If you just read the headlines, Monday looks like a rare bad news day for Apple. A new batch of Nielsen data shows that twice as many new smartphone buyers have chosen Android phones over iPhones in the past three months. Apple stocks dropped three percent after an analyst reported an iPad supply shortage. Together, the two stories suggest that Apple is losing its footing on top of the mobile market--which isn't definitely not good news. Based on past trends, though, the news isn't quite as bad as it sounds.
For the past decade and a half, Apple has become increasingly terrific at squeezing big profits out of a small share of the market. For the past year, the company's mobile division has been dominating with this strategy. At this point in time last year, Apple sold only 2.9 percent of the mobile handsets, but they managed to pull in a shocking 39 percent of the mobile profits, more than any other competitor. By this summer, Apple laid claim to half of profits earned by the industry's top eight manufacturers.
Android is indeed growing, but there are also signs that the big manufacturers like Samsung and HTC that have been driving that growth are thinking of dropping Android in favor of their own operating system. Furthermore, statistics released this summer showed "the return rate on some Android devices is between 30 and 40 percent, in comparison to the iPhone 4′s 1.7% return rate as of Antennagate in 2010" to quote Jason Biggs at TechCrunch. "Also worth noting, but immeasurable," says Biggs's colleague Greg Kumparak. "How many would-be iPhone buyers held off with the knowledge that a new iPhone was not only on the way, but was actually behind its normal release schedule?"
As for the iPad news, many analysts aren't blinking about rumors of an iPad supply shortage. "The iPhone 5 launch is much more important than the iPad right now," BGC Partners analyst Colin Gillis told Reuters. "Could the tablet market slow down? Yes absolutely, but data from factories is notoriously unreliable especially since Apple started diversifying their supplier base." Reuters also quotes other analysts report that "Apple remains the market leader that it created with the iPad" and "strong earnings growth for Apple due to … strong global demand."
All things considered, the numbers don't lie. Fewer people are buying iPhones and fewer iPads are on the market. But Apple has always sold fewer devices than their competitors but has dominated as a business for pushing technology forward. As Steve Jobs once said, "Innovation distinguishes between a leader and a follower."
This article is from the archive of our partner The Wire.
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