Android’s market share is literally a joke; Apple is winning the smartphone wars and winning them handily (interview)

“Android’s market share is a joke, and most tech writers aren’t getting the punchline,” John Koetsier reports for VentureBeat. “That, at least, is the opinion of John Kirk, a ‘recovering attorney,’ financial adviser, business coach, and investor who wrote an interesting column recently stating that market share in general, and Android’s market share in particular, is not an appropriate measure of success.”

“And that contrary to all popular opinion, Apple is ‘winning the smartphone wars — and winning them handily,'” Koetsier reports. “I wanted to understand Kirk’s position, so yesterday we chatted about Apple, Google, Android, and Wall Street.”

Some snippets:

VentureBeat: You stated that Android’s market share is a joke. Why?
John Kirk: It’s a reference to the old joke that you can lose money on every sale but make it up in volume. Many companies in the Android ecosystem are losing money or, at best, breaking even. HTC, Motorola, and many of the other phone manufacturers are in that boat.

VentureBeat: But isn’t profit a trailing indicator?
Kirk: Yes, it is. But market share isn’t necessarily a leading indicator. Profit comes from a combination of market share times margins, and people are completely ignoring margins.

VentureBeat: Leveraging a high profit share on a low market share is certainly efficient. But is it safe?
Kirk: You can look at the PC wars versus the Mac, which everyone says that Apple lost … but what Apple ‘lost’ by losing that war was winning 45 percent of the current market’s profits! So despite the fact that currently they’re at 8 percent market share, they’re doing very well… I don’t think that history is repeating … it seems much more likely that we’re ending up with a duopoly rather than a monopoly, and that Apple’s ecosystem is large enough to be self-sustaining right now.

Much more in the full article here.

MacDailyNews Take: And, HP and Dell “won.” (smirk)

Related articles:
Android’s market share is literally a joke; Apple is winning the smartphone wars and winning them handily – May 23, 2013
The Church of Market Share revisited – April 26, 2013
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
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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

35 Comments

  1. Like our elected representatives, the financial sector and the press are all bought and paid for by the same oligarchy.

    Good luck getting an honest story out of any of them!

    Apple does very, very well at what they do and are self confident to keep to themselves. That pisses off every self serving, MBA toting A-Hole that is anywhere else but at Apple Inc.

    Apple makes great, desirable things, but they cant buy ALL the ad space, what with the corporate standard being 8% of gross for all marketing activities. That leaves a WHOLE lot of ad space to fill next to paid reviews and followed by astroturfed trolls.

  2. A company doesn’t get $160 billion cash in the bank, selling every product it can manufacture, and basically doing what it wants by losing the product races it is in.

    Apple always has been very careful to balance profits (margins) with high quality products. It refuses to release products or enter markets where it does not believe it can retain a reasonable profit share. The current “low end” iPhone debate raging among analysts, Wall Street and bloggers is a perfect example. If Apple has to drop to 5% margins just to sell a low-end, lower quality iPhone to gain low-end market share, Apple will take a pass.

    1. So, then explain why Apple’s share price is $450, why Microsoft’s P/E ratio is 17 compared to Apple’s 11, and why Google shares are selling for around $890 or so. If market share doesn’t matter and profit share does, why is Apple being totally disrespected by Wall Street. Apple is offering a stock buyback, has a bond offering, it gives healthy dividends and Apple has plenty of cash in the bank, so I’m fairly certain it has something to do with Apple’s falling smartphone market share.

      If I’m wrong about that then tell me what has Apple’s share price in the toilet while the rest of the stock market is running as smooth as silk and other tech companies have great gains this year. If I’m off track about Apple’s crappy share price then tell what I’ve left out. I know Apple’s retail stores are still doing very well and more are coming. It doesn’t seem like Apple deserves a P/E ratio of 11 if Microsoft’s is 17. I can’t say there are injustices taking place, but there definitely seem to be some inequalities with Apple’s share price when compared to other profitable tech companies. As far as I can tell, there’s only Apple’s rapidly sinking smartphone market share holding the stock down.

      1. Actually, it has very, very little to do with “Apple’s falling smartphone market share”. It has to do with Wall Street (not individual investors) getting what they want out of Apple.

