The Real Reason Why Apple Fears Android

July 29, 2011

It’s about the money, plain and simple. Nothing more, nothing less. Apple fears having lighter money bags because of Android. Proof of that is Apple’s mad scramble to courthouses, suing Android device manufacturers left and right, its fear of losing money veiled by intellectual property rhetoric.

Thom Holwerda, managing editor of OSNews, put 2 and 2 together, and found out that money–the loss of a big part it, especially–is at the center of Apple’s fear. He paints a layperson’s picture that explains why “Apple is attacking Android so ferociously.” His bases are two seemingly unrelated graphs, both published on Ars Technica.

Let’s recall that in earlier years, Apple was primarily a computer and media player manufacturer before it entered the smartphone and tablet markets. Of course, Apple reaped mountains of cash from sales of its laptops, desktops, and iPods.

But, those are no longer Apple’s fattest cash cows. Rather, as of the third fiscal quarter of 2011, almost 2/3 of Apple’s total revenue–68% to be precise–comes from the iPhone (47%) and the iPad (21%). Almost half of Apple’s revenue comes from the iPhone, while a little more than 2/5 comes from the iPad.

This pie chart from Ars Technica sums it up:

This second graph from IMS Research shows a comparison of smartphone market share estimates for first quarter of 2010 and 2011:

Apple’s share grew by 19%–yey! Nokia’s and RIM’s market shares fell, with Nokia experiencing the biggest decline (40% decrease from last year). Motorola is stagnating–so no cause for worry from Apple. But, looking at Samsung’s, HTC’s, Sony Ericsson’s, and LG’s growths–those numbers probably painted a grimace on Steve Jobs’ face.

We’ve created this handy table showing the percentage of growth (based on data from the IMS Research graph):

Manufacturer % Growth
Nokia -40
Apple 19
RIM -25
Samsung 333
HTC 67
Sony 67
Motorola 0
LG 300
Others 0

Holwerda describes the market share growth of Android device makers as “insane.” Hardly the same word can be used to describe Apple’s growth figures. Holwerda put 2 and 2 together like this: “For a company which relies on the smartphone market for almost 50% of its revenue, that must be one scary realisation.”

Apple has every right to defend its cash cows (i.e., the iPad and the iPhone)–after all, this is a profit-making game. One way Apple could do that is to stay in the game–if not ahead of it–by innovating and producing new products. Though, as Holwerda observes, Apple seems “unable to turn the tide with just new products alone.” Apple’s seeming inability to compete by innovation, in the eyes of many, appears being covered up by Apple’s strategy to compete by litigation.

While Apple gets busy litigating, Android can continue developing, innovating, and creating new products as much as its green robotic heart desires. Both legitimate practices, I should say. But, between the two, which one leaves a bad taste in your mouth?

Comments

  • AdmiralAlpha

    Here’s a legitimate source you should consider, that indicates Apple’s year over year growth in terms of units sold worldwide. Maybe you might want to consider it over the shoddy and unreliable IMS research article you rely on for your main points. http://www.idc.com/getdoc.jsp?containerId=prUS22962811

    So your analysis is that Apple is trying to defend its revenue sources? How brilliant. Perhaps you’ll tell me that Apple’s company logo is a stylized fruit next. Every major corporation in the world works hard to perpetuate themselves, with each that is successful bringing unique perspectives and ideas to the table. In the future, perhaps you’ll focus your articles on actual innovations from one of the many Android manufactures instead of arguing over trite and irrelevant patent disputes.

    I’d like to see artless where instead of painting a false dichotomy where Apple simply litigates and Android innovates you give credit to both as legitimate contenders that bring forth new technologies and design techniques to the world. Also, while Apple and Android don’t leave a bad taste in my mouth, rotten little children who kick and scream and moan about how bad a rival company is in a passive aggressive way such as yourself do.

    It’s not the Android platform I can’t stand, it’s the fans.

