The Church of Market Share revisited

“It’s an article of faith in the Church of Market Share that Android is nearing a tipping point where its market share lead will inevitably turn into a developer share lead, too,” John Gruber writes for Daring Fireball.

“There’s no question in my mind that the most appealing thing about Android as a platform is its overall market share. The more Android devices that are out there, in use, the more appealing the platform is for developers,” Gruber writes. “But to think that market share alone is a primary motivation for all or even most of the developers who’ve turned the iOS App Store into a phenomenon is to miss the forest for the trees. It’s looking at the market from the viewpoint of a spreadsheet, reducing everybody and everything to numbers.”

Gruber writes, “The truth is, the average Android user is not the same as the average iPhone user. iPhone users surf the web more, they’re more willing to buy software, they’re more willing to install and use apps. Some of these stats aren’t even close. What I see as the fundamental flaw in the Church of Market Share doctrine is the assumption that users are users… You can say that it’s elitist or arrogant to argue that iOS users are better customers than Android users. But you can also say that it’s the truth.”

“With about only 5 percent of the total handsets sold, Apple is earning two-thirds of the handset industry’s total profits,” Gruber writes. “Those who favor market share as a primary metric look at Apple and see its position as fragile — subject to the whims of a sliver of the overall market. I see it the other way around. Market share in and of itself has little value. A company with deep pockets and a willingness to spend can buy market share by selling products at or even below cost. You can cheat your way to market share. I say “cheat” because that’s not sustainable as a long-term strategy. A fire can’t keep burning without fuel, and profits are the fuel for business.”

Read more in the full article – highly recommended – here.

MacDailyNews Note: Gruber originally published this article on January 9, 2012, but it’s just as valid today as it will be next year and the year after that.

Like tablet users, personal computer users, vehicle owners, restaurant patrons, etc., smartphone users are not created equal. Some are worth having and others are not. Some even cost you money.

As we wrote last November: Android can have the Hee Haw demographic. Apple doesn’t want it or need it; it’s far more trouble than it’s worth.

When you read the hit-whorish headlines proclaiming that “Samsung is winning,” just ignore them; they’re written by idiots for idiots. Flooding the market with derivative plastic crap via Buy One, Get X Number Free promos is not winning. Selling units to the most desirable customers who spend billions within your ecosystems while reaping the lion’s share of the industry’s profits is winning.

The fact is that the smartphone profit picture looks like market share flipped upside-down. That’s the picture that shows who’s really winning.

Related articles:
iOS dominates Android: 75 cents of every dollar spent on mobile advertising is spent on Apple iOS devices – April 19, 2013
Android owners aren’t real smartphone owners – March 12, 2013
iPhone users watch twice as much online video as those with Android phones – March 12, 2013
Where are the Android users? – March 11, 2013
With 78% share, Apple’s iOS tightening its grip on the enterprise and taking share from Android – March 8, 2013
Apple rules the skies with 84% in-flight share vs. Android’s 16% – March 7, 2013
Apple iPad continues domination with over 80% usage share in U.S. and Canada – March 7, 2013
comScore: Google’s Android, Samsung continue to lose U.S. share to Apple’s iOS, iPhone – March 6, 2013
Apple iOS dominates mobile video viewing with 60% share vs. Android’s 32% – February 13, 2013
Android’s Web share down 13% since November; Apple’s iOS now over 60% – February 1, 2013
Android’s unit share growth has not hurt Apple’s profit share – February 26, 2013
Apple iOS dominates mobile video viewing with 60% share vs. Android’s 32% – February 13, 2013
Android’s Web share down 13% since November; Apple’s iOS now over 60% – February 1, 2013
IDC: Apple dominates worldwide tablet market with 43.6% unit share – January 31, 2013
The Android engagement paradox – November 26, 2012
People buy more Android phone units and do less with them vs. Apple’s revolutionary iPhone – November 14, 2012
Study: iPhone users vastly outspent Android users on apps, respond much better to ads – August 20, 2012

26 Comments

    1. Dude, your first chart is only up to 2007, Mac share has almost doubled since then! Even with less than 10% share, Apple garners over 50% of the profit from the ENTIRE PC industry, or did you miss that recent article?

