“Apple’s premium pricing strategy has come under criticism for allowing Android competitors continued dominance in terms of unit market share. One argument against Apple’s pricing strategy is that Apple is starting to lose the ecosystem war to Android as Android adds a tremendous number of entry level smartphone users. The premise is that ecosystem value depends on the number of people participating in them, and that Android is going to end up with several times as many users as iOS,” Elephant Analytics writes for Seeking Alpha. “Despite Android’s growth, we maintain that Apple still has the strongest ecosystem and is not at risk of being relegated to second-tier status in the future.”
“While it is true that ecosystem value is dependent on enough people participating in them, iOS already has a tremendous amount of users and is successful enough that doubling market share would not significantly influence app availability,” E.A. writes. “The iPhone platform is the first priority for 35% of developers vs. 27% for Android smartphones. This comes despite Android’s sustained numerical advantage… A key reason why Apple still retains development priority is app profitability. Google Play is doing very well in terms of downloads and total number of apps, beating Apple’s App Store in both of those metrics now. However, the metric that matters most to developers is profitability, and in that area Apple still dominates. This is mainly due to Android’s user numbers being inflated by large numbers of cheap smartphones. People buying cheap smartphones just do not spend very much on apps.”
E.A. writes, “Apple retains developer priority due to higher app profitability as well as a less fragmented OS. There are very few significant apps that are missing from the App Store, while Google Play is still missing a number of top apps. As well, studies indicate that Android has less consumer loyalty than Apple. This means that Apple has a chance to convert very significant numbers of Android users in the future.”
Read more in the full article here.
MacDailyNews Take: As we wrote earlier today:
The quality of the customer matters.
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The quality of the customer matters if you are going to milk them like a cow for every nickel that can be extracted. Aside from selling your customers like a street whore to advertisers it means not a damn thing.
If customer a makes $75,000/year and buys a product for $100 and another customer making $125,000/year buys a competing product for $100, what difference does it make? If all you are selling is the physical product or service- nothing. If you are pimping them out for ads and data mining, quite a bit.
This begs the statement:
Who gives a flying flip at a rolling doughnut unless you are selling their privacy out or their eyeballs.
Did it really beg THAT question…?
Yes, yes indeed it did.
Darwin speaks the truth. There are still way too many people who naively believe that Apple is going to enjoy an easy road ahead because it currently charges high margins and therefore attracts relatively well-heeled customers first. Problem is, that’s not where the market is moving. As smartphones continue to be commoditized, Apple is going to have to learn to sell to the common man. Cook & Co have been horridly slow to skate to where the puck is going to be.
… and one place where Apple could make a difference is to make it very clear — and filterable — which apps are merely marketing trojans and which apps actually respect one’s privacy. But Apple isn’t leading the way on that front anymore, either.
If there was any sign that the “common man” is the least bit interested in participating in an ecosystem, you’d have a point. But study after study has implied that people who buy cheap phones don’t really use them for much other than phone calls and texts.
Apple’s iOS continues to dominate in web usage despite Android trouncing it in the number of activated devices. How do you explain that?! The only possible answer is that Android users are, on the average, not using the internet on their phones very much. Why should Apple care about them, then?
People have been telling Apple to sell cheap sh*t to “the common man” practically since Apple was founded. The biggest reason Apple is in the position they are now is because they’ve ignored those voices. Don’t expect them to change direction any time soon.
——RM
Robin, clearly you missed my entire point. Apple needs to be planning for TOMORROW. Europe and N.A. markets are becoming saturated. Most future growth is in Asia, Africa, Oceana. And it is there where price sensitivity is stronger, and Apple is not penetrating very well.
Drop the US-centric mindset. The USA has 5% of the world’s population. If Apple wants to be a global presence, it will have to be more more aggressive in serving those customers not with cheap junk, but with higher-value, more modestly-priced Apple electronics. Only time will tell, but some initial reactions seem to indicate that Apple just whiffed with the 5C. You know that Apple would be bragging if pre-orders indeed were through the roof.
