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Apple's Retail Business Is Growing Fast (Online and Off), but Google's Android Is Taking the First-Time Buyer Market

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It appears that the competing operating systems have cornered opposite sides of the market.

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In 2013, Apple (NASDAQ:AAPL) officially became the Internet's second-largest online retailer, behind perennial number one Amazon (NASDAQ:AMZN). According to new data from the e-commerce research firm Internet Retailer, Apple took in $18.3 billion in total online sales last year, representing year-over-year growth of 24%, higher than Amazon's 20%. Of course, Amazon really has nothing to worry about: its 2013 sales total figure of $67.8 billion is bigger than those of its 10 closest competitors combined.

Staples (NASDAQ:SPLS) was for many years the number two retailer, but it fell to Apple in 2013 with $10.4 billion in total sales -- a 1% increase YOY. Walmart (NYSE:WMT) took the cake for most growth in 2013 with $10 billion in total sales, or 30% up YOY.

According to The Wall Street Journal, a good deal of Apple's spike in online retail sales can be attributed to the fact that Internet Retailer included hardware sales in its report. In previous years, the firm used only digital sales from iTunes and the App Store, not sales data from the company's online Apple Store. 

And it's not just the online Apple Store that's seeing expansion and success: The tech company is adding two new Apple stores to its physical presence in New York City, with both scheduled to open next year. One will be located in the new World Trade Center mall being built by Westfield Group. The other, at 74th Street and Madison Avenue on the Upper East Side of Manhattan, will reside in an old bank building first occupied in 1921 by United States Mortgage and Trust Company. The World Trade Center shop will be situated between other high-end retailers, namely John Varvatos and Michael Kors (NYSE:KORS); the Upper East Side store will reside in one of the wealthiest neighborhoods in the world.

Across the smartphone divide from high-end Apple, Google's (NASDAQ:GOOG) Android continues to make strides with less-well-off consumers. New figures from analysis firm ABI Research have Android's global market share of smartphone operating systems at a full 80%, with almost 300 million smartphones running the OS. As the ABI senior practice director of mobile devices said, "Android looks set to completely dominate the high-growth developing market and increase its market share still further."

The firm also noted that basic mobile-phone operating systems lost 5% of total market share in the first quarter of 2013, and that most of those users upgraded to Android, not Apple's iOS, for their first smartphone.

As Natasha Lomas of TechCrunch wrote, this "suggests Google's mobile platform is set to be the biggest winner as the 'billions' of remaining mobile subscribers update to smartphones -- helping to keep what is already the dominant smartphone platform ahead of the competition."

Apple manages to do well for itself with a market share smaller than Android's; profit margins are much higher for iPhones and iPads than they are for devices that run Android. Of course, if billions of users are really entering the smartphone market within the next few years, perhaps Apple will reconsider its offerings suited for emerging markets.

Follow me on Twitter: @JoshWolonick and @Minyanville

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No positions in stocks mentioned.
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