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Apple Lags in Market Share, Leads in Profit Share

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For followers of tech, it would seem you can't turn anywhere without running into an "Android vs. iPhone" article. And lately, the conceit of those pieces -- more often than not -- have been leaning in Google's favor. Last week, Dutch analytics firm Distimo predicted the Android Market would surpass the App Store in numbers by July, though it already leads in free apps. And a recent Nielsen study claims that future smartphone buyers are now more interested in purchasing an Android device than an iPhone. With Android leading in market share, user interest, and free app numbers, Apple has fewer ways to lead in the smartphone market.

Except for a major one: profits.

Speaking with All Things Digital, Canaccord Genuity analyst T. Michael Walkley says that, in the second quarter, Apple clobbered the competition in operating profits. Of the eight largest manufacturers in the industry, Cupertino nabbed 50% of operating profits -- while only commanding 18.6% of the smartphone market and less than 5% of the broader handset market.

Walkley believes Apple will be a profit leader for the foreseeable future.

"While most of this share came from Nokia, we anticipate Apple will continue to gain share from Nokia and RIM during their smartphone OS transitions," he told All Things D. "Given RIM's pre-announcement this past Thursday combined with our skepticism regarding QNX and RIM's ability to launch competitive 'super phones' during 2012, we believe RIM's value share will continue to fall during the next several years…. [And] we anticipate further declines [at Nokia] over the next several quarters as [the company] undergoes a platform transition."

Although Android has more smartphones in folks' hands, it stands to reason why Apple trounces them in profits. Google-branded smartphones tend to be priced more inexpensively and Phandroid's Rob Jackson notes that a quick perusal of Amazon Wireless reveals a great number of Android devices being sold for a penny. But Jackson also writes, "With so many Android-invested carriers and manufacturers and each putting money into development, marketing, and a host of other areas aimed at building a better product and increasing the sale, Android's affect on 'Profit Share' is somewhat elusive."

That being said, for a true "Apples-to-Apple" comparison, when there are more than a few people willing to pay the "Apple Tax" to procure the latest iPhone, Android needs more than just a low price to lengthen its lead.

(See also: Google Will Soon Steal Apple's App Store Crown, Study Says and Android, Not iPhone, Most Wanted Among Buyers)

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POSITION:  No positions in stocks mentioned.