And Apple IS planning for tomorrow. So far we only know what the new iPhone 5c is going to cost customers in the USA. What it is going to cost customers of China Mobile or NNT Dokomo is another thing entirely. Switching to brightly colored polycarbonate is controlling cost and preparing for different markets. Going 64Bit with biometric security is a shot at the corporate market in the USA. Clearly these are market based strategic developments and not well understood by many consumers. It is in someway surprising that wall street has so many idiots but then we are often just watching sales guys who really don’t know anything. The prime example of a sales guy who knows nothing but managed to get himself into a position to give the allusion that he does is Steve Balmer. Steve Jobs chose Tim Cook not because he was a good sales guy. Tim’s expertise was getting the products to the market and he does that very well. He is watching the market and making sure Apple will have products ready for them. The design was never to be his area of expertise. If you design great products and can get them to market, who needs sales idiots? A great product sells itself.
People making $75k and $125k aren’t buying $100 phones; they are more likely buying $700 phones (latest model of iPhone, or whatever is the current top-of-the-line Galaxy flavour).
And Android’s market share is build on ultra-cheap ( and ultra-crappy) pre-paid no-contract customers buying $150 (or even $100, or $70) Androids, still running FroYo (or Gingerbread at best), with 700MHz processors (handling everything, including graphics), with 2MP fixed-lens cameras and screens with resolution 480×320 pixels. About 60% of apps on Android market can’t even run on these devices; yet, they make up sizeable proportion of Android’s market share. And people who buy these (in the US) are the ones making $35,000 per year. These people ain’t ever spending ANY money on an app, even if it is just $2! Especially not when there are plenty free ones. And they aren’t really very attractive advertising targets either (why bother advertise to them when they can’t afford anything?).
The dollar point is not the point. The fact that the income of the customer only matters if you are selling them for advertising or data mining.
That is precisely my point. Just as there is very little value of an Android consumer to developers, who prefer free over paid, there’s as little value there to advertisers and data miners, since these consumers aren’t the kind with meaningful disposable income.
You need to read
http://en.wikipedia.org/wiki/Begging_the_question
Exactly who sees Apple’s iOS ecosystem as king? Not the smartphone industry, not Wall Street, not the tech pundits. Tim Cook or Phil Schiller don’t count. Do developers actually say that Apple has the best ecosystem? I doubt that very much. It would be great if Apple could market that developers say Apple has the best mobile ecosystem. Profits apparently don’t mean anything. Only high market share means a lot. Wall Street definitely believes iOS is an also-ran and are always pushing Android OS as the best in the world.
In fact yes, they do. They may not say it explicitly (although I’m sure there are several who would gladly tell you that), but if you look at the two stores, and the quality of apps, it is very obvious. The number of apps missing on Google Play (that exist on App Store) is still significantly higher than the number of Apps for Android that don’t exist on App Store.
More importantly, among those that exist on both platforms, the percentage where there is absolute parity of features and user interface is fairly small; the rest are significantly better on iOS versions. They have more complete feature set, have more consistent UI, are more robust and stable than their Android counterparts. Very few developers have the time to bother developing and testing for every single major flavour of Android (the platform) and phone (the hardware).
After spending two years with Android, I finally got myself an iPhone, so I can say I know what I’m talking about.
I recently spoke with an App Store developer and granted, he is only one individual, but his answer was substantial: iOS apps is where all the money is.
And yes, he also said the ecosystem was preferable to Android’s.
MDN, the quality of developer also matters.
Do you honestly think it’s good strategy for Apple to aim for a 35% to 27% iOS versus Android first application development? Really?
Long term health of the platform depends on number of users. Don’t believe it? Ask any long-term Mac developer.
Who the hell says they’re “aiming” for that number?
And 35-27 is pretty amazing, considering how many more Android devices there are out there.
Admit it, dude, you’re grasping at straws.