      As for your second chart, that’s missing the last 3 quarters of results. Having a chart end in either Apple’s 2nd or 3rd fiscal quarter is always going to look like sales fell off a cliff since they follow the Xmas quarter.

      Perhaps, you need

      1. Actually, that chart only goes through 2005. You may be tempted to think the tick mark is directly above the 2005, giving two more years, but I counted them and then looked at where the datapoint markers are. The last gap between tick mark and edge is the 2005 year.

        So Mike, how was life for you 8 years ago?

      2. Dude, the first chart showed that Mac market share crashed because Apple under BOTH Jobs and Scully was managed for profit margin, not for market share, and hence not for developer profitability.

        The second chart shows that Cook is doing the same thing with iOS — too slow to respond to growing competition. MAYBE in the long run, iOS will maintain over 30% market share, but with Apple’s handset sales of ONE current model of iPhone against new competitors launching gadgets every few months, how long do you think 3rd party developers will prioritize Apple?

        With rare exception, most great 3rd party app developers have already decided to offer both Android and iOS versions of their software. Because of this, Cook cannot maintain the huge handset margins that Jobs could just a couple years ago. As a result, stopgap rushed products like the iPad mini have done almost nothing to improve Apple’s profits.

        Please show me a chart that indicates that Cook is being more proactive in making:
        1) either Mac or iOS the market share leader for the long term
        2) either Mac or iOS profits increasing faster than their respective overall competitors in each category
        3) any indication from Cook that Apple has a new market segment to create or take over.

        If you can’t show us any data to support these things, then expect AAPL stock to remain flatlined. The world waits for Cook to make a move, and he’s sitting on his ass accomplishing nothing. Just as my second chart showed you.

    2. If MDN needs a history lesson, you need an Internet search engine lesson. I searched on “chart apple product revenue” and found this wonderful site: http://barefigur.es

      Click on the “Revenues by Product” menu in the side bar and enjoy watching what KenC wanted you to admit to, and as a bonus you get 8 additional years of reality to temper your agenda.

      1. great site, Jim.

        Every time another iPhone service provider is added to the roll, iPhone profits jump. The revenue picture is rosy, and we’re all impressed. But why should everyone give Cook credit for this? WHY?

        The iPad mini, Cook’s grand contribution to new products since he was awarded the reins, has undercut iPad margins, now earning $100 less per sale than each iPhone. His inconsistent strategy is painfully obvious: he plays for market share in cheap tablets, but attempts to use one model of phone to serve the much larger, and much more diverse, mobile phone market. That is why Samsung’s growth in the phone market is so much faster. Even with an inferior product, Samsung is convincing people that its copycat phones are “good enough” … and each galaxy sale is a lost iPhone sale, no matter how many people here seem to think that by some unknown magic and completely unlike the Mac in the 1980’s, Apple’s loss of market share to its competitors in the phone markets will make no difference to its long-term profitability. It will. Apple MUST maintain strong worldwide iOS market share or else developers, just like they did with Windows, will select the inferior platform to prioritize.

        Speaking of the Mac, Cook hasn’t done practically anything to improve the Mac OS, unless you think the failed iCloud is a success. It stinks as badly as the MS “cloud” while offering even less practical benefit.

        What has Cook done to dramatically improve Mac software (iWork ’09 or feature-removing iTunes 11 anyone?), or significantly refresh most Mac product lines (on time)?

        Each “new” Mac released under Cook has been a mixed blessing, with useability & upgradeability compromised for questionable reasons. DIYers are being screwed and longtime Apple power users have been ignored by Cook. No new GPU options or thunderbolt for the Mac Pro, no retina displays of any size, nor software to support it. So no surprise that Cook has done nothing to improve Mac market share, and hence, profit growth is not significantly outpacing the competition — except by sheer luck that Windows 8 is such a disaster. That is absolutely no excuse for Cook to coast. Apple should be announcing 20% PC sales share and 50% phone sales share — and spending the money necessary to develop those products and services — instead of playing financial games to please market speculators.

    3. The first graph doesn’t really show anything other than Commodore’s crashing and Scully’s mismanagment of Apple. Strap each companies profits over that market share graph and we may have something to go by.

