Tablets will soon start driving smartphone market share, giving Apple (NASDAQ:AAPL) a big advantage over Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) in the coming year, Goldman Sachs analysts Bill Shope and Heather Bellini wrote in a research report. The analysts, who surveyed over 1,000 mobile device users, concluded that ecosystems were driving “platform stickiness” and predicted a slow decline in Android smartphone share starting in 2013.
Why do the Analysts Predict Advantage Apple?
“The danger for Google in our view is that tablet share loss leads to smartphone share defection as consumers choose to standardize on a platform, which would expose the company to a rising portion of mobile searches subject to higher TAC [traffic acquisition costs] rates and highlights the importance of a compelling tablet offering to Google,” the analysts wrote. “We see Android tablet share excluding the [Amazon (NASDAQ:AMZN)] Kindle Fire going from 33 percent this year to 21 percent next year,” the analysts wrote. “We also see Android smartphone share declining next year to 53 percent from 55 percent this year.”
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They predicted Apple’s tablet sales volume at 61 percent of the global total in 2014, up from 56 percent currently. In comparison, Google’s Android was expected to have a 23 percent share and Microsoft 16 percent.
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While Apple may closely control its hardware and platform software — in complete contrast to Google — it instead allowed more vendors of applications, making it more attractive as a marketplace, the analysts argued. In addition, while Android represented more than 70 percent of smartphone shipments in the third quarter of the year, iOS generated more than 60 percent of mobile Internet traffic.
“Apple customers have shown more willingness to pay for complements than Android users,” they wrote. “This in turn makes iOS a more attractive platform for complement providers and this eventually attracts more users. The loyalty and quality of Apple’s user base, driven by its platform strength, enable it to command subsidies for the iPhone from the carriers in the form of a hefty wholesale average sales price.”
What’s the Next Battleground?
The analysts also predicted television to be the next battleground for tech companies. “Looking ahead, we believe the next big market disruption could be in the form of smart TVs,” they wrote. “These devices, integrated with existing mobile ecosystems, could be the battleground for the next big compute revolution. As such, smart TVs’ ability to become another platform component will likely mean significant investment from Apple, Microsoft, Google, Samsung, and others.”