——RM
I’m not grasping at anything. You previously claimed that the common man doesn’t care about smartphones, so you’ve already written off the potential of the iOS platform in world markets. I am saying Apple’s iOS would be a huge hit in emerging markets if only Apple would market it effectively, with more modestly-priced handsets.
Well, speaking as someone who lives in the United States, I’ll just say that I don’t really give a crap how Apple does in “developing” markets. It doesn’t affect me one way or the other. The only people who care are those living in those markets or people micro-focused on the stock price.
Unless the performance of iOS in Africa and Asia is somehow going to affect my ability to get the best apps first here in the US, I don’t care. I’ll leave Apple to that and not worry about it. If that makes me provincial, so be it.
——RM
My teenage niece owns an Android phone. Parents won’t get her an iPhone — too expensive, compared to the deal they get on the Android.
So mark one up for Android, huh? Not so fast. She also owns an iPod touch. She uses that to run apps and listen to music, and the Android phone is for calls, texts, and internet when there’s no wi-fi.
Granted, she’s just one person, but it makes me wonder how many other young people are counted as Android users when they own iPod touches and will almost certainly get iPhones when they move out on their own.
——RM
Tim Cook said last week that this week they would sell their 700,000,000th portable device. I don’t know how many of those are in the marketplace and active but I do know this: Most of them are running the latest operating system. With the 64-bit iPhone 5S, does 1 app write cover both the phone and the Mac? Android has NOTHING like that, nor will they anytime soon. And if 64-bit iPad is announced next month, ONE app can be used on three different devices, two of them mobile. I think that puts Microsoft and Android at a pretty big disadvantage I have never seen a Google Chrome laptop and I don’t think Windows 8 is a big success. Maybe I’m wrong but…. this DEFINITELY points to the Apple ecosystem as the most attractive for developers and users. And 64-bit is VERY attractive to the enterprise customer.
It’s all about the apps. For example, how many more appliances have iOS integration than Android?
I think Apple will win by controlling this market like they did with music.
The other day I spoke with an engineer who works at Google. In his pocket there was a flavour of Nexus phone. I asked if this is a requirement at work, and he said “not really”; apparently, he was just rather cheap, didn’t care to have a great smartphone (he works on some other Google projects, unrelated to mobile), and he got himself a plain vanilla Nexus, so that he can get updated when updates are available”. More importantly, he said that the common story he hears is that people usually migrate from “featurephones” to smartphones by going to a cheap Android first, and soon thereafter, they graduate to the iPhone. It is just a matter of time when he’ll do the same.
iPhone/Mac users as well as Apple need to face reality. The fact that iOS still maintains a SLIGHT lead over Android among developers is NOT encouraging. That is because iOS had a MUCH bigger lead and the trend has been consistently in favor of Android. If the trend continues and Android takes the lead, the narrative that iOS is headed toward second class status among developers–as Mac OS did years ago–will be solidified in the culture and media. At that point, it will be MUCH harder to turn that around and we will be in a vicious cycle. The time to do something to reverse the trend is NOW, BEFORE iOS actually falls behind. There have been some reports that Apple is allowing/encouraging carrier discounts on the 5c to allow it compete; we’ll see if that is sufficient. The reality is the Apple’s pricing is currently NOT REMOTELY COMPETITIVE through much of the world, as demonstrated by iOS’s collapsing world market share. It would be as if Apple decided not to sell any Macs priced less than $2500. Sure, there would be some delusional posters on MDN defending that, claiming that Apple doesn’t make “cheap” computers. Except that no one is talking about Apple pricing at the bargain bin level, just dipping its toe into the mid-tier, say $400 – $450 off contract for the 5c. The 5s is a great phone and I will probably get one. But the iPhone 5 WAS ALSO A GREAT PHONE, and Apple’s total profit’s have PLUNGED over the last year–so the current strategy is not even resulting in high profits! I like Apple’s products and can afford them. I want Apple to continue as the world’s leading mobile platform.