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Apple Inc (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) and China

The Google Model

67 percent of the devices sold this year in China will run Android.

A similar trend has been noticed by the US firm Analysys International, which predicted Android’s market share would rise by 7.3 percentage points to 90.1 percent in the third quarter.

Android is open source and Google releases the code under the Apache License. This open source code and permissive licensing allows the software to be freely modified and distributed by device manufacturers, wireless carriers and enthusiast developers. Additionally, Android has a large community of developers writing applications (“apps”) that extend the functionality of devices, written primarily in a customized version of the Java programming language. In October 2012, there were approximately 700,000 apps available for Android, and the estimated number of applications downloaded from Google Play, Android’s primary app store, was 25 billion.

Even though the software is open-source, device manufacturers cannot use Google’s Android trademark unless Google certifies that the device complies with their Compatibility Definition Document (CDD). Devices must also meet this definition to be eligible to license Google’s closed-source applications, including Google Play.

As Android is not completely released under a GPL compatible license, e.g. Google’s code is under the Apache license, and also because Google Play allows proprietary software there is still an upside for Google.

The Apple Model

iOS (previously iPhone OS) is a mobile operating system developed and distributed by Apple Inc. Originally released in 2007 for the iPhone and iPod Touch, it has been extended to support other Apple devices such as the iPad and Apple TV. Unlike Microsoft’s Windows Phone (Windows CE) and Google’s Android, Apple does not license iOS for installation on non-Apple hardware. As of September 12, 2012, Apple’s App Store contained more than 700,000 iOS applications, which have collectively been downloaded more than 30 billion times.[ It had a 14.9% share of the smartphone mobile operating system units shipped in the third quarter of 2012, behind only Google's Android. In June 2012, it accounted for 65% of mobile web data consumption (including use on both the iPod Touch and the iPad). At the half of 2012, there were 410 million devices activated.[6] According to the special media event held by Apple on September 12, 2012, 400 million devices have been sold through June 2012.

While Apple iOS has less users, they make more from each one, Apple users are more active data consumers and they have sold 30b apps as opposed to 25b on the Android system.

Quality Vs Quantity

The top five mobile phone producers in China

The top five cell phone producers in China — Samsung Group, Lenovo Group Ltd, Huawei Technologies Co Ltd, ZTE Corp and Coolpad — all use the Android system. They now hold 60 percent of the Chinese market

Android is likely to continue gaining market share in the world, so much so that one in every two handsets sold worldwide will be running on it by 2015.

Two-thirds of the cell phones sold in China in 2012 run on Google Inc’s Android operating system, making the country the largest market for the system in the world, a recent study said.

Sales of smartphones are also increasing at a faster rate in China than in any other global market, going up by 85 percent from last year so far in 2012, according to the London-based Informa Telecoms & Media, a unit of the research firm Informa UK Ltd.