Sunday, January 16, 2011

Google Vs Apple. Is Android Killing Apple? A Brief Look at Android's Effect on Apple's Growth since 2007

It seems that there is hardly anywhere on the net that I go where the argument that Android is killing Apple is put forward. I've even read that Apple will soon be heading towards insolvency like what happened two decades ago during the Mac PC Skirmish I. The belief is that Google (the new Microsoft) is raking in all the money and Apple is suffering diminishing returns.

Fact is in 2007 when Android was announced with great fanfare and plenty of prognostications of imminent Apple demise, Google was a larger company by market capitalization than Apple. Apple blew past Google in 2009. Now after 3 years or so of Android 'success' Apple is now larger than Google by a $100 billion ( $318 b vs 197 b ).

see chart:

Goog vs Aapl Growth since Android

You would have made little money if you bought into Google at Android's announcement, Goog is actually still under it's all time high. You would have tripled your money with Aapl if you had bought in at the iPhone announcement.

And it's not as if Aapl is overbought vs Goog as Goog's P.E at 25 is higher than Aapl's at 23.
Apple's Forward P.E is even lower at 15 vs Goog at 20

Google says that it hopes to earn $1 billion in mobile in a year.
Apple made $8.82 billion from iPhones alone last quarter announced in October. (That's not counting other iOS devices like iPads, iPod Touches or revenues from iADs, App Store, iTunes music, movies etc.) That $8.82 b wasn't even from the high earning Christmas quarter which is yet to be announced. 
Apple is heading towards $40 billion or more a year in mobile.

(I understand the revenues are not directly comparable for the two companies as Apple produces the whole eco-system but I just wanted to point out the few facts above which seemingly is unfamiliar with many as the countless 'Apple is being killed by Android stories' out there attest). 

I own both stocks.