    • Joshua H Henry

      Hey, I read this as a balanced article… You may be offended bc you have a secret love for Steve Jobs but you don’t have to blast the author bc ur feelings or pride was hurt by the numbers.
      I’m just saying… Calm down a bit. If apple or google paid me I would care about these numbers but they don’t… So I could care less

    • UniquesongofJoy

      From the article you linked to
      “In particular, Android-based devices extended their lead in the United States and took leadership in Canada thanks to Samsung,
      This kinda enforces the point of this article don’t ya think?
      Motorola, HTC, and LG.”

  • 8PAQ

    Samsung being a shameless Apple copycat is what leaves bad taste in my mouth. If it wasn’t for an American company that gave them a free OS Samsung would be in deep trouble right now because obviously Samsung or any other Asian manufacturer don’t have the skill to actually come up with a great OS. On that note everyone buy American. That would be motorola for you Apple haters out there. Down with copycats!

    • Renato Valenzuela

      you do realize that apple products are made in china by the lowest bidder right? if anything, buy korean. and samsung is the largest electronics manufacturer in the world. they dont need smartphones to stay afloat.

      • Zazazam

        Why don’t you just shut the hell up! America this, America that, stick to the goddamn point. Why don’t you mention the foreign people who contributed to America. Stupid DICK!

        • None

          Heaven forbid he unearths the origins of Apple’s labor in an article about Apple’s profit margin. . . You’re right, there is absolutely NO place for that in here.

          Aside from that, Samsung isn’t a “shameless Apple copycat.” Unless of course Apple developed the Super Amoled touch screen or pioneered DDR4 memory and kept them hidden from the rest of the world except Samsung then Samsung copied it. . .

  • Teedalt

    wow this isn’t even factual. read real news.

    • UniquesongofJoy

      Can you expand on that… HOW is it not factual?

  • Jay

    The way I see it is that Apple had there chance to gain market share, but limited it by only sticking with AT&T. I liked the iPhone and always wanted one but was not willing to change carriers to do it. I held out for years hoping that it would have changed. I just recently upgraded my unlocked iphone 2G on T-mobile to the Samsung Galaxy S 4g, and am very happy with the android OS. I even like it better than the Apple OS. So because Apple didn’t release the phone to other carriers, I am now happy with my android phone and don’t think I would switch to Apple even after T-mobile combines with AT&T. I think that will hold true for alot of other users also.

  • HS

    Your handy chart is not consistent. Compare Apple’s & HTC’s growth to Samsung’s & LG’s. You’ve used different calculations!

  • http://androidfanatics.blogspot.com/ CoreAn_Crack3rZ

    I was thinking of using these stats for a presentation, but some guys commenting that these are unreliable (or whatever is they are saying)

  • chopstewy

    So, last time I checked, 40% market share – 24% Market share is a loss of 16%, not 40%. Same with Apple, who only gained 3% market share, not 19%. In business, 19% Market share is only associated with new and Fast growing industries with only 1-3 major competitors…sorry, but the smartphone market is WWWWAAAAAAYYYYYYY too saturated for that kind of explosive growth. True Story.

    Also, not to mention, between market share growth and loss in the last table, doesn’t come out to 100%, which doesn’t make any sense what-so-ever…

    Elmer, premise is on point, but in the future, be sure to know your business math before trying to get your articles in WSJ…just saying….

    • chopstewy

      Also, in the 2nd chart, the fact that LG, HTC, and Samsung (Android’s 3 biggest supporting manufacturers) all showed market share growth equal to (LG @ 3%), or greater (HTC @ 4%, and Sammy @ a whopping 10%) than Apple is what Jobs saw that started this ugly ball of legalized entropy in motion.

      With that being said, I am going out on a limb here, and stating that Apple doesn’t have any new gadgets or technology up it’s sleeves, so it’s resorted to legalities to “keep the doors open and the lights on” in a sense.

  • Junkmail

    Another Android fanboy article that offers nothing to the conversation that anyone with a brain (and the android users) would know already.