Android beats iOS in stock markets

By Kim Yoo-chul

There are many indicators that show how a company is performing. Among them, stock prices are probably one of the best pointers to tell whether it is going in the right direction.

In this regard, Apple’s reign over the smartphone world is showing signs of decline as stock prices for the technology giant drop while those of its competitors climb.

Since Apple’s first iPhone was launched in 2007, the Cupertino-based outfit has long controlled the global smartphone market, but things are changing.

Before 2010, Apple impressed investors with updated iPhones, which received warm responses from consumers. Since then, Apple’s grip on the market has slipped with the sudden rise of Google and Korea’s Samsung Electronics.

Apple discounted the impact the Samsung-Google alliance would have on its business.

Now, Samsung leads the global market in smartphones and budget models, prompting stock analysts to increase their estimate for Samsung shares to more than 2 million won.

Thanks to Samsung’s full support, Google saw a 20.6 percent rise in its share price during the past six months, while Apple’s stock decreased by 38 percent during the same period.

Apple shares hit a historic high at $705.07 on Sept. 21 last year, but the share price was trading at $420 Monday in New York. In contrast, Google shares reached a record $821.50 the same day.

Samsung is the most serious backer of Google’s Android software and rose to become the global top phone supplier using the latter’s open-based platform. Apple created its own iOS software, which is not available to other phone vendors.

“Yes, it’s true that Apple is a creator and innovator. But innovation doesn’t really matter for consumers,” said TongYang Securities analyst Park Hyun.

“Pricing does matter. In terms of such new circumstances, Apple was late to respond to different consumer demands, while Samsung is seeing a faster evolution of its products.”

Apple is currently sticking to its old formula, releasing one product a year while rivals such as Samsung release multiple devices with better design and prices.

“If Apple wants to just remain as a true innovative firm, then they can,” said an executive at Samsung by telephone, asking not to be identified.

“But investors will further sell its shares. Apple is being asked to change its business strategies. As it has a solid brand image, more affordable models won’t seriously hurt its corporate value.”

An important point to note is that Apple is ignoring the impact of the 5-inch tablet market and sticking with its 4-inch iPhone despite the fact more other players are releasing smartphones with wider screens.

“U.S. District Judge Lucy Koh’s ruling to reduce Samsung’s payment to Apple by nearly half also means Apple can’t survive by just embracing its decades-old virtues. Because Apple has a very strong supply-chain management structure, it is able to roll out price-competitive models, which is also good for Samsung in terms of competition,” said the Samsung executive.

Unlike the struggling Apple, Samsung has secured the needed conditions to lift its stock prices. It has the right products and money for marketing and solid brand awareness, which should be a positive sign for investors.

Park expects smartphones will account for 54 percent of total cell phone sales this year, rising from last year’s 42 percent.

“That’s why we are positive about Samsung stocks. As the company is well positioned to respond to challenging market factors, Samsung can sell more mid-range devices. Bullish phone sales will also help its semiconductor and display units report increased revenue,” said Park, adding Samsung stocks will increase.

Samsung will introduce its new smartphone, the Galaxy SIV, next week in New York, which is Apple’s home turf. This shows the company’s guarded confidence to widen its lead over Apple.

“New York is the heart of the United States. The reason why we chose the Big Apple is simple. We want to show investors that we can manage,” said another Samsung official in a brief interview in downtown Seoul.

Samsung has dual strengths in finished goods and parts, while Apple doesn’t run its own factories. This causes Apple to buy parts from suppliers in Japan, China, Taiwan and South Korea.

“We want Apple to recover. We want Apple to regain their status as our top client. Healthy competition creates more markets,” said the Samsung official.

Apple was the top client for Samsung when the iPhone maker bought flat screens and memory chips for almost all of their i-devices, but that partnership changed a few years ago after Apple took Samsung to international court, claiming Samsung had copied the look and feel of Apple devices.