Apple Inc. (AAPL)’s Turnaround Strategy

Nokia still falls behind in basic product specifications, but makes up for that by being partnered with Microsoft Corporation (NASDAQ:MSFT). Microsoft has both an effective marketing strategy and is leveraging its operating system platform by making sure that Microsoft Office 365 will only be available to either iOS or Windows users.

Google still has momentum

Going forward though, Google Inc (NASDAQ:GOOG) is still expected to grow earnings at a fairly high rate. Analysts on a consensus basis are anticipating the company to grow earnings by 14.9% on average over the next five years. The growth in earnings seems reasonable when considering the sheer number of web capable devices that are likely to emerge. Qualcomm estimates that smart phone shipments will grow at a 24% compounded annual growth rate because of displacement of basic phones. Because of this, Android application store sales are likely to grow at high rates.

That being the case, Microsoft is also likely to thrive in this environment as Bing will be the default search engine on iOS 7, and Windows Phone 8. Because of this, the Bing search engine should be able to generate an even greater number of search queries, which will directly result in additional advertising revenue.

Conclusion

Apple Inc. (NASDAQ:AAPL), Microsoft, and Google are well positioned in the mobile arena. While the growth is heavily favoring Google Inc (NASDAQ:GOOG) and Apple right now, Microsoft has been able to gain market share over the past couple years.

Going forward, Apple’s earnings growth will be driven by lower-end smart phones. Google, on the other hand, will generate significant ad-revenue sales growth, because of the organic growth in smart phone devices.

The article Apple’s Turnaround Strategy originally appeared on Fool.com and is written by Alexander Cho.

Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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