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Alphabet's Android Topples Windows as Most Preferred OS

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Per Techcrunch, Alphabet Inc.’s (GOOGL - Free Report) Android operating system (OS) has dethroned Microsoft’s (MSFT - Free Report) Windows as the most popular OS in the world with respect to Internet usage.

TechCrunch quoted data provided by StatCounter (a web analytics company) per which Android had a 37.93% market share in the Internet usage space in Mar 2017. This was followed by Microsoft with 37.91% share, Apple’s (AAPL - Free Report) iOS at 13.1% and Mac OS at 5.17%.

Shares of Alphabet were up 1.06% on Monday. We note that the technology giant outperformed the Zacks Internet – Services industry over the last one year. While the industry gained only 7.6%, Alphabet’s shares returned 13%.

StatCounter noted that Android’s growth was driven by growing demand for smartphones as a means to access the Internet, declining PC shipments and rising demand in Asian countries.

We note that Microsoft has dominated the global OS landscape since the 1980s. Given the fact that Android entered the space just five years ago, with a market share of 2.4%, this is a phenomenal achievement. It marks an end to Microsoft’s dominance in the OS space.

However, as per StatCounter, the Windows OS still commands the lion’s share when it comes to desktops and laptops.

Our Take

As per a Cisco (CSCO - Free Report) report, it is estimated that more than half of the world’s population will be connected to the Internet by 2020. With PC shipments on a decline, much of this demand will be met by smartphones that enable users to access the Internet on the go. 

As per an IDC report, the worldwide shipment of smartphones is estimated to reach a whopping 1.9 billion by 2020 at a CAGR of 6%. Given the growth opportunity in smartphones, it is expected that the demand for OS will go up significantly. We believe that Android’s dominance is a positive for Alphabet.

Moreover, in emerging economies such as India where more than 90% of the smartphones have Android, there is ample scope for the company.

On the other hand, although Microsoft is losing ground in the OS space in terms of Internet usage, its in-built search feature, Bing, is proving to be a strong competitor for Alphabet’s search engine Google.

Zacks Rank

At present, Alphabet carries a Zacks Rank #2 (Buy) while Microsoft carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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