The popularity of Apple Inc’s (AAPL'>AAPL) operating system appears to be on the rise, according to recent numbers released by the NPD Group. According to NPD, Apple’siOS market share in the US. surged from 26% to 43% from October to November.
The NPD Group has yet to release data for the month of December. However, it has found that on Christmas Day, 6.8 million Android and iOS devices had been activated. This was up significantly from the comparable year-ago period. When the fourth quarter reports are finally released, it will likely be a close finish between the two.
Apple’s Peers Suffer a Fall
During the same period, Google Inc’s (GOOG'>GOOG) Android market share plummeted from 60% to 47%. Nonetheless, Android remained the leading operating system (:OS).
Other operators such as Research In Motion Inc.’s (RIMM'>RIMM) market share dwindled from 8% in the previous quarter to 6% in October and November combined. This is a far cry from the 21% share it had in the third quarter of 2010. As it stands now, the race seems to be predominately between iOS and Android.
Meanwhile, Apple’s smartphones have been the most sought after products during the October and November period. Apple’s iPhone 4S, iPhone 4 and iPhone 3GS were the top three purchases. Samsung’s Galaxy S products (4G and II) came in fourth and fifth, respectively.
Apple’s iPhone 4S has gained popularity and is expected to boost the company’s top line significantly in the current quarter. The new iPhone has reported strong sales in the U.S. and U.K. However, iPhone 4S did not fare as well in Europe amid the macro-economic concerns.
Emerging markets such as Brazil, Mexico, Russia and China are becoming more important to Apple, representing 16% of overall sales.
Third Quarter Gartner Report
In the third quarter of 2011, Gartner reported that Samsung became the top smartphone manufacturer worldwide as sales tripled year over year to reach 24 million. On the other hand, Apple shipped 17 million iPhones in the same period, a year-over-year increase of 21%, but down nearly 3 million units from the second quarter of 2011.
Additionally, in the third quarter of 2011, Android OS market share almost doubled from the year-ago quarter to 52.5%. Meanwhile, Apple’s iOS had a 15.0% share, which declined from the previous year (16.6% in 3Q10).
Apple relies heavily on its iPhone sales. In the last concluded quarter, the tech-giant sold 17.1 million handsets, representing year-over-year growth of 21.0%. Revenues from iPhone handset sales, accessory sales and carrier payments totaled $11.0 billion, up 24.0% from $8.8 billion in the year-ago quarter.
However, the company has been facing significant amount of pressure from Android-based smartphones and that would be a likely headwind going forward. Nonetheless, given the loyal customer base, international expansion, competitive pricing strategy and solid cash position, we remain optimistic on Apple’s long-term growth.
We maintain our Neutral rating over the long term (6-12 months). Currently, Apple has a Zacks #3 Rank, which implies a Hold rating in the near term
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