iPhone Vs. Android: Apple's Success Only Goes So Far - InformationWeek

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IoT
IoT
Mobile // Mobile Devices
Commentary
7/23/2015
02:05 PM
Eric Zeman
Eric Zeman
Commentary
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iPhone Vs. Android: Apple's Success Only Goes So Far

Apple's iPhone is a beast, but it will never fully conquer the smartphone market, where Android still holds some sway.

iPhone 6s And 7 Other Smartphones To Watch In 2015
iPhone 6s And 7 Other Smartphones To Watch In 2015
(Click image for larger view and slideshow.)

There's no denying the Apple iPhone is king of smartphones. It may be a big seller the world over, but it doesn't make sense for everyone. There will always be room in the market for competition, especially in the entry-level segment.

Apple owns more than 90% of all profits in the smartphone business. No other company makes money selling smartphones the way Apple does. It's astounding, really, that Apple is able to gobble up so much of the profit. It's even more astounding that other companies even bother trying to compete. But they do, and they will.

Apple reported sales of about 47.5 million iPhones during its third fiscal quarter. That follows sales of 61.2 million and 74.5 million during its first and second quarters, respectively. The iPhone has been selling like mad since Apple debuted the iPhone 6 and iPhone 6 Plus last fall.

(Image: Ellica_S/iStockphoto)

(Image: Ellica_S/iStockphoto)

To put the numbers into a little perspective, Samsung outdid Apple in its most recent quarter, with shipments of between 71 million and 76 million.

Globally, Android slays the iPhone in terms of volume. IDC predicts Android shipments will top 1.15 billion, giving it 79.4% of the entire smartphone market this year. iPhone shipments are predicted to reach 237 million for 2015, which puts the iPhone at 16.4% of the market. Android is outselling the iPhone nearly five to one.

The iPhone has some room to grow.

"There's no question that a large chunk of Apple's installed base is still using older models (pre-iPhone 6/6+), which leaves continued growth opportunity in the second half of 2015 and beyond," Ryan Reith, program director with IDC, noted in a report. "In addition, IDC believes a sizable portion of the Android installed base were those who migrated over to the platform from iOS with the desire for a larger screen smartphone. This is an opportunity Apple is no question focusing on."

For too long, Apple kept the iPhone's screen at 4.0 inches or less while the screens of Android devices ratcheted up to 5.0 inches or more. The bigger screens appealed to consumers, and sales of such Android phones skyrocketed. As soon as Apple began making big phones, some Android users began to return to the iPhone.

[Read more about Apple's latest financial quarter.]

Apple competes well at the top of the market. With prices ranging from $649 to $949, the iPhone is among the most expensive handsets in the world.

This is why Apple will never own the entire market.

"The price difference between Android and iOS devices in many markets will remain a significant hurdle for Apple," said IDC's Reith. That will eventually block Apple's growth.

The market for low-cost handsets is significant, as prepaid carriers in the US serve to demonstrate. They count tens of millions of customers, and most of their handsets cost less than $200. The same scenario applies to emerging markets, where cost is king.

Bottom line: The iPhone is a winner and likely always will be, but Apple can't (and won't) compete in the low end of the market, leaving plenty of opportunity for others.

Eric is a freelance writer for InformationWeek specializing in mobile technologies. View Full Bio
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Stratustician
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Stratustician,
User Rank: Ninja
7/23/2015 | 2:28:36 PM
Outpricing in the market
Your article points to a key issue here.  Since Apple devices are rarely discounted outside brand new terms, and even newer models not carrying a device subsidy, I think many iPhone users are still hanging onto their old models due to the high cost of upgrading/replacing.

