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Android has dominated the tech news this past week, but Apple (Nasdaq: AAPL) investors don't seem to feel threatened.
The operating system from Google (Nasdaq: GOOG) dominated the world's smartphone market in the final quarter of 2010; Google unveiled more details Monday about Android 3.0, aka "Honeycomb," which drew oohs and aahs of appreciation; and Android tablets running Honeycomb are expected to flood the market later this year.
Meanwhile, Apple and Sony (NYSE: SNE) are locking horns over the inclusion of Sony's e-reader app in the iTunes App 
Store.
Investors have apparently shrugged off the Android threat. Apple's share prices were up $5.71 Tuesday to close at US$345.03 in heavy trading.
Android, Android Uber Alles
Research from Canalys showed that Android became the leading global smartphone platform in Q4 of 2010, with worldwide shipments of Android-based smartphones hitting 32.9 million units. The erstwhile leader, Nokia's (NYSE: NOK) Symbian platform, chalked up 31 million units.
That strong showing covered various versions of Android, including OMS, China Mobile's version of the OS; and Tapas, a new mobile OS based on Android that was created by ex-Google China president Kai-Fu Lee, Canalys said.
However, the United States was "by far the biggest market for Android smartphone shipments through 2010," Canalys vice president and principal analyst Chris Jones told MacNewsWorld. In Q4 2010 alone, the U.S. accounted for more than one-third of Android device shipments, he added.
Android has "great market momentum" and Jones expects it to continue growing strongly.
Meanwhile, eMarketer predicts that Android will outstrip the iPhone in the U.S. smartphone market by 2012. In that year, 31 percent of smartphone users will own an Android device while the iPhone's share of the market will be 30 percent, eMarketer forecast.
Most of Android's growth between 2009 and 2010 came at the expense of Research In Motion (Nasdaq: RIMM) and other non-Apple handset makers, eMarketer said.
Apple's Other Strengths
Certainly, Android smartphones are becoming increasingly popular. That doesn't necessarily spell doom for the iPhone -- recall that iPhones are highly popular in China and South Korea and that Apple's pushing hard to penetrate overseas markets.
Further, the iPhone and iPad are increasingly penetrating the enterprise market, another area Apple is targeting strongly.
While more than 80 manufacturers have announced Android tablets this year, many running Honeycomb, these devices have yet to hit the market, and Apple dismissed them as, essentially, vaporware during its first-quarter FY 2011 earnings call last month.
Then there' s the iTunes App Store. Mobile devices rely heavily on apps, and Apple's still king of the app store heap.
Application stores are a potentially lucrative part of the smartphone ecosystem largely due to Apple's App Store, Gartner (NYSE: IT) said in its worldwide mobile app store revenue forecast, published in January.
This report predicted that worldwide mobile app store downloads will hit 17.7 billion this year, 117 percent up from the estimated 8.2 billion downloads in 2010. By the end of 2014, Gartner forecasts that more than 185 billion applications will have been downloaded from mobile app stores.
Apple, you will recall, recently celebrated the 10 billionth download from its iTunes App Store.
Let a Hundred Flowers Bloom
The app market is where Google falls down -- while demand for Android apps is strong, various Android app markets are springing up like mushrooms after the rain.
"There's the Amazon (Nasdaq: AMZN) Android apps store; the Verizon Android apps store; the Android Market -- the most likely candidates for more Android stores are carriers," Mark Beccue, a senior analyst at ABI Research, told MacNewsWorld. "O2 in Germany is talking about setting up its own Android apps store, for example."
The problem arises because Google's business model for apps is to give everyone a free hand to tweak Android and to set up their own app markets.
"Android is the Microsoft (Nasdaq: MSFT) of the licensed software market," Beccue remarked. "Like Microsoft's model with Windows, the advantage to Google's licensing model is proliferation. However, it suffers from fragmentation."
While Apple controls what apps are released on its platforms, Google leaves this up to the OEMs who make the devices and to the wireless carriers, Beccue said.
Advantage to Apple.
Apple, Sony Mix it Up
Apple has apparently begun enforcing a rule for its App Store that requires the use of its in-app purchase API in apps that let their users buy additional content, functionality or services. Currently, some apps take users to the device's Web browser if they want to make a purchase. From there, the purchase is made directly from the app provider, rather than through Apple, which typically takes a portion of in-app purchase transactions for itself.
That led to accusations from Sony that Cupertino had changed the rules for apps submitted to the iTunes App Store. Apple reportedly turned down Sony's e-reader app submission, The New York Times (NYSE: NYT) reported Tuesday.
"We have not changed our developer terms or guidelines," Apple spokesperson Trudy Muller told MacNewsWorld. "We are now requiring that, if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase."
Apple's App Review Guidelines from 2010 state that apps that unlock or enable additional features or functionality with mechanisms other than the App Store will be rejected, Keith Michel, chief technology officer at MacroView Labs, told MacNewsWorld.
The guidelines also state that "Apps utilizing a system other than the In-App Purchase (IAP) API to purchase content, functionality or services in an app will be rejected," Michel pointed out.
Enforcing the IAP rule might impact many apps already in the store.
The move may be a bid by Apple to lock in users or get a piece of the revenue some apps take in. That could backfire if developers of popular apps such as Netflix (Nasdaq: NFLX), Hulu Plus or Kindle don't go along with Cupertino's move, Josh Martin, a senior analyst at Strategy Analytics, told MacNewsWorld.
"If or when Apple changes how users buy content in-app so they get their 30 percent cut, developers or content owners may pull out," Martin stated. "If or when that happens, we can talk about how, since Amazon left iOS, it's been a boon to Apple's competitors."
