Apple and Google: Two-horse Racing in the Mobile Market

Both Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) are “winning” the mobile market, depending on what track the two are running on. Google’s Android operating system is a clear winner in the platform wars, and devices running Android outnumber devices running Apple’s iOS.

Market research firm Flurry looked at the horse race on a couple of different tracks as well. On the basis of time spent in apps, iOS outruns Android by more than 20%. The introduction of the iPhone 5 stopped a skid in iOS app usage that followed the introduction of Samsung’s Galaxy S3 smartphone. The new iPad and the iPad mini started another Android slide that was halted slightly by the introduction of the Galaxy S4, but the halt was only temporary.

Flurry offers three possible explanations for the gap in time spent within apps, but our view is that the introduction of the iPad mini really changed the game. The smaller screen size and lower price answered consumer demand for a competitively priced Apple tablet. And tablets, more so than even smartphones, have been widely adopted in the two-screen environment that was once dominated by a TV screen.

Apple completely dominates the profit side of the mobile device market, but Android stands out in emerging markets, where inexpensive devices prevail. Whether Google can convert all those cheap Android-based phones into profits remains a question that the company has avoided answering. We predict that as soon as there’s some good news to report, Google will be first out of the gate.