Here’s Who the Mobile Wars HELP and HURT
The mobile space is as crazy as ever. With the announcement of the iPhone 5, there are now three phones at the “top” of the market: The iPhone 5, the Samsung Galaxy S3, and the Nokia Lumia 920. Supporting them are three different operating platforms: iOS 6, Android 4.0, and Windows Phone 8, respectively. We’re going to unpack exactly what this battle of the brands looks like.
Apple (NASDAQ:AAPL) is, of course, the force behind the iPhone 5 and iOS 6. Pre-orders are sold out and shares are at an all-time high. The new device is pushing Apple to new heights that could very well be sustainable. The phone is the first in the line to be authentically 4G capable, meaning it can operate on the fastest networks available.
While wireless carriers like Verizon (NYSE:VZ) and AT&T (NYSE:T) may suffer as subsidies eat into their profit markets, every new iPhone sale adopts someone into the Apple ecosystem. The “iProduct” lineup encourages loyalty by creating seamless integration among brand products but making it difficult to cross the line and use other software. For example, FaceTime is awesome, as long as you only want to call other people with FaceTime, i.e. people with an Apple device.
Meanwhile, Verizon and AT&T get downgraded from Buy to Hold. Stifel Nicolaus analyst Christopher King cites a hit to the bottom line from the iPhone 5 subsidy. Sprint (NYSE:S) has also said that it doesn’t expect to see profits from the iPhone until 2015. The company may need as much as $7 billion in financing to cover costs associated with subsidies and a network upgrade. Sprint has already committed $15.5 billion for iPhones over the next four years.
Samsung’s Galaxy S3 phone operates on the Google (NASDAQ:GOOG) Android platform. As the world’s biggest phone manufacturer, this is a great endorsement. Android is seeing a lot of updates with names like JellyBean and IceCream Sandwich, and the OS is about as awesome as the names are cute. Android takes about 52 percent of the global smartphone market, while Apple gets about 33 percent. Google has also acquired Motorola, the number four manufacturer, which will be pushing out powerful RAZR phones running on Android. Carrier subsidies for Android phones also cause carriers grief.
Symbian seems to be falling off the map as a platform. After being dropped by Nokia (NYSE:NOK) in favor of Microsoft’s (NASDAQ:MSFT) Window’s Phone 8, its market share has dropped below 1 percent. Nokia may be in its final bid for life with the Lumia 920 as it tries to take on Google and Apple. The Microsoft platform holds just 3.6 percent of market share, even less than Research in Motion (NASDAQ:RIMM) — but everybody knows the BlackBerry is dead, right? RIM is down over 50 percent this year to date.
Qualcomm (NASDAQ:QCOM) makes the Snapdragon processor that’s used in both the Samsung Galaxy 3 and the Nokia Lumia 920. Success for these phones also means success for Qualcomm, which has seen over 14 percent growth in the last three months. The company has also just announced that its new 4G-LTE modem is being implemented in broadband routers in Japan, which could spur further Qualcomm market share growth.
While Apple looks like its at the top of its game, it is by no means the champion. Other manufacturers and platforms keep the lead, if not the hype. Beneath it all, tech manufacturers like Qualcomm stand to do well as they stand back and meet the ever increasing demands of the mobile arms race.
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