The Real Reason Why Apple Fears Android

July 29, 2011
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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?

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