Why market share doesn’t matter to Apple

“It was reported towards the end of last week that the iPhone 5C may not have been selling at the rate that investors and Apple longs had hoped for,” Quoth the Raven writes for Seeking Alpha. “Before we could start to worry about these metrics, it was released this weekend that even though the 5C orders were cut up to 35%, the iPhone 5S has apparently increased production by 75%.”

“Depending on the margins that Apple is yielding from each of these phones, this may not even be any type of bad news for the company,” The Raven writes. “The general analyst sentiment was that because the 5C was an inherently cheaper product to make, the margins would be significantly better on the top-tier 5S. In that case, Apple continues to hum right along in mobile.”

The Raven writes, “This does well to prove a couple of arguments that Apple can use to tailor their business plan: 1. It shows that the average Apple consumer has the means to purchase the higher end equipment from Apple; 2. It shows that consumers want the best/higher end product, as the iPhone 5S is better made with the new top of the line A7 processor and fingerprint ID scanner; 3. Gaudy (everyone flipped out about the ‘gold’ when it was released) might be right up the Apple consumer’s alley – the same way Lexus sells cars with gold trim.”

MacDailyNews Take: The writer doesn’t own the iPhone 5s in gold and has likely never seen one in person. Unlike us. The iPhone 5s units in our pockets are champagne gold. In some lighting conditions they even look like light copper. It’s not the least bit gaudy. It’s nothing like this. (He’s right about one thing, though: those Lexus cars with gold trim are gaudy.)

The Raven writes, “As long as Apple continues to find sects of success within iPhone, the company’s ‘ecosystem’ of products will continue to prove a good investment vehicle; as Apple still has considerable market share to gain in Mac, and as Apple will likely continue to dominate music sales/streaming radio. With 10 coming catalysts and a continued push in mobile, Apple continues to be a threat to competitors like Samsung and Pandora – and Apple remains, to this investor, a continued rock solid investment going forward.”

Read more in the full article here.

MacDailyNews Take: The writer is in the ballpark with his first two points, but it’s more accurate to say that the well-heeled customer chooses Apple and those users gravitate to Apple’s higher-end products.

These are the desirable customers. These are the customers that pay for substantive R&D. These are the customers that matter. This is why they get the world’s first and only 64-bit smartphone. This is, in fact, why they get the world’s modern smartphone in 2007, years before anyone else gets a serviceable knockoff.

These are the customers that pay for not only the best devices, but also for the best apps and services. This is why market share doesn’t matter for Apple and why Apple doesn’t really care about general market (unit) share. This is why the Mac lived while all the others’ PC businesses slowly died during Microsoft’s dreadful Dark Age of Personal Computing. This is why the Mac continues to thrive today. All of the smart and rich people have Macs. Intelligent developers understand this.

In each market in which it competes, Apple owns the only part of market that matters: Consumers with taste, the ability to discern value, and who possess disposable income and the will to spend it. Google, Samsung et al. can have all of the leftovers. They’re more trouble than they’re worth, which isn’t much, not even en masse.

If you have a billion users who settled for your product because it was part of a Buy One Get One freebie, how content (music, movies, apps, books, etc.) are they going to buy and to how many paid services are they going to subscribe and how much are they worth to advertisers? Pretty much bupkis on all three counts.

We’d rather have the 400+ million (and rapidly growing) customers with the taste, the intelligence to recognize incredible value, and the money and the will to spend it. Wouldn’t you?

As long as you corner the market on the best customers, and there are enough of them to support a healthy business (very healthy in Apple’s case), market share doesn’t matter.

Related articles:
Newsflash: Apple sells premium products at premium prices to premium customers – October 23, 2012

CIRP: Apple iPhone users are younger, richer, and better educated than those who settle for Samsung knockoff phones – August 19, 2013
Twitter heat map shows iPhone use by the affluent, Android by the poor – June 20, 2013
iOS dominates Android: 75 cents of every dollar spent on mobile advertising is spent on Apple iOS devices – April 19, 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
World’s best-selling smartphone: Apple iPhone 5; iPhone 4S #2, third place Samsung Galaxy 3 brings up rear – February 20, 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
Apple utterly dominates mobile device market with 6% market share – and 77% of the profits – August 6, 2012
Game over, Android: Apple owns 84% of mobile gaming revenue – May 7, 2012
Wealthy smartphone users more likely to have iPhones; less likely to play games, tweet – April 2, 2012
U.S. Apple product users split evenly between Republicans and Democrats; Half of U.S. households own at least one Apple product – March 28, 2012
Study: iPad users more likely to buy – and buy more – online than traditional PC users – September 29, 2011
Apple iPhone users most open to mobile payments – August 22, 2011
iPhone users smarter, richer, less conservative than Android phone users – August 16, 2011
Apple iPhone users spend significantly more on their credit cards than non-iPhone users – November 5, 2010
Study: Apple iPhone users richer, younger, more productive than other so-called ‘smartphone’ users – June 12, 2009
Nielsen: Mac users are better educated and make more money than PC users – July 12, 2002

29 Comments

  1. Many folks out there forget this little tidbit “Samsung was forced to admit in court during its legal trial with Apple that it actually sold only about half of what it reported as having shipped in the quarters in question during the trial.” (This statement is directly above chart 1 – see link) what makes anyone think Samsung is operating any differently?

    Read more: http://www.electronista.com/articles/13/10/31/windows.phone.climbs.to.four.percent.as.android.dominates/#ixzz2jLzYNaOV

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