Apple Inc. (AAPL) Leaves Android in the Dust With iOS 10

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Apple Inc. (NASDAQ:AAPL) is seeing iPhone and iPad owners upgrade to iOS 10 at a faster pace than any previous release. The new operating system is already on more than two thirds of all AAPL mobile devices. This success is one of the key reasons why Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) is releasing its new Pixel smartphones.

Apple Inc. (AAPL) Leaves Android in the Dust With iOS 10

Android is the clear winner when it comes to the mobile platform wars. In the most recent quarter, IDC says 87.6% of smartphones sold were running Android, compared to just 11.7% for iOS.

iOS 10 vs. Android Fragmentation

So why is it that despite such an overwhelming lead, the developers of many popular mobile apps and games still hit Apple’s App Store before they land on Google Play? And while Google Play has pulled ahead in sheer numbers of apps available — roughly 2.3 million to 1.4 million for AAPL’s App Store — those numbers also fail to reflect Android’s massive lead.

A big advantage AAPL still enjoys is its relative lack of fragmentation. The latest stats have iOS 10 installed on over 66% of all active Apple mobile devices, less than a month after its release.

Android’s equivalent to iOS 10 is Android 7, better known as Android Nougat. This latest version of Android was released on Aug. 22, but it quickly went nowhere. iOS 10 actually started slow compared to previous releases, but was still running on about 48% of AAPl devices two weeks after its release. Android Nougat? After two weeks, Google had it pegged at less than 0.1% adoption.

At this point, even Android Marshmallow (released in 2015) is on less than 20% of Android devices. 2013’s KitKat is still powering over one quarter of all Android devices and 15% or so are running Jelly Bean … from 2012.

If you’re an app developer, knowing that Android has some fantastic hardware to work with, including devices like the Samsung Electronic (OTCMKTS:SSNLF) Galaxy S7 sounds good. But when you factor in either having to tweak your app to support a four year-old operating system, or having to forgo a huge chunk of Android users by releasing an app that’s based on the features of a current operating system, the math hurts.

Testing and support are also much more difficult in that fragmented Android landscape.

When a developer targets the iPhone, they can count on the majority of all the AAPL devices out there running the most recent OS, in this case iOS 10. That means no dumbing down the app and an easier time of testing and support.

That relative uniformity across its devices is why AAPL continues to punch far above its weight when it comes to mobile apps.

Google Pixel to the Rescue?

Google knows this, of course. Its strategy of allowing third party manufacturers to do the Android heavy lifting meant a huge lead in raw numbers, but those manufacturers have near zero interest in pushing out Android updates to their customers. Better for business to convince them to buy a new phone if they want the new OS.

So you end up in a situation where nearly two months after you release a new operating system, the fastest growing version is a year old and 35% of all devices are running a version that’s two years old.

A part of the decision to release the Google Pixel was to wrestle Android adoption away from those OEM manufacturers and take control, Apple-style. Pixel will ship with Android Nougat and Google Pixel smartphones will be able to update to the latest versions as soon as they are released –just like the iPhone.

It will take time, but if the Google Pixel succeeds, eventually Android will begin to more closely resemble iOS, with fewer devices running outdated operating system versions.

Even if the approach doesn’t pay off in shoving AAPL’s iPhone further to the fringes, it is likely to help Google Pixel sales gain momentum over competing OEMs and let Google continue charging a premium price. At that stage, Pixel sales could actually represent a lucrative revenue source for GOOG (just as the iPhone is for AAPL) instead of being a tool for showcasing Android capabilities and reducing fragmentation.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.


Article printed from InvestorPlace Media, https://investorplace.com/2016/10/apple-inc-aapl-ios-10-leaves-android-dust/.

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