      That macrumors graph at first appear to be hellishly damning of Cook’s tenure, if it represented October 2011 take over by Cook from Steve dying, but it doesn’t.

      Looking at the graph, it’s easy to see the seasonality and small but steady growth of Apple’s market in it’s mature products (iTunes music store, iPod sales, Mac sales). The iPhone and iPad show the same thing, only magnified on a greater scale. Not to mention, at several of those upwards trends, Tim Cook was the acting CEO. 2004, 2009, and finally January of 2011.

    4. Actually your chart you put up was cropped. Here is the same full chart with Q4 attached which clearly shows apples upswing following the third quarter.

    5. @Mike

      like Ken C pointed out Mac is making near 50% of worldwide PC profits.
      Mac makes more money than all the PCs put out by Dell, HP, Asus, Acer and Lenovo COMBINED.
      (go see the stats at Asymco.com)

      to put that in perspective:
      imagine you had a FAST FOOD RESTAURANT chain in it made MORE MONEY than McDonalds, A&W, Burger King and Wendys COMBINED.
      are you losing or winning? lol.

      — IBM stopped making PCs a long time ago after losing money. And where is Compaq? Gateway collapsed and sold to acer. HP is thinking of quitting PCs , Dell is floundering … meanwhile apple is still many times their market cap and raking in billions of mac.

  1. Luckily Cook and Apple is not as short sighted as Gruber, the upcoming more affordale iPhone will go a long way in keeping it on top, just like the Original iMac kept Apple solvent.

    To somehow believe that just because TODAY, devs are not making as much on Android as on iOS will always be the case on such an enormous platform that is improving by leaps and bounds is beyond short sighted and foolish.
    But like I said, the upcoming more affordable iPhone and iPad mini shows Cook knows what he is doing, regardless of what the ever optimistic evangelical Apple choir have to say.
    Those who do not remember the past are always condemned to repeat it.

    1. Good god, you think Gruber doesn’t know his Apple history? And, you think Apple needs a “more affordable iPhone” to keep “Apple solvent”? Yes, you wrote that analogy.

    2. Enormous platform? Android? Are you kidding? Only people who don’t know wtf consider Android one platform. Try writing an app for it sometime. Android is a fragmented piece of shit. Too many versions.

      1. @Mac Daddy
        Indeed!
        To talk of “Android” is not even close to appropriate. When so many branches are dead ends and/or are incompatible, there is no such thing as “Android” — to write for or to have marketshare.

    3. You realize, do you not, that MDN was reposting a Gruber article from TWO years ago? So while one might be foolish to believe that just because some is the way it is TODAY (er, today two years ago) it will always be that way, the last two years have painted a picture of the situation getting even stronger than in the past, despite the growing number of phones and washing machines using Android.

    4. I keep trying to tell you people that I lose money on every sale but I make it for it in volume and market share!

      Nobody ever listens. I wonder why? uhhhhh, my internet and phone are being shut off. It’s a conspiracy against me just because I have no money. so there

    1. If people don’t make a market, then where does the money come from?

      It was a dedicated group of Apple users who refused to settle for the dreck windows offered in the mid 90s that kept buying Apple products. Those are people who made ‘the market’ for Apple

  2. For the last few weeks I’ve asked all that I meet with a Samsung S3 or HTC whatever why that and not the iPhone. All 15 or so I’ve asked really had no idea. None of knew about iPhones as such and had just taken what their telco pushed at them. Also, all said they didn’t do much except calls, texts and photos. None had even turned on their wifi nor ever gone to google play.

    This has been pretty consistent for the last year or so and only techy types ever do anything other their standard apps.

    All people I’ve had this discussion with with iPhones do heaps more than that, it almost always seems to be their most used device

    To my observations, there’s a big difference to the way android and iOS users use theirs devices.

    Developers will chase the money, not platforms. Quality apps usually appear on iOS first and they’re usually more functionally better than android equivalent (google maps anyone, please don’t flame me, I use apples Maps and its great)

    Apple gets 70% of the market share of app purchases and paid out over $9 bill to developers !

    So who’s got market share really ?

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.