Watch CBSN Live

Apple Amps Up Its Full Court Press Against Google's Android

Google's (GOOG) Android mobile operating system has continued to march ahead in market share, nearing 50 percent worldwide, according to Canalsys. What will Apple do about it? Plenty.

Although expecting everyone to buy an iPhone is unrealistic, Apple is doing its best to put its product in front of as many people as possible with a new low-priced phone for the developing world and by striking a new carrier deal. On the defensive front, Apple just managed to get an EU-wide preliminary injunction against a number of Samsung's more popular smartphones -- another step in Apple's strategy to legally hobble Android sales as much as possible.

Cheap iPhone isn't an oxymoron
There could be a cheaper iPhone within weeks, sacrificing profit margin to appeal to lower-end sales in emerging markets, if a Reuters report is correct. Although Reuters says that the move would challenge Nokia (NOK), remember that Nokia CEO Stephen Elop, in his burning platform memo, saw Android as a big threat in the low-cost smartphone market:

In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry's innovation to its core.

Let's not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally -â€" taking share from us in emerging markets.

And even MediaTek is adopting Android.

If the lower cost model report is true -- and given how Apple has actively moved older iPhone models to a $49 price, a separate inexpensive model isn't that much of a stretch -- then the company has adopted a classic strategy. Instead of letting others cannibalize its sales in particular markets, Apple will do that itself.

Sprint gets the iPhone
According to a Wall Street Journal report, Sprint (S) will get to sell both the iPhone 4 and 5. The Journal calls it a "big win" for Sprint, which might keep some customers from moving to another carrier. But it's also smart business for Apple.

If the iPhone isn't available at a particular major carrier, then its millions of customers will by default choose something else -- likely an Android phone. One used to a given interface and style of software, it becomes more difficult to get consumers to change to something else. And if Apple can't get more people to buy an iPhone, it will eventually see a halt to its growth rates.

Moreover, it's in Apple's interest to ensure the existence of a greater, not smaller, number of big carriers. If AT&T (T) merged with T-Mobile, that would leave it and Verizon (VZ) as the iPhone outlets in the U.S. Apple is better off having more carriers turning their attention to the iPhone and potentially bidding against each other to carry the company's products.

Bye-bye Galaxy smartphones ... for now
The real wow in smartphone news at the moment is that Apple just got an EU-wide preliminary injunction against Samsung's Galaxy S, Galaxy S II, and Ace smartphones, as patent blogger Florian Mueller noted. Not to be confused with the preliminary injunction against selling the Galaxy Tab tablet in Germany, this is far more extensive and covers some of Samsung's most popular smartphones.

This move by Apple -- paralleling the patent infringement lawsuits it's filed in the U.S. -- is intended to deny Google and its hardware vendors access to markets and customers. The more Apple can limit Android sales, the more it undercuts overall Android volume, which then affects how profitable Android phones are and how much money manufacturers can invest in developing new products and marketing current ones.

But then, it's no surprise that Apple would have a multifaceted strategy for dealing with Android. The company is smartly run.


View CBS News In