Apple’s smartphone strategy: It’s the ecosystem, stupid

“In a conference call for Wall Street analysts and media late Tuesday, Apple CEO Tim Cook and Chief Financial Officer Peter Oppenheimer spent considerable time reviewing the company’s leading online app store in iTunes and its vast developer community,” Patrick Seitz writes for Investor’s Business Daily. “[Cook said], ‘We have the strongest ecosystem in the industry with app stores in 155 countries, iTunes music stores in 119 countries, hundreds of millions of iCloud users around the world, and most importantly, the highest loyalty and customer satisfaction rates in the business.’ Cook knocked Android’s ecosystem as being ‘fragmented.'”

“Apple’s iTunes store passed $4 billion in revenue for the first time ever in the March quarter, giving it an annual run rate of $16 billion, Oppenheimer said. Sunday marks the 10-year anniversary of the iTunes Music Store, he said. The iOS app store portion of iTunes debuted nearly five years ago, in July 2008,” Seitz writes. “The iTunes store includes an unmatched amount of content, including 35 million music tracks, 1.75 million books, 60,000 movies and more than 850,000 apps.”

Seitz writes, “Apple device users have downloaded more than 45 billion apps and developers have made more than $9 billion from those sales, Oppenheimer said. Apple’s app store accounted for 74% of all app sales worldwide in the March quarter, research firm Canalys reported. Apple’s app store offers a superior experience to rival platforms because of its ‘careful curation’ of ‘quality’ apps, Oppenheimer said. ISI Group analyst Brian Marshall says Apple has a “best-in-class ecosystem” that engenders customer loyalty and market share gains.”

Read more in the full article here.

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  1. I find it weird that for example today on all those galaxy S4 reviews i havent seen anyone say that the iphone is better because of the software. They all compare hardware, rarely say anything about how its the software that makes iphones better aside of beautiful hardware.

    1. I haven’t seen an S4 yet but I wasn’t impressed with the S3. The feel was a plastic feel and I thought the OS sucked. Not sure what people are seeing in it, I think its just because its not an Apple product they are liking it. I’m open I’m not an Apple Phanboi, but I just didn’t thin the S3 was anything great.

      1. Saw an S3 in the store. Not impressed. One reason is that it had a simulated display…you couldn’t try any apps, judge the quality of the display, or test the responsiveness of the S3. In fact, the iPhones were the only devices that were powered and functional for customers to try out. That says something to me. So do the commercials of Apple’s competitors that use simulated displays.

    2. If you’re lazy, the easiest way to review things is to list the features. It takes someone with a bit more intelligence to understand which features are worth having, how well they operate and what the trade-offs are. Making a decent job of comparing the software of different platforms is just too much of a stretch for most reviewers.

    3. The S4 reviewers I’ve read have been remarkably oblivious to the qualities of the iPhone. Their loss.

      One remarkably oblivious article I read over at The Register was all worried about smartphones spying on you due to malware infections. They were of course chattering on about Android phones, as if the iPhone and its ZERO MALWARE didn’t exist. Again, their loss.


      I replied by pointing out this studying indicating the exponential growth in malware for Android:

      Android malware more than doubled worldwide in 2012

  2. The ecosystem is why Apple needs to be vigilant about market-share. Whenever anyone takes the lead in market share, it takes developers. As Blackberry, Microsoft and Apple have learned, once you lose market share, it is a bitch catching up again.
    And that’s today’s lesson about ecosystems.

    1. I would respectfully disagree. Developers will go where they know they can make the most money and that is and has always been on iOS and with Apple. Even as its over all market share has decreased the profit share has remained steady.

      1. Sure, that’s how it was for Apple until it lot market-share in the 90’s.
        That’s the way it was for Microsoft, until it lost market-share.
        That’s the way it was for Blackberry, until it lost market-share.

        Do you spot a trend?

        1. Wrong wrong wrong. That is the trend I see from you.

          Highest customer satisfaction and loyalty in the industry. They also own profits 70% of the market. It’s called winning.

        2. Actually, the Mac never suffered from much actual ‘App-Lack’. The only example I can recall of App-Lack on the Mac as decent CAD software, and that was eventually solved. The Mac has had plenty of everything else, mostly the cream of the crop without much proliferation of crapware, unlike the Windows market. As with iOS users, Mac users have consistently bought more software than average Windows users.

          Of course there have been plenty of troll myths to the contrary.

            1. I was there, ignorant person, professionally.

              You only remember mythology? You only live in fantasyland? You’ve been in a coma? You’re a Microsoft addict?

              I went Microsoft-Free in 1993 and only find Windows useful for playing Windows-only games. Is that what you’re talking about? GAMING? If so, fine. I hope you had fun with your games. I was busy WORKING.

  3. That is not a very nice headline!

    How about:

    “Apple’s smartphone strategy: It’s the ecosystem, analyst”

    I mean the words at the two endings are sort redundant, right?

