iOS vs. Android: forecasts and analysts' reasoning

According to a recent report by IDC, Apple’s iPad has increased its share of the global tablet market from 66% in the first quarter of this year to 68% in the second quarter. In the same period, the share of Android devices from Google fell from 34% to 27%. RIM gained 5% market share in the second quarter, which was the debut for its new PlayBook tablet.

According to IDC forecasts, Android’s market share will fall to 23% in the third quarter, but HP’s $99 TouchPad sales should increase its share again to 26% in the fourth quarter.

Android has a good reputation in the smartphone market Google’s Android platform feels most confident in the smartphone market.

In the US, the share of Android smartphone owners increased from 35% in the first quarter to 40% in the second quarter, while Apple showed a more modest increase from 26% to 27%.

Why has Android entered the fight in the tablet market as well?It takes a lot of effort to promote Android-based tablets.

First of all, this can be explained by the high competitiveness of the market, as well as the fact that Android tablets and smartphones still use incompatible operating systems. Here the advantage remains with Apple’s iOS, which works on both iPhone and iPad, and allows developers to synchronize all tasks, while Google has to work with two different OS.

Google has developed a modified version of Android for smartphones, known as GingerBread, as well as a separate version for tablets – Honeycomb. The next version of the OS, the so-called Ice Cream Sandwich, will work on smartphones and tablets, but it will not appear until the end of this year. Until that time, you should not expect significant results from Android in the tablet market.

Forecasts in numbers (according to Trefis analysts’ estimates)

• The iPhone’s share in Apple’s stock price is 54%.
• Macintosh products (desktop computers, laptops, software and external devices) occupy another 12% of the corporation’s shares.
• The iPad also accounts for 12% of the shares.

What can affect the correctness of Trefis forecastsiPhone market share: iPhone’s share of the mobile market has increased from 0.3% in 2007 to 3% in 2010, and it may increase to 15% by the end of the forecast period.

The success of the iPhone is due to the unique touch interface, user-friendly controls and many other factors. The new iOS 4 has added multitasking to this list. It is also impossible not to note the halo effect of other popular Apple products – the iPod and Macintosh computers. According to Trefis estimates, soon every fifth phone in the world will be an iPhone, that is, its market share will be 20%. In this case, an increase in stock prices up to 25% is not excluded. On the other hand, by the end of the forecast period, the iPhone’s share may be only 10% of the market, and then the shares belonging to the iPhone will fall to 15%.

iPhone Gross Margin: iPhone gross margin decreased slightly from 62% in 2007 to 61% in 2009. This was followed by an even bigger decline to 51% in 2010. By the end of the forecast period, the gross profit of smartphones is expected to fall to 37%. In 2010, the main reason for this decline was the release of the iPhone 4 with additional features. A negative role was also played by the scandalous launch of free bumpers, which were designed to solve temporary difficulties with the iPhone 4 antenna. Of course, the price reduction will entail a decrease in gross profit. Thus, if the gross profit of the iPhone falls to 30% by the end of the forecast period, then the iPhone’s share in the Apple stock market will fall by about 10%. On the other hand, if the gross profit remains at 51%, then the iPhone’s impact on Apple shares will increase by 15%.