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Is Apple About to Gain a Mountain of Market Share?

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The TechStrat Report by Sean Udall. Sean provides in-depth analysis, strategies and trades across the technology sector. Take a FREE 14 day trial.

The more discerning the buying public becomes, the more the quality and/or price for value equation comes to the fore.

Note that Apple's (NASDAQ:AAPL) smartphone market share is actually rising in developed markets.

Long-time readers know that I have previously held that Apple would increase market share for two-three quarters after the release of a new phone and then tail off as Android re-emerges. However, in the U.S. (and UK & France) that "tail-off" isn't occurring.  Simply put, as the facts change, so does my thesis.

Given how well this very old iPhone 5 is selling versus the best of the rest, I think the iPhone's share gains are actually more sustainable than that.

Plus, just think how well the next release will sell. If AAPL is seeing rising market share in the US now with a very aged iPhone lineup, what will that share look like with products that benefit from the the following?:

1. A new phone that is more like the beloved 4S upgrade than the 5.

2. A 4.5-5.0" screen size.

3. A cheaper device for emerging markets.

4. Far more usability in iOS7, which has so far been broadly overlooked.

5. And last but not least, all the new frequent upgrade plans by the major carriers.

Most of the above is self-explanatory. But at a minimum, I believe the next iPhone will be as well received as the 4S upgrade (which was a monster seller) versus last year's iPhone 5, which fell flat, relatively speaking.

As far as where AAPL's market share would be after a year of selling 4.5-5.0 inch devices, it might just be truly spooky to the rest of the competition.

Speaking for myself and many others of my ilk, we would ALL be using a bigger iPhone if it existed. As far as the emerging markets phone goes, it's coming, so can we quit hearing incessant reports about it?

I will emphasize that between the new look and feel, anti-theft/security features, and improved multitasking, the improvements in iOS7 are compelling and vast.

So far, I have not seen a truly good review of just how much better the OS upgrade actually is.

Frankly, there is also one thing that many don't articulate well at all and it's a single word -- REGRET. 

And what do I mean by this?

It's simple.

I'm sensing a growing number of the converted Google (NASDAQ:GOOG) Android masses that "like but don't love" their big-screened phones. 

Many of these users don't fully utilize or appreciate the power of Android and its vast array of features, and even fewer are the Rooting Technophiles that can even get a bigger boost of the device through modifications. 

These folks use their devices, and then in a few months, start longing for the unfettered usability of the iPhone again. Something like iRadio could further spur this longing, and a much bigger display on one of the next iPhones could fully ignite it. 

Thus, I believe a good proportion of buyers that went for high-end Androids over the past two years will return to Apple. I don't make these kinds of forecasts lightly, but I'll poing out that in 2009/10, I stated Android would go from 3-5% to 65-70% global share and I think I'm calling this latest trend correctly.

Bottom Line: In discerning markets, the aging iPhones are holding their own and in fact gaining share against very stiff competition.

With 3 new devices coming in the next 3-6 months, the usual iOS share surge should reassert itself. And if AAPL finally brings something in the large screen variety, there could be a market share rout for at least two quarters if not longer.

The TechStrat Report by Sean Udall. Sean provides in-depth analysis, strategies and trades across the technology sector. Take a FREE 14 day trial.
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