Will Apple Inc. (AAPL), Google Inc (GOOG) Benefit or Suffer Because Of This?

Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) and their places in the smartphone market are very delicate. Any move in the wrong direction can cost a company big.

On the Apple side of things, you have Tim Cook and Jony Ive pushing to make the iPhone and its iOS operating system the go to smartphone.

On the Google side of things, there is Larry Page and Sundar Pichai pushing its Android operating system to new heights.

While both companies have had success to this point, there is one thing we don’t want to forget: the market can and will change over time.

And if you believe a recent report by ABI Research, a big change is coming. Their latest research study shows that sub-$200 smartphone shipments will exceed 750 million in 2018. Even more so, they are expecting low cost smartphones to account for 44 percent of all shipments by 2018.

In other words, both Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) have to be prepared for this.

Apple Inc. (NASDAQ:AAPL), you are up

While this is important to both companies, one cannot help but to think about what this means to Cupertino.

For the past few months, many have been talking about whether the company will release a cheaper iPhone towards the end of 2013. There is nothing concrete out of the Apple camp at this time, however, it doesn’t mean there is no conversation internally.

If Apple is going to compete in the global smartphone market moving forward, it will need a cheaper iPhone as a means of becoming a major player in emerging markets.

Google Inc (NASDAQ:GOOG) is in better position, being that its operating system, Android, is used by a variety of vendors. This allows the company to spread its market share far and wide.

Senior analyst Michael Morgan added that “research has shown that the feature gap between low- and high-end smartphones is decreasing, making low cost smartphones a ‘good enough’ solution for price sensitive consumers in all markets.”

Both of these companies plan on staying relevant in the smartphone game for many years to come. For this reason, Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) will need to focus on price over the next five years.

These hedge fund managers continue to like what they see from Apple: David Einhorn, Christopher Hansen, and Jeffrey Edwards.

Check out the video below for more on what the iPhone may provide users in the future:

Disclosure: none