Goldman Sachs sees Apple eroding Google’s mobile market share

“Goldman Sachs computing analysts Bill Shope and Heather Bellini and colleagues this morning offer up a longish (79 pages) summary of what they see as the “platform wars” and the rise of tablet and smartphone computing,” Tiernan Ray reports for Barron’s. “The authors’ point is that tablet computers will drive smarthpone market share as the ‘ecosystem’ across the two tends to be mutually reinforcing. In this respect, they see Apple, which the firm rates a Buy, having an advantage with half or greater share of tablets, and Google being at a disadvantage as it tries to rival Apple’s iPad.”

“The analysts surveyed over 1,000 mobile device users and conclude that ‘ecosystems drive platform stickiness, thus leading to a slow decline in android smartphone share starting in 2013,'” Ray reports. “The report has Apple controlling 61% of tablet sales volume come 2014, up from 56% today, compared to 23% for Google’s Android, while Microsoft will come from almost nothing to 16% by 2014, and will keep growing at Google’s expense thereafter.”

MacDailyNews Take: As we wrote over a year ago on October 27, 2011:

Windows Phone will be popular. Over time, it’ll eat the lunch of the increasingly fragmented, increasingly insecure, and increasingly costly Android (losing patent infringement lawsuits and dropping features/paying royalties to multiple IP owners will do that to you).

The not-iPhone world will begin to dump Android and move to Microsoft’s mobile OS offering because it will eventually cost less, work better, and come with far fewer legal issues. In the iPhone wannabe market, it’s already happening (Nokia, for example). We expect the same to happen in the iPad wannabe market, too. Google and Microsoft will long battle each other for the non-Apple markets and that’s a much better scenario for everyone than having a single ripoff artist flood the market with fragmented, insecure, beta-esque, mediocre-at-best products. Google’s attempt to be the next Microsoft is doomed.

This, of course, will also impact Google’s search business. Apple’s Siri will increasingly deliver info to users sans Google and Microsoft will, naturally, use Bing for their search. As we’ve said many times in the past: Google will rue the day they got greedy by deciding to try to work against Apple instead of with them.

The bottom line: We’d rather see a company trying unique ideas, even if – shockingly – it’s Microsoft, than the wholesale theft of Apple innovations that we’ve been seeing for over four [five] years now. Don’t steal IP. Even worse, don’t steal IP and “claim to be innovators.” We have no problem with any companies that attempt to compete with Apple using their own unique ideas and strategies.

Ray reports, “The authors’ premise is that the debate over ‘open’ versus ‘closed’ software platforms is misunderstood by investors. They argue Apple is closed in the sense of controlling its hardware and platform software, but it provides a rather open platform in the sense that it allows for a lot of vendors of applications, or what the team calls “complements,” which makes it more attractive as a marketplace than Google’s Android.”

Read more in the full article here.

MacDailyNews Take: As Apple CEO Steve Jobs said on October 18, 2010:

“Google loves to characterize Android as ‘open’ and iOS and iPhone as ‘closed.’ We find this a bit disingenuous and clouding the real difference between our two approaches. The first thing most of us think about when we heard the word ‘open’ is Windows, which is available on a variety of devices. Unlike Windows, however, where most PCs have the same user interface and run the same apps, Android is very fragmented. Many Android OEMs including the two largest, HTC and Motorola, install proprietary user interfaces to differentiate themselves from the commodity Android experience. The user is left to figure it all out.”

“Compare this with iPhone, where every handset works the same. Twitter client, TwitterDeck, recently launched their app for Android. They reported that they had to contend with more than a hundred different versions of Android software on 244 different handsets. The multiple hardware and software iterations presents developers with a daunting challenge. Many Android apps work only on selected Android handsets running selected Android versions. And this is for handsets that have been shipped less than 12 months ago. Compare this with iPhone, where there are two versions of the software, the current and the most recent predecessor to test against.”

“In addition to Google’s own app marketplace, Amazon, Verizon, and Vodafone have all announced that they are creating their own app stores for Android. So, there will be at least four app stores on Android, which customers must search among to find the app they want and developers will need to work with to distribute their apps and get paid.”

“This is going to be a mess for both users and developers.”

“Contrast this with Apple’s integrated App Store which offers users the easiest to use, largest App Store in the world, preloaded on every iPhone. Apple’s App Store has over three times as many apps as Google’s marketplace and offers developers one-stop shopping to get their apps to market easily and to get paid swiftly.”

“You know, even if Google were right and the real issue is ‘closed’ versus ‘open,’ it is worthwhile to remember that ‘open’ systems don’t always win. Take Microsoft’s ‘PlaysForSure’ music strategy which used the PC model, which Android uses as well, of separating the software components from the hardware components. Even Microsoft finally abandoned this ‘open’ strategy in favor of copying Apple’s integrated approach with their Zune player; unfortunately leaving with OEMs empty-handed in the process. Goolge flirted with this integrated approach with their Nexus One phone.”

“In reality, we think the ‘open’ vs. ‘closed’ argument is just a smokescreen to try and hide the real issue which is: What’s best for the customer? Fragmented versus integrated. We think Android is very, very fragmented and becoming more fragmented by the day. And, as you know, Apple strives for the integrated model so the user isn’t forced to be the systems integrator. We see tremendous value in having Apple, rather than our users, be the systems integrator.”

“We think this is a huge strength of our approach compared to Google’s. When selling to users who want their devices to just work, we believe integrated will trump fragmented every time. And we also think our developers can be more innovative if they can target a singular platform, rather than a hundred variants. They can put their time into innovative new features, rather than testing on hundreds of different handsets. So we are very committed to the integrated approach, no matter how many times Google tries to characterize it as ‘closed,’ and we are confident that it’ll triumph over Google’s fragmented approach, no matter how many times Google tries to characterize it as ‘open.’”

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]


  1. “The authors’ premise is that the debate over ‘open’ versus ‘closed’ software platforms is misunderstood by investors”
    “There are stupid people that prefer specs and terms other than USER EXPERIENCE AND ACTUAL FUNCTIONALITY”

    1. Many of these people are former/current Windows users…

      And as MDN correctly points out… There is the iPhone AND non-iPhones… That’s basically it…

      The thing that is interesting for investors is that Apple always has a market that it can still GROW into… Whereas the competition floods the market and finds they no longer have growth for their stockholders to invest their future on.

      Apple correctly focuses on creating best product experiences and those willing to pay for it.

      So as Androids top out… Most iPhone users stay with Apple… MSFT is cutting out of Google pie not Apple pie.

  2. …offer up a longish (79 pages) summary… Good grief, a 79 page summary? I’ve read short novels that were shorter than that. If that’s how long the summary is, how much larger can the entire book be?

    The true summary is above in @troy’s post.

  3. Well, someone tell those numbnuts at CNBC who were touting IDC’s prediction that Android would take share away from the iPad by 2014. Of course, if they had looked at the IDC report, they’d have seen that it was Windows that was supposed to take share from both Android and iOS, but hey, they don’t care.

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