        Apple was a “growth stock” and Wall Street was making a lot of money trading Apple up and up and up.

        When that appeared to be unsustainable and Apple had amassed over $130B in cash and short term investments, the sharks swam in. They pummeled Apple for every real and imaginary issue. They demanded that Apple “return those profits to the shareholders” (never mind that those shareholders never had those profits in the first place so there was nothing to “return” — many big name Wall Streeters even claimed that the stockholders owned those profits — another lie. Yet, for month after month the lies piled on. And the stock kept dropping. All the while Wall Street was drooling over the chance to get a large fraction of that $130+ billion.

        Then Apple caved in. Apple agreed to a vastly increased stock buyback and a significantly increased dividend. This definitely flowed money into Wall Street pockets. Add to that the bond issue that is managed buy the Street and its even more money went to the Street.

        So what did the Street learn? That with enough bashing of Apple, Inc. they can get Apple to submit to processes that gets the Street money. Hurray for The Street!!! It taught Apple a lesson as to who’s boss. Whip a man long enough and he’ll either die or do what you want — and Apple refuses to die.

        But….
        Since the Street only is only interested in two things, “What are you doing for me TODAY.” and “What are you going to do for me TOMORROW.” — and since the Street has learned that it can manipulate Apple with enough bashing, the Street has decided to go for it again. They won’t even wait for the stock price to recover as that would take WAY to long for them to be happy.

        So the bashing starts all over again. Forget the financial fundamentals. Forget products and marketing and sales.

        So now we’re into the repeat stage of the old “lather, rinse and repeat” method.

      2. Apple has way more outstanding shares than Google. Comparing share prices without the numbers of shares just shows how stupid you are.

        Compare the quarterly profits of the two companies. That’ll open your eyes.

      1. Not low end parts – but less expensive, high quality parts coupled with more efficient assembly processes and Apple’s incredible economies of scale. Few other manufacturers could be contemplating a run of something like 100 million of a single product and be in a position to pay for components in advance or to offer investment in manufacturing plant.

        Apple will still require exceptionally high standards for quality in every component, Apple wouldn’t put their name to it otherwise. The trade-off will be that some cutting-edge features and expensive technology will be omitted. Things like retina screen and cases that are expensive to assemble would not be necessary on a lower cost iPhone.

        However you are surely right that any new iPhone will run the standard IOS of the day. IOS runs on all recent iPhones. If you load it onto a 3GS, it still runs, but due to hardware differences, some features are not supported ( turn by turn navigation and Siri for instance ). It’s quite likely that a more affordable iPhone would not have some of the most advanced features of iPhone 5 and IOS would adapt accordingly, but the core features would all be there exactly the same as on every other iPhone.

      2. you can still make a very profitable high quality product – less expensive by removing some of the bells and whistles

        dare to think different ?

        – no camera to start – big savings there.

        – no 4g network – or maybe no wifi – just cellular

        – core apps – no installation – no store – just stock and pure apple apps – yet still an upgradeable os

        – plastic over metal

        – less memory

        – older processor

        think about what’s really used on a smartphone
        how can it get simpler
        how can it be more reliable

        its a web browser, iPod, phone and camera

        its 4 products in one – remove one product and save

  3. MDN again trots out another talking head to reinforce its short-term simplistic thinking.

    Apple’s future prosperity depends not only on handset profits, but also app store profits. The day that developers prioritize another marketplace (like they did with Windows software) is the day that Apple will struggle to hold up its margins. The fact that iGadget margins are falling already is a sign that Cook is concerned. But, without a full iPhone family to offer diverse markets the products they want and can afford, Apple indeed will see itself with the minority market share in the near future, and eventually the minority value share too.

    Funny how MDN never talks about Mac market share.

      1. Apple’s Mac market share is greater than 8% now and growing faster every quarter. Thank you Microsoft for always meeting our expectations. The world is moving on now. Steve Jobs talked about the truck to car transition. Steve Ballmer and the rest of Microsoft are still trying to understand what Steve Jobs was talking about.

        I read you are working on another truck called Windows 8.#? Keep turning out those trucks until they turn off the lights.

