Here come the hundreds of millions of iPhones and Android/Chrome phones

In 2008, consumers and businesses around the world bought almost 1,200,000,000 cell phones. Yeah, that's 1.2 billion gadgets connected to the wireless telecom networks around this world.

That's a lot of cell phones. In fact, given that there's about 6 and a half billion people on the Earth, that's one cell phone sold for EVERY FIVE people on the entire planet. Put in other words, it's as if one out of five people on the planet bought themselves a brand new cell phone last year. That's not just 20% of your affluent adult friends who bought cell phones in 2008. It was as if 20% of every baby in the nursery bought a new cell phone last year. It was as if one out of every five villagers in Mochudi, Botswana bought a cell phone last year.

That's just totally unsustainable. Heck even if the global economy had been growing, that's a heckuva a bar to cross every year. Oh yeah, in 2007, more than a billion cell phones were sold. And the year before nearly a billion cell phones were sold.

Add up the numbers, and we bought enough cell phones in the last six years to have given one to every single person that's alive.

But this year, for only the second time since the cell phone hit the market in the late 1970s/early 1980s, cell phone unit growth will be negative. Yes, fewer cell phones will be sold this year than were sold last year. And let's face it, can we really expect 20% of the world's population to buy a new cell phone every year? Probably not, and that means this industry, which was in secular growth mode and has provided millions of high-paying jobs around the world has peaked and is now mostly going to be reflective of the macroeconomy of the world.

And that means that we shouldn't expect the market for cell phones to provide a meaningful backbone of growth for the broader economy. And since we're now close to what the maximum demand for this product can look like, you've got to exclusively focus on only companies that can take market share from other companies.

Nokia's got more than 1/3 of the global marketshare for cell phones right now. These guys are going to have to really outprice and/or out-innovate their competition if they want to maintain and/or grow that marketshare.

And that takes me back to Apple and Google. Apple's got about 1% of that global marketshare for cell phones right now-- they've sold ten or twenty million in the last year. And since the iPhone now has a price point of $99, and since that same iPhone will likely be given away for free with a two-year AT&T service contract in another year or so, that means Apple's going to be able to double, triple and grow their market share even ten-fold from the 1% level it's at today.

Model it out yourself, if you want -- getting the iPhone platform up to 10% marketshare in cell phones would mean 100 million units sold, even if the cell phone market is to contract 5% more this year and next.

And while the price point for the iPhone will continue to come down, the unit growth will still provide outright revenue growth for Apple. And component costs for the iPhone will come down too, and that means margins for Apple will expand. And that means more earnings growth ahead for this juggernaut.

And on that note, we should note that either or both the new Chrome OS and the Android OS from Google will take marketshare from the other companies (not Apple though, it's only got 1% of the market, remember!) as the cell phone and netbooks converge. The PC marketplace is only about 300 million units a year, btw, which is why cell phones and netbooks are so important for growth in tech in the new millenium.

I wouldn't buy either of these right now at these levels and expect to make any money in the near term -- I'm much too bearish on the overall economy and markets for that. But I'd want to own a least a toehold of both of these. Otherwise, I'd wait for both of these stocks to come down, but as I've told everyone about these two companies for years -- they are as good long-term investments as you can make.