How important is Apple’s iPhone market share?

“Michael Walkley, Canaccord Genuity’s Apple analyst, estimates how much the major smartphone providers generate in profits, which I believe is more critical to which of them will thrive in the long-term,” Chuck Jones writes for Forbes. “Unit market share is important as a company needs to sell enough to cover its fixed costs such as research and development. However if it isn’t making any money at some point in time it should exit the market unless there are ancillary businesses that their smartphones are supporting.”

“Apple’s worldwide iPhone unit market share has held fairly steady in the low to mid-teens since 2013 and maybe even earlier,” Jones writes. “However its profit share of smartphone market has been much higher… 2017 1st quarter: 83%.”

“With a very loyal user base and a high value/high price strategy I don’t see its profit leading position eroding very much,” Jones writes. “Samsung has typically been in second place but it has seen its smartphone profits fall over the same timeframe. Its profit percentage has been in the low to mid-teens since 2015. Huawei is in third place. After breaking even in 2013 to 2015 it is now eking out 5% of industry profits.”

Read more in the full article here.

MacDailyNews Take: If it’s not an iPhone, it’s a profitless iPhone knockoff.

Little Mikey had a lemonade stand. Okay, it was a kiosk. He sold 100 (8 oz.) cups yesterday for 10-cents each. He spent 11-cents per cup for artificial lemon flavoring, corn syrup, and the paper cups. He used tap water because it was free. Threw it all together in a big plastic pail. He’s out a buck for all of his trouble. Boy, that was a lot of work for less than nothing!

Around the block, little Steve runs a lemonade stand, too. It’s all blonde wood and very clean. He sold 50 (24 oz.) glasses yesterday for 50-cents each. He spent 20-cents per glass on fresh-squeezed lemons, pure cane sugar, spring water (mixed with the utmost care), and some very nice glassware (he buys in bulk and gets a good price). He took home $15 yesterday. He’s currently building his newest stand right where Mikey’s used to be.MacDailyNews, April 23, 2009

“All men are created equal.”

Well, not when it comes to users of smartphones and tablets…

The bottom line: Those who settle for Android devices are not equal to iOS users. The fact is that iOS users are worth significantly more than Android settlers to developers, advertisers, third-party accessory makers (speakers, cases, chargers, cables, etc.), vehicle makers, musicians, TV show producers, movie producers, book authors, carriers, retailers, podcasters… The list goes on and on.

The quality of the customer matters. A lot.

Facile “analyses” that look only at market (unit) share, equating one Android settler to one iOS user, make a fatal error by incorrectly equating users of each platform one-to-one.

When it comes to mobile operating systems, all users are simply not equal.SteveJack, MacDailyNews, November 15, 2014

Android is pushed to users who are, in general:

a) confused about why they should be choosing an iPhone over an inferior knockoff and therefore might be less prone to understand/explore their devices’ capabilities or trust their devices with credit card info for shopping; and/or
b) enticed with “Buy One Get One Free,” “Buy One, Get Two or More Free,” or similar ($100 Gift Cards with Purchase) offers.

Neither type of customer is the cream of the crop when it comes to successful engagement or coveted demographics; closer to the bottom of the barrel than the top, in fact. Android can be widespread and still demographically inferior precisely because of the way in which and to whom Android devices are marketed. Unending BOGO promos attract a seemingly unending stream of cheapskate freetards just as inane, pointless TV commercials about robots or blasting holes in concrete walls attract meatheads and dullards, not exactly the best demographics unless you’re peddling muscle building powders or grease monkey overalls.

Google made a crucial mistake: They gave away Android to “partners” who pushed and continue to push the product into the hands of the exact opposite type of user that Google needs for Android to truly thrive. Hence, Android is a backwater of second-rate, or worse, app versions that are only downloaded when free or ad-supported – but the Android user is notoriously cheap, so the ads don’t sell for much because they don’t work very well. You’d have guessed that Google would have understood this, but you’d have guessed wrong.

