Apple’s most important number

“The first number that Tim Cook mentioned in the fourth quarter investor conference call was the number of active Apple devices. The 1.3 billion monthly active devices is the most important measure of the health of Apple’s business,” Horace Dediu writes for Asymco. “It’s the primary way the company chooses to measure itself and it’s the best instrument available to understand the company’s strategy.”

“This is only the second time this number was revealed. The previous figure, given in January 2016, was 1 billion active devices,” Dediu writes. “Thus, while Apple sold 586,744,000 devices the number of active devices increased by 300,000,000.”

“The number of active devices speaks of the future of the company and should be carefully scrutinized while the number of devices sold speaks of the past and should be cursorily glanced at,” Dediu writes. “The ratio between purchases and active devices… remains remarkably constant. It’s currently about 64%. It’s so constant that perhaps we can invent a rule of thumb which says that two out of every three devices ever sold by Apple is still in use. And that this rule is always true.”

Read more in the full article here.

MacDailyNews Take:

Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves. – Steve Jobs

17 Comments

  1. I have a Mac SE in my office. It’s just for pretty and when it’s running the HD sounds like nails tumbling in a coffee can, but it works. It has an old version of MS Word on it. Kinda cool. The Mac SE was my first ever Mac in 1987.

    1. Great Mac that SE. The SE 30 was the powerhouse.

      iMiss those dayz. Still have my Iici. Still boots. Has Quark, Photoshop, Illustrator 88 etc.

      What a great Mac that Iici IS! Every time iOpen the top iAm still in awe of the DETAILS on the INSIDE. Signatures and all. What a time.

    2. Me, too! My first real computer was a Mac SE with 1 MB RAM, two floppy drives and an internal 20 MB drive. Cost me $3,000. It was the start of a Mac-centric career that’s still going strong.

    3. my first was mac plus, two floppies, so I paid $1200 for MacBottom 20 meg external HD with 300 baud built-in modem to connect to compuserve. Total cost $3600 (my wife flipped out)

  2. …”two out of every three devices ever sold by Apple is [sic] still in use”

    That is a mindbogglingly high number. If we assume people retire old devices and keep newer, this would mean that practically every single iPhone 5, 5s, 5C 6, 6s, SE, 7, 8 and X are still working; and if some of the older ones from this list have been retired, then the list of active ones will include 4S (and possibly 4 as well) — phones that are seven years old!!

    This high-retention number would normally be bad news (people keep old devices, and don’t replace them with new ones), if Apple’s sales numbers of new devices weren’t braking records. So, Apple keeps selling more phones than any other maker, and that helps keep that market share solid.

    What’s remarkable is that with all the phones Android sells (about five times as many as Apple), their total number of active users is barely 2 billion (not even twice as many as iPhone users). There should be no surprise to anyone when app developers first go for iOS; between the uniformity of the platform (vs. the fragmentation), the readiness to pay for apps, and the overall quality and desirability of Apple customers, it is quite difficult to justify developing for Android first (unless your app is for specifically targeting poor people).

    No competing maker can hope for numbers anywhere near these numbers.

    1. There is a huge market for used iPhones. I suspect that many iPhone trade-ins make their way to lower cost markets in Latin America and Asia. Although Apple’s unit share sales numbers are low in these regions, usage share is likely much higher.

      The high demand for used iPhones explains the high resale value and the active devices number.

      1. been that since beginning, apple makes tons in developing markets selling 1 year refurbished devices traded in by fanboys like me, greatly contributes to ‘services’.

    2. Wall Street is only interested in high quarterly sales of new smartphones and nothing else. Things like no fragmentation or good aftermarket service also doesn’t seem to impress Wall Street. I would think greedy big investors want Apple to build smartphones that have a yearly expiration date that would force yearly iPhone upgrades. Apple’s steadily growing user base doesn’t offer the massive growth needed to drive up Apple’s share price.

      I always find it amusing how analysts praise some Chinese company having huge growth one year and then praising another Chinese company having huge growth the following year. These analysts don’t seem to realize that they’re all stealing market share from one another every other year.

      Meanwhile, iPhone sales may only slightly rise or fall but that’s considered some sort of disaster and panic sets in on Wall Street because it signals some sort of demise of the iPhone. Apple is getting absolutely zero praise for keeping older devices in use. Wall Street sees that as a hindrance to selling newer iPhones. It should show Apple’s customer loyalty, superior build quality and Apple being helpful in saving natural resources. Apple is doing an overall fine job but that’s just not enough to satisfy greedy investors looking for Apple to take over ALL of Android’s market share. Slow but steady gains simply aren’t good enough to excite Wall Street.

  3. I have an iPhone 4S and 6 Plus sitting on my desk that I periodically charge and glance at (one has my U.S. sim while I’m here in Europe, the other doesn’t have one). Do those count as “active”?

    1. When Google states ‘active’ numbers it appears to be based on devices that have accessed Google Play in the past month. I would suspect that Apple does something similar by detecting devices that have accessed Apple services in one form or another within a certain time period.

      1. In that case there are problably several hundred million “active” iOS devices that are rarely used, just sitting somewhere, periodically charged, updated and backed up automatically through iCloud. My 4S and 6+ are still fully functional, but given the pittance I’d earn from selling them and privacy concerns, it doesn’t make sense to get rid of them.

