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While the crowd at Apple’s recent iPad launch was enthusiastic, the market was not. Apple’s share price dropped as the products were announced.

The company’s last quarterly result fell short of analyst expectations and two senior executives left under a cloud – that’s often a sign of deeper trouble at large technology companies.

Today Apple’s shares are trading at roughly US$562. That’s way down from the $705 peak reached earlier in the year.

Splashy launches, glowing media reviews and rapid growth mask Apple’s most pressing problem.

Apple became the world’s most valuable company thanks to iPhones and iPads stealing a march on rivals. Now others are catching up.

Samsung, in particular, threatens Apple. It can quickly match the company’s technology and is prepared to beat Apple on price. Samsung’s products are based on Google’s Android software. Android is not as polished as Apple’s software, but that’s irrelevant.

Apple’s share of what analysts call “the mobile platform market” has increased in recent years but Android’s share has grown faster. Today Apple commands roughly one-third of the market, while Android accounts for just over half. Android sales continue to grow at a faster rate.

Now, you could argue raw market share doesn’t matter. Apple is the technology leader and commands premium prices which means it reaps the lion’s share of mobile platform profits. All that is true.

In the long-term Apple’s perceived advantage is less important than one other piece of data: Android now accounts for 75% of new smartphone sales. Roughly four Android devices sell for every iPhone. This changes the nature of the market for third-party applications – currently an area where Apple is a long way ahead of rivals.

Apple’s advantage is eroding. Soon it will be forced to choose between defending its high margins or protecting its market share. It can’t have both. Shareholders have figured this out.

If you’re not a shareholder, this is good news. Apple kit will get cheaper.