Google built a platform that depends heavily on advertising support, but sold it to the very type of customer who’s the least likely to patronize ads.

iOS users are the ones who buy apps, so developers focus on iOS users. iOS users buy products, so accessory makers focus on iOS users. iOS users have money and the proven will to spend it, so vehicle makers focus on iOS users. Etcetera. Android can have the Hee Haw demographic. Apple doesn’t want it or need it; it’s far more trouble than it’s worth.MacDailyNews, November 26, 2012

SEE ALSO:
Higher income U.S. states use Apple iPhones; lower income states use Samsung Galaxy phones – September 27, 2016
iOS users are worth 10X more than those who settle for Android – July 27, 2016
Apple’s App Store revenue nearly double that of Google’s Android – April 20, 2016
Poor man’s iPhone: Android on the decline – February 26, 2015
Study: iPhone users are smarter and richer than those who settle for Android phones – January 22, 2015
Why Android users can’t have the nicest things – January 5, 2015
iPhone users earn significantly more than those who settle for Android phones – October 8, 2014
Yet more proof that Android is for poor people – June 27, 2014
More proof that Android is for poor people – May 13, 2014
Android users poorer, shorter, unhealthier, less educated, far less charitable than Apple iPhone users – November 13, 2013
IDC data shows two thirds of Android’s 81% smartphone share are cheap junk phones – November 13, 2013
CIRP: Apple iPhone users are younger, richer, and better educated than those who settle for Samsung knockoff phones – August 19, 2013
iPhone users smarter, richer than Android phone users – August 16, 2011
Study: Apple iPhone users richer, younger, more productive than other so-called ‘smartphone’ users – June 12, 2009

6 Comments

  1. While I agree with MDN’s take, there is a very strong market for Android cheapie phones.
    I know several people who should buy android phones. Why?
    They never use more than the very basic features.. call, text and photo. They don’t use a computer so when they throw their old phones away, they lose their pictures. They really don’t care.

    They lose or break their phones at least twice a year. So cheap is better for them.

    They have no real desire to learn how to use their phones and since android software changes with each phone, it just enforces the “don’t care to learn” feeling. They don’t care.

    So, there are a number of people out there who really should buy android phones to go with the android tablets they don’t use and the dell computers they only use for text and candy rock games.

    PS, even after a year, there are people at the places I eat at the are amazed when I pay with my Apple watch. There was one guy who said he wanted to pay with his watch but the android software he got did not seem to work. What was my secret??? Apple watch I said. He did not get it. See above. 🙂

    1. What you say is undeniably true from the point of view of those customers, but what does the manufacturer get from it? If the profit margin is very low, they can’t continue with that business model unless an additional profit is gained elsewhere.

      The customers who scarcely use the smart features of their phones are certainly not going to be the ones buying services and features that might generate additional revenue streams for the manufacturer.

      1. That may be true. In some cases, the company produces Android devices to showcase the technical skills they possess in at the component and device levels which may lead to sales of components they manufacture for use devices by other OEMs.

  2. Market share (aside from profit) is important only in the sense that a certain level must be maintained in order to support a vibrant ecosystem of developers and accessories. The iPhone certainly has this, and has an advantage in this due to the demographics of those with iPhones tending to spend more on apps and accessories.

    Apple has faced periods of time with other product lines where market share was low enough to damage the supporting ecosystem and affect profits. Notably, this was the case with the Mac, but Apple’s answer to this wasn’t to decrease margins/low prices, but rather to increase quality and build out the supporting ecosystem themselves while riding a fortunate wave of incoming cross-platform compatible standards brought forth via the Web.

    1. Market share benefits those who can gain financially from the ecosystem. That’s not necessarily the same people who manufacture the phones, but the manufacturers are the ones who are putting large investments at risk.

      1. Right, I was referring to market share importance from Apple’s perspective. From a developer or accessory maker, the market share stats are significant as well as they are to the consumer in terms of the ecosystem, support and compatibility with others.

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