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Android Invasion Puts Squeeze On Apple

apple/android guys 

In case anyone missed any of the slew of research reports out this week underscoring the fast-growing market share of Android, Google CEO Eric Schmidt boasted at a tech conference Wednesday that some 200,000 Android-based phones are being sold each day.

That's double the total two months ago. "It looks like Android is not just phenomenal but incredibly phenomenal in its growth rate. God knows how long that will continue," he told audience members. Thanks for clarifying the difference between "phenomenal" and "incredibly phenomenal," Eric.

But it seems a bit odd Google periodically trumpets the number of Android-powered phones being activated each day. Imagine if Microsoft made a big deal out of activating Windows on another 5 million or 10 million PCs. In both cases, neither company is making any money off the hardware in which its software is packaged.

Google's own attempt to manufacture and directly sell its own handset (the Nexus One) earlier this year flopped. But that didn't matter much, because what Google is really after is getting more and more people to use search, Gmail, and other Google services on their phones. Schmidt pointed out that the proliferation of Android devices is turning into significant revenue as a result of increased mobile search traffic.

By partnering with multiple manufacturers and carriers to launch more than 20 Android handsets, Google has been able to gobble up smartphone OS share while boosting use of its own mobile properties. It seems almost a mathematical certainty that, through alliances with the likes of HTC, Motorola and Verizon Wireless, Android will eventually become the most pervasive smartphone platform.

Google's success with Android highlights the limitations of Apple's end-to-end approach to technology development. As wildly popular as the iPhone has been, it's part of a closed system in which Apple creates all the hardware and software itself. That helps insure the high level of seamless design and user friendliness Apple products are known for, but also limits how widely Apple's iOS can spread.

Unlike Google, of course, Apple is focused on making money from the hardware it sells rather than search advertising, (though it obviously made a serious push into app advertising with the iAd.) While launching the iAd system, Apple CEO Steve Jobs took a swipe at Google, saying search is not where it's at in mobile.

Nevertheless, if Android is helping to drive sales of handsets made by Apple competitors, then it's not good for Apple. And sales of Android devices have surpassed iPhone sales for the last two quarters, according to NPD Group.

As long as the smartphone market keeps up its rapid growth, Apple will continue to post huge quarterly earnings. But with Android's recent share gains, the company has to be looking harder than ever at ending its exclusive deal with AT&T to offer the iPhone through Verizon as well. Expanding distribution to another carrier, especially one viewed as offering more reliable service, would certainly help Apple to cope better with the Android invasion.

The latest rumor is that Verizon will start offering the iPhone at the start of next year. Whether this one becomes a reality may depend on just how much pressure Apple is feeling from Android these days.

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