    1. You really need to go back and read the original source article by John Kirk. This guy is not just “another talking head.” His article lays out very important business realities regarding market vs profit share and is a great read. Your rant conveys a total lack of familiarity with subject on which you are commenting.

    2. Actually Mike, if you had some time to review the latest reports, you would see that tablets, mainly Apple iPad ,is significantly cutting into Laptop/desktop market share numbers and is projected to overtake those in 3 years. Further, Mike, if you look at Mac market share, you will see that while Apple holds just 8% of the market, there to they hold 45% of the profit. So … Mike …. tell me, does Apple have some edge on platform apps? Hardly, most apps are made for Windows systems.

      1. @ crazy, Spark, & Joe:

        We are all familiar with the the math. A company can achieve profits by emphasizing either margin or volume.

        Problem is, you guys are all forgetting App store profits. Apple is still in the lead for iOS, but its Mac App Store isn’t exactly setting the world on fire. Why do you suppose that is? Do you think it may have something to do with lack of developers, who long ago jumped on the Wintel platform? What makes you think the same thing won’t happen to iOS?

        Apple has two platforms to promote, and Cook isn’t really doing anything with the Mac except dumbing it down. Don’t deceive yourself into thinking that PCs & Macs are dead. They aren’t.

        As for iOS, drop the US-centric thinking and realize there’s a world out there, and not everyone in it wants the one current mobile phone Apple sells. Cook is losing the battle to Samsung because he refuses to offer a full family of iPhones.

        If Apple wants successful platforms for the long run, it’s going to have to have a respectable — preferably somewhat slightly over 50% — market share to go along with its historically high unit margins.

        Apple is getting slaughtered by investors — not because they don’t agree it offers superior products and services, but because premium companies almost always lose the market share race. And this is sad, because now more than ever, Apple should be on the attack to take market share back from Microsoft and Samsung, both of which have obvious weaknesses that could be exploited if Cook wasn’t such a timid leader.

        1. It’s possible that more cheap cubic zirconia and fake diamonds are sold than real diamonds, especially high quality clear diamonds.

          Does that mean the diamond trade is doomed because it has a low ‘market share’?

          Is market share the only issue to look at? Of course not. Android has low end barely-smart phone market share full of cheapskates and bargain hunters and people who do not buy apps, and are less valuable for advertisers.

          App Store profits recently exceeded 1 billion per year. That’s profits, not revenue. Profits.

          Has google released profits that they make from their also-ran store?

    3. Mike,

      Apple’s margins are down for many, many, many reasons, but one of the most significant is that they most recent items are much more difficult to build. This drives two things: 1) gross margins go down and 2) ramp up times are extended.

      Both these things happened with the iPhone 5, the iPad mini and both classes of iMacs.

      However, you should note that those issues typically last a quarter or two — as happened here. Apple typically keeps an general, external design for two or three generations of a product. If they have a the basic iPhone 5 build process worked out then if they just tweak it for the next iPhone, the margins will recover. The same can be said for both the iPad line and the iMac line.

      Cook definitely WAS concerned about this, but if Apple stays true to form, Cook won’t be concerned come the second half of July when it reports the second calendar quarter’s results.

      People forget that in 1990 Apple was at its peak and the press was saying Scully was the “Shogun” and running the personal computer industry and even then Apple (across all product lines — both Apple and Mac lines plus associated equipment) Apple only had a 19.2% market share. That was the highest Apple ever got. Then Apple/Scully lost its/his way and tried to ship all things to all people. I’ve said it here before: Who knows — without looking it up — the difference between a Performa 6400 and a Mac 6400 (other than IDE versus SCSI) or what is the diference between a Performa 6410 and a Performa 6420? Talk about product diversity trying to hit every possible customer and price point!

      Steve came back and cut the number of products DRASTICALLY — including several whole product lines. Apple is still here and going stronger than ever. It *IS* selling more product than it ever has.

      Contrast that with Dell who was selling every conceivable version of a PC and associated equipment you or anyone else could possibly imagine. Dell’s peak market share was a factor of two higher than Apple’s peak. Yet Dell pursued the “race to the bottom” philosophy. We’ll sell everything at razor thin margins in every conceivable configuration and make it up on future sales once we own the market.” What Dell did not realize until it is too late is that a “race to the bottom” may create huge short term revenues (and sometimes huge short term profits) but it is not sustainable. In the feature phone world Nokia learned this too late.

