Competitors conspire with Google Android against Apple's iPhone

Apple is currently king of the smartphone world. The iconic iPhone has doubled in market share since 2008, rising to 10.8 percent in the first quarter of 2009 from 5.3 percent in 2008, according to Gartner.

But Apple may be in for a Microsoft moment. Just as a steady stream of well-heeled competitors like IBM, Red Hat, and Oracle are aligning themselves with Linux as a way to undermine Windows in servers and desktops, so, too, are crowds starting to form around Google's open-source Android in the smartphone market.

Linux: the bete-noir of proprietary operating system vendors.

Samsung, LG, Motorola, and others are placing increasing stakes on Android. Indeed, BusinessWeek reports that Motorola has "one bullet left in its gun" and this bullet is Android. It can't afford to let the "iPhone killer" draw blanks. "Motorola's handset business depends on Android," as ZDNet's Larry Dignan suggests.

Importantly, Android is growing in the area that defines the iPhone's success more than anything else: applications. BusinessWeek's Stephen Wildstrom says that "Android is now a contender" in large part due to its growing array of third-party applications:

The Android Market is surprisingly well-stocked, considering the relatively small number of Android phones in use....[W]ith support from Google and from handset makers desperate to come up with something that can mount a serious challenge to the iPhone, Android could become a major player.

And not a moment too soon. With Apple iPhone margins as high as 60 percent by some estimates, the market already seems ripe for an open-source competitor to bring prices down while improving choice. I love my iPhone, but as Android-based phones become smarter and slicker, I just might change camps. As with Linux in the server market, the smartphone industry is filled with second-place competitors. Most of these have a strong interest in banding together behind a Linux-based solution, in this case Android. It may take a soup-to-nuts, integrated solution like the iPhone to create a market, but it takes an open-source solution like Android to foster choice and lower costs.
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