Apple’s stock is up 129% in the past year. The company has the most popular phone in the US with a 4% market share of all cell phones and 10.8% of current smart phone sales as well as $39.8 Billion in cash. So who does Apple need to be saved from? Google. Well actually, Google’s Android is the more immediate threat.

Apple’s co-founder and CEO, Steve Jobs is a true visionary. He has seen what most people can’t, repeatedly. But either his crystal ball has fogged or he has been distracted (by a tablet?) or possibly, he has become a tunnel visionary. At any rate, Apple following its current path is on track for a head on collision with a mammoth.

Current data indicates that iPhone users out number Android users 10 to one. That doesn’t take into consideration the nearly 20 million iPod Touch users, also familiar with and fond of the OS. So what’s the problem? The problem is Apple limits its users to one phone, one carrier and Apple censored apps. The company is slow to make hardware or software changes and when they do they are slight. Lastly our choices are black or white.

In the opposite corner is Android, an open source, Linux based operating system that can be customized to many phones, with apps that are not censored. It’s an OS that embraces Google’s apps and invites true innovation. Android customers have 3 (soon 4) carriers to choose from and over 20 phones. My estimate is that if things continue as they are Android users will outnumber iPhone users by the end of the third quarter of 2011.

Now back to solving Apple’s dilemma. This first strategy includes three tactics.

1) Sell an iPhone with Android. This needs to be priority one. Create a customized Android distribution that has iTunes preloaded (see #2) and uses iPhone skins wherever possible. Take the most visual parts of the iPhone including the icons, keyboard and anything else that can be transplanted and use it to create the most iPhone like Android experience possible.

2) Apple needs to create an Itunes app for the Android Market and negotiate to have it included in as many Android distributions as possible. Although the profit from iTunes revenue is negligible on Apple’s balance sheet, it could be the mortar that holds Apple’s virtual bricks in place.

3) Make friends with Google. Even if Jobs thinks he can beat Google’s Eric Schmidt in the phone game, Apple should embrace Google apps. There is still time for Apple to team up with Google against Microsoft.

Full disclosure: I own Google (GOOG). I do not own Apple (APPL).

Rick Culleton CEO DiscountElectroics.com