      This same tale may be repeating itself with Samsung. Samsung’s saving will be that it sells into many, many different markets: from TVs to washing machines. If the race to the bottom in smart phones becomes unsustainable for Samsung they can move on to vacuum cleaners.

      Meanwhile Apple will still be here in the computer/smartphone/tablet/whatever’s next markets.

      1. Simplify the product line again will benefit consumers.

        iPhone: large/medium/small, 32/64/128Gb, A7 or A6
        iPad: large/medium/small, 32/64/128Gb, A7 or A6

        *the difference is iPhone includes Wifi & cellular telephone capabilities, where iPad is Wifi only. Sizes are current to product offerings now. Large 9.7″ screen, Medium 7.8″ screen, Small the 4″ screen. Storage Memory offers savings as does last years processor.

        Could not be simpler. And Apple benefits too as claiming the Largest smartphone over any competitor.

          1. Well Mat D, i guess sort of like that.
            I would imagine the processor used to distinguish;

            iPhone A7m / 128Gb

            Three years from now knowing you have a A7
            its clear to see, as the A10 rolls in.
            And of course “m” for medium size screen.
            Or the iPad mini size.

  4. Do you seriously not know how to read? We at least know you can’t think…
    From above (referring to “Mac market share”
    Apple ‘lost’ by losing that war was winning 45 percent of the current market’s profits!

    1. reference your source, please.

      no one would be happier than I if this were true, but the reality is that Apple isn’t striving very hard to improve Mac market share or profits. Cook (and most MDN readers) seem obsessed only with iOS, since it’s the newer kid on the block.

        1. Well, Apple offers two different operating systems to support what it considers two different classes of machine. Combine the two if you think it makes your opinion more valid. Fact is, tablets are primarily consumer media devices — relatively inexpensive luxury items — that don’t earn the margin that Macs do. So Apple has actually positioned the iOS to run a market share race, despite your protestations to the contrary. What’s sad is that Cook has started to lose the market share of iOS because he refuses to offer a greater variety of iPhones. At this rate, give it another year or two, and I promise you, you WILL see Android touting a few impressive apps that aren’t available for iOS. Developers go where the market is, you know.

          1. i just like to say,

            Apple Computers Inc. became
            Apple Inc. for a reason.

            That reason was an expansion more geared to consumer products running iOS. Though at the time was iPhone OS and happened the day iPhone hit the market.

            Apple didn’t just jump into the phone industry they studied it, researched innovative ways where existing competitors where stuck due to software – the core software the OS. With a determination to reach 1% global market penetration – the plan covered apps by third party support, a store that rewarded developers, stores to get these products in the hands of consumers. It was an extremely well planned move.

            Everything (the system) (the product) (the stores) (the business plan) right down to the rewards system and presentation style has been copied by Apples’ competitors.

            Apple changed not only the phone industry but business overall.

            As the competitors are allowed time to suck the life by copying Apple… hope is not lost. Apple can re-invent itself – yes they are that good. Have faith.

          2. Your problem seems to be you ignore facts preferring your own ill informed fantasies. The facts are that Android users, Samsung users included, seldom buy Apps thereby not generating many App sales to attract those developers. On the other hand, users of iOS devices tend to buy Apps for real money, and then, after buying them, spend more money on in-App purchases, thus attracting developers to iOS to make money. More analysis of net usage consistently shows iOS users despite being far outnumbered by Android users, hit website and ad counters on the Internet far more than do Android users, dominating the money being generated in that way. . . thus attracting developers again who develop Apps that link onto the Internet. Finally, developers themselves state that they much prefer to develop on iOS FIRST and then port to other mobile platforms later if they see an economic reason to do so. . . and some have not seen a reason to move to Android, given the low level of Android users willing to buy Apps. Those are the facts of the market.

  5. Apple doesn’t do buy one get one free like Samsung and all the rest. So that’s why android has big marketshare and yet no profits to show for it. And that’s why Apple is winning as well.

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