    1. When Bill Clinton ran for president, his campaign had a motto: “It’s the economy, stupid!” That was directed at President Bush, who was trying to run on anything except the economy, which was bad. Clinton won, and the “It’s the -insert random thing here-, stupid” meme was born. Do you understand the headline now?

        1. I suspected as much, but it wasn’t clear. In considering your comment in light, I guess you were saying that the words “analyst” and “stupid” are synonyms, or something. However, those words would only be “redundant,” by this logic, if used together.

      1. “It’s the -insert random thing here-, stupid” meme was born.

        No actually. I was using that ‘meme’ when I was a little kid, decades earlier. It would be interesting to look up the origin. Anyway, it’s one of those eternally useful, insulting memes.

      2. The “Stupid” in the campaign motto was NOT directed at Bush.. It is directed at the “self”.. it’s a reminder to whoever says the motto to stay focused and not get too distracted by other issues.

  4. Unless one is a student of history, you’re bound to repeat it. That is a test-tested mantra. No arguments there.

    History lesson: in platform wars, it is not always the best that wins. The Windows vs OSX wars show that good-enough is sufficient to claim 90% marketshare.

    In the desktop wars, Microsoft did not have to get better than Apple. It just had to be good enough. That is where Samsung is now – good enough.

    Among my circle of non-tech friends, I sense Samsung having the bigger buzz. In the last 6 months (corresponding to the period of Apple share-price toboggan ride) I can think of a handful of non-tech friends who have raved to me about their Samsung phones – but none for Apple. In contrast, in years past, it was always people raving about Apple products. Something has shifted in the marketplace.

    All I can say is that, if Apple fans, particularly MDN-readers cannot at least acknowledge that, the biggest jibe I can make to such readers is that they are exhibiting Balmer-like qualities.

    Remember, no one is invulnerable. Even MDN readers are capable, at some point, of being Balmer-like, INCLUDING the editor of MDN.

    It is a principle of life that, those whom we criticise the most, we end of becoming like them, given sufficient time. That goes for the MDN editor.

    1. Your points are well taken. However, it’s difficult to argue that Apple is technologically inferior as it was in the past when Windows 95 came out. They were in danger of doing falling astray before they outed Forstall, who was overextended (Maps, Siri, iOS, all those iOS apps) and who become overly political. That’s exactly what got Jobs into trouble before he got canned.

      Back to my earlier point. Apple has the best chip design team, the best designers, the best software engineers, and the best hardware engineers. If they can still grow their cash pile while increasing the dividend, they will have even more leverage, which will allow them to take even larger risks.

      If Apple hits a homerun with mobile payments, they will again be way ahead of the competition in terms of hardware and user experience.

      The biggest question: can Apple revive iTunes and create great internet services. This is the biggest question mark, as is can it beat Google and everyone else to a major advance in AI.

        1. Definitely a poor choice of words. I sound like an analyst!

          I should have said refresh. I really like the redesign from last year, but I want a richer content experience. iTunes and iTunes Extras are a stab at that.

  5. When Bill Clinton ran for president, his campaign had a motto: “It’s the economy, stupid!” That was directed at President Bush, who was trying to run on anything except the economy, which was bad. Clinton won, and the “It’s the -insert random thing here-, stupid” meme was born. Do you understand the headline now?

  6. Samsung’s plethora of ‘new phones’ continues to appeal to the ‘ignoramus’, ‘glitteratti’ and ‘el cheapo’ and this will never change regardless of what Apple Inc. produces or has to offer in innovation and substance. This is how the consumer market operates and will remain well into the foreseeable future but by the same token, Apple will continue to take the ‘lion share’ of the profits. What else matters?

  7. Just learned a good lesson about ecosystem yesterday. A friend’s android locked her out of her phone. She tried a lot of things to get it to work but could not. She got a new phone, but her info could not be ported over. She lost her contacts, cal, notes. All I could think was I don’t have this problem with my iPhone. If it does brake I have everything backed up and can easily replace it. I know a lot of Android fans bitch about being tied to iTunes, however being forced to backup is a good thing. I sure there are ways to solve her problem, and Android can be backed up. However non techies don’t understand this, and don’t do what they need from the start. Apple’s ecosystem will save your ass one day.

  8. Apple lost the computer market long before windows 3.0 or windows 95 because of the hardware – high margins , limited options. There was no consumer market in 1986, it was all enterprise. When you buy a 1,000 computers and can save $1,000 per computer, that’s a million bucks.

    1. Apple NEVER had the computer market (which was always mostly a business market). It was lost first to IBM and MS DOS and then to HP and DELL and Windows 95. Both Apple II and Macintosh were ALWAYS minority platforms. The Mac still is.

      But it has at least been profitable since Steve came back.

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