  4. This from the article :

    “Dr. Edward Deming once said that the numbers that best define a company are two factors that do not appear on any financial statement. These factors are the value of a satisfied customer and the value of a dissatisfied customer. These factors must be multiplied by every other number in a financial statement in order to assess the prospects of the business. A high satisfaction leads to repeat purchases and referrals, growing the business; while a low satisfaction leads to ending relationships and a repulsion of potential new customers.”

    ———–
    This is what I wrote yesterday in that controversial article on Apple’s latest foray into ‘social activism’:

    “Ignoring stuff like Siri, Apple TV, product launch date failures etc I’ll just focus on Macs again:

    We’ve got Apple selling as a ‘flagship’ still on it’s Website the Cylinder Mac Pro which has not been updated since 2013! Imagine again Ford selling a car from 2013 as NEW in 2018 ! We’ve got Mac Mini not updated also for years, we’ve got a Macbook Air which is supposedly to be the ‘lightest’ Mac having MORE PORTS than the Macbook !! ? (total consumer confusion and anti Steve Jobs philosophy of product line clarity), we’re still missing a 32 GB MacBook Pro while high end PC laptops have had them or years, the new APFS file system according to some is buggy for backups …. etc

    If Apple needs to do ‘social’ well ok, but I’ll feel a heck lot better if the PAID THE SAME ATTENTION to some PRODUCT issues.

    ———–

    I don’t really want to get into a controversial argument about ‘social activism’ but I do believe that Job’s laser focus on products is slowly being eroded replaced by leadership greater interest in ‘other things’ . More and more products today are being launched buggy or with missing components (and it’s treated as ‘acceptable’ or ‘normal’ ) : iPad Pro launched with NO Pencil supply (the most important differentiator of the ‘Pro’ iPad), the HomePod with a host of features missing (waiting for update) etc, new APFS file system buggy for backups, BATTERGATE (an easily avoidable issue if they had ‘focused’ ) etc etc.

    I’m NOT saying these products are ‘bad’ (besides my macs, iPhone etc, I have an iPad Pro 12.9 I use everyday for example) or Apple is ‘doomed’ (I bought another $8000 worth of apple stock during the recent dip) but we have to admit the fanatical Jobs focus on products, quality and shipping seem to be slipping.

    (Jobs wasn’t perfect but things should be IMPROVING with improving technology and resources and not slipping. Many American cars in the 1970s-80s were shoddy vs Japanese imports etc but they have improved immensely, likewise I expect Apple TODAY to be way better than year 2000 not worse. Components, manufacturing systems have improved. Not fighting for survival as in the past but with hundreds of billions in the bank product launches should be MORE perfect not less so ).

    Please note that in a bit more than 10 years (from an Apple 3 months from bankruptcy) Steve Jobs created the iPod, iTunes, Apple Retail Store system — all basically from SCRATCH (i.e they were NEW platforms or systems ), and documents show he was aware of Apple Watch.

    not to mention he did the iMac and DOZENS of significant mac models (the iMac for example went from plastic ‘bubble’ to lampshade to Intel Flat Screen). He also masterminded the crazy difficult transition from PowerPC to Intel and MacOS 9 to OSX (a completely different OS based on Nextstep) , and then there was iOS…

    Tim Cook has been CEO for 7 years . Although I can’t think of Anyone who can replace Cook as CEO and he has done reasonable well for stock holders (although nowhere close to Jobs 30-40% average stock increase a year) we have to admit his PRODUCT resume has not been as impressive.

    90% of Apple’s profits I would argue still come from products masterminded by Jobs. Even the neglected Macs last quarter made more than TWICE Apple Watch, TV, Beats, AirPods and other accessories etc COMBINED.

    Apple has to remember , paraphrasing Deming , it’s main focus should be the ‘ satisfied customer’ which ties into Jobs concept that Apple’s real mission serving the world is with great life changing PRODUCTS . Apple leadership need to buckle down, get away from distractions, and like Snow Leopard did for software, do a ‘hardware’ quality and shipping reset and move harder on innovation.

    1. Totally agree so 5 stars, but two stars for too many parentheses; Better to transform most of them into paragraphs or else reduce the length of the article. I think most of us miss Jobs for that very reason of sharp focus on details. I wonder if Forstall could remedy it but then he did Mapgate, if he were indeed its primary cause. Top execs did not care for his Jobs-like abrasiveness so I suspect he was the fall guy.

      1. Sorry for the writing style. The long length is due to my experience that if I’m not thorough enough I sometimes get argumentative replies from readers who have not understood my post due to facts I’ve left out. For example if I don’t talk about Mac issues at length, I get replies like “you’re an idiot. I love MY Mac, it’s fine”.

        As for Scott Forstall I think the Map thing was an inside political struggle more than maps. From what I’ve read Forstall does have or had an abrasive manner but he was a brilliant guy, AND years later Maps is STILL not perfect. Not in my area at least.

        Personally I think the current team can perform better if they had the fire really lit under them. Many people who performed brilliantly under Jobs became pretty lacklustre like Jon Rubenstein, Ron Johnson, Tony Fadell. All their businesses they got into later had problems: Palm, J.C Penney, Nest. The key for extraordinary performance seems to be Jobs leading them ….

        BTW: I find it hard to write articles criticizing Apple as I’m a fan and an investor, but I do so hoping to encourage improvement at Apple.

Reader Feedback

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