Is the iPhone Becoming a Dinosaur?

The iPhone continues to lose ground to the gaggle of Google powered smartphones running the Android OS. And if Apple doesn’t do something fast, it risks losing its perch among smart phone manufacturers.

A Sept 23 survey conducted by ChangeWave research shows that Google (NASDAQ: GOOG) and its Android smartphone operating system is now neck-and-neck with Apple (NASDAQ: AAPL) and its iPhone OS among future buyers. Specifically, 38% of some 4,000 consumers in the survey said they would prefer to buy a phone running the Apple iOS in the next 90 days and 37% of respondents were eyeing an Android-powered phone. That’s a big shift from three months ago, when 50% of future buyers were favoring the just-released iPhone and 30% were anticipating an Android smartphone.

The slowdown in enthusiasm among consumers seems to be tied to two things –the fact that the iPhone 4 hype and huge spike in demand during June has now subsided as it normally does after a new release, and that Android continues to see big innovation from app developers and phone firms Motorola (NYSE: MOT), HTC and others.

That is not to say the iPhone doesn’t have clout – it still does. The company remains a big player in future buying even if it’s essentially tied with Google for now, and remains on the top of the heap when it comes to satisfaction. About 3 in 4 iPhone users surveyed by ChangeWave said they were “very satisfied” with their phone, compared with 65% for Android OS phone users.

While  Apple’s closely-guarded technology may satisfy, it leaves the door wide open for innovators like Google to eat its lunch. Apple doesn’t allow for anyone else to join the iPhone party and the gadget will thus be limited to a single update per year at best. While a new iPhone in mid 2011 is sure to make another splash, it’s tough to offset a steady drumbeat of Android headlines. In the last three months alone, some 20 Android OS phones have rolled out – including the Motorola Defy and Flipout, and HTC’s Desire and Wildfire phones.

So what does the future hold? It’s hard to say. Microsoft (NASDAQ: MSFT) is about to try its chops again in the smartphone arena with its Windows Mobile 7 launch within weeks, and Nokia (NYSE: NOK) is making waves with its N8 release that sports the open source Symbian operating system.

The bottom line is that innovation is driving the smartphone industry. And unfortunately for Apple, its close control over its iPhone means slower evolution – and thus a real risk of losing its dominant position in the near future.

As of this writing, Jeff Reeves did not own a position in any of the stocks named here.

Daily Trader’s Alert — Yours FREE! In each issue, InvestorPlace’s Chief Technical Analyst Sam Collins gives you his take on what’s slated to impact your portfolio during the trading day. It also includes Sam’s Trade of the Day — his daily stock or ETF pick complete with chart and trading target. Daily Trader’s Alert is yours free, sent right to your e-mail inbox each trading day before the market open. Click here to get started now.

Article printed from InvestorPlace Media,

©2023 InvestorPlace Media, LLC