Apple Inc. (NASDAQ:AAPL) is losing business to rival Google Inc (NASDAQ:GOOG) , if the latest reports are to be believed. Bloomberg published a report titled, “Apple App Advantage Eroded as Google Narrows IPhone Lead.” The iPhone maker is indeed facing some of the worst times in its history as market competition intensifies across the board.

Apple Inc. (NASDAQ:AAPL)’s App business is staring at an arguably unstoppable paradigm shift as Google continues to lure developers and consumers to its Android platform. Additionally, recent reports also suggest that Google has started developing iOS Apps, which could further dent Apple’s App business.

The iPhone maker is also facing stiff competition on its iPad business unit from rival companies that have engaged competitive pricing as their core strategy, toward penetrating the industry that Apple Inc. (NASDAQ:AAPL) has dominated since the invention of the first iPad.

Amazon.com, Inc. (NASDAQ:AMZN) is one of the major competitors in this market with its Kindle Fire and Kindle Fire HD tablets. The e-commerce giant’s tablets, along with Google’s Nexus 7, played a major role in Apple’s idea to come up with a cheaper iPad, the iPad mini. Microsoft Surface RT tablets are also in with a challenge, though not so on pricing.

Google’s one major advantage over Apple Inc. (NASDAQ:AAPL) is that it’s Apps can be used across several smart devices, including devices made by Samsung Electronics, HTC, Motorola Mobility, Amazon, and Sony Ericsson, among others. Apple’s iOS Apps, on the other hand, can only be used by Apple device owners, which limits its accessible market.

While market competition intensifies, the impact on Apple’s price has been very evident over the recent past. Whether you call it a coincidence or a direct impact, perceptions could be deceiving. In a report published Monday, Feb. 4, Morgan Stanley analysts believe that Apple Inc. (NASDAQ:AAPL)’s tumbling price has nothing to do with “competition.” According to the report Apple’s price movement had a near perfect correlation to its gross margins since March 2012

Apple’s gross margins have always been among the healthiest in the industry, averaging above 40 percent. The recent fall since March 2012, from about 47.5%, then 42.5% and 40% to a low of about 39%, has been tracked by the company’s average stock price per the various quarters. The analysts also revealed that Apple Inc. (NASDAQ:AAPL)’s gross margin stumble is a cyclical affair, and has nothing to do with structure.