Android devices, which often can be heavily subsidized, may have better adoption rates simply because it's a lower cost alternative for folks who need a new device.  There's also a lot more selection, so it definitely eats into the iPhone market since many users who don't want to shell out $500-$1000 for a new device might be more incented to switch especially now that the market has very comporable devices to the iPhone from Android handset manufacturers.
melgross
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melgross,
User Rank: Ninja
7/23/2015 | 4:49:02 PM
Phone pricing
Both Apple and Samsung do the same thing with their flagship phones. They discount them next year, and then again the year after that. So Apple's phone pricing is really from $399 up, not $649 up. And then, Apple came out with the somewhat lower priced 5C, which is expected to be replaced this year too. An advantage Apple also has is that there are a lot of people who are willing to spend more for their product. Those people may not be thought of as potential customers, but they are. We can see that in China. And then, of course, is the fact that Apple isn't interested in selling cheap phones, unlike Android manufacturers, Apple has an extensive software ecology, and third parties making Hardware. Apple is therefore interested that users have satisfaction in performance, while Android manufacturers have no such requirement. That iPhone sales are continuing to grow strongly is enough for Apple to be satisfied with their position of profitability, without worrying that said profits are keeping sales down. And after all, a company that is strong financially is in the best position to lead.
melgross
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melgross,
User Rank: Ninja
7/23/2015 | 4:51:18 PM
Re: Outpricing in the market
Except that just the opposite is happening. It's Android users, for the most part, that are switching to the iPhone. There is little stickiness to Android.
Angelfuego
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Angelfuego,
User Rank: Ninja
7/23/2015 | 5:55:07 PM
Re: Outpricing in the market
I was an Android users for several years. I switched to an iPhone, but for a very short time. I am back with my Android, and I am pleased with my decision. I like Apple products,  but I am not blown away by the iPhone. Androids can do a lot of the same stuff for a cheaper cost.
Angelfuego
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Angelfuego,
User Rank: Ninja
7/23/2015 | 5:56:49 PM
Re: Outpricing in the market
@STATISTICIAN, Since we are also talking cost, I would like up to bring up the fat that Apple doesn't have sales on iPhones. I tink they should start doinf that.
yalanand
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yalanand,
User Rank: Ninja
7/23/2015 | 11:23:20 PM
Re: Outpricing in the market
Thank God prices aren't slashed for the iPhone and if that happened Android can bid goodbye because everyone knows what an apple stands for. Having been an android developer as part time, I would miss my job if that ever happened.
yalanand
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yalanand,
User Rank: Ninja
7/23/2015 | 11:28:58 PM
Re: Outpricing in the market
I have an iPhone 5s as well but I love the interface, the work centric culture and the safety. However I would like to add that app market and follow up services are so high priced that it just doesn't make any sense.
yalanand
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yalanand,
User Rank: Ninja
7/23/2015 | 11:31:23 PM
Re: Outpricing in the market
@ melgross: I would not be so sure. Most people who can afford an iPhone buy an iPhone because of that craze, but I don't think they switch entirely because functionality and cheap price of android is great. I have a nexus device as well as an iPhone and I use the nexus most of the time because it is easier to work with.
yalanand
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yalanand,
User Rank: Ninja
7/23/2015 | 11:39:11 PM
Re: Phone pricing
@melgross: Most busy people like me have a different psychological profile while tackling flagship phones. We don't care about specs because we can't afford to waste our time thinking about specs. We think that high price determines best performance and we also are too busy to wabble through different types of phone companies as well. So we take the highest priced phone in the current market without thinking much. That is how the iPhone succeeds. It is high priced but isn't the best in antutu benchmarks. Still people buy it because they think high price determines performance.
Gigi3
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Gigi3,
User Rank: Ninja
7/24/2015 | 4:39:48 AM
Apple vs Android
"There's no denying the Apple iPhone is king of smartphones. It may be a big seller the world over, but it doesn't make sense for everyone. There will always be room in the market for competition, especially in the entry-level segment."

Eric, the only problem with Apple products are its affordability, where Android can be affordable to everyone by spending $50 for entry level smartphones. There is no doubt that Apple products are superior in terms of quality and features.
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