yARN: can Apple survive the Android onslaught?

Consider the strategies, loyalty and buying patterns

Now that Apple has shown the world how to make smartphones and tablets that many people want to buy, can it withstand the onslaught of Android-based devices from a variety of competitors? After all, the Samsung Galaxy S II has received rave reviews, setting a new benchmark for Android phones and said by some to be a true iPhone competitor.

The most important thing is that the smartphone and tablet markets are still growing. Even if iOS gets knocked from top spot in the tablet market, Apple will still be one of the biggest vendors, running a profitable business, and providing a worthwhile market for developers. It’s worth noting that although the latest US smartphone installed base figures from comScore puts Apple in third place, both iOS and Android are still growing at the expense of other platforms.

The nature of the Android market is that you get devices at a wide range of price points. Apple’s strategy is to come up with something that a lot of people will want to buy with very few variations. So you can buy a $200 Android phone, but not a $200 iPhone. Back in 2008, Steve Jobs said, “We don’t know how to make a $500 computer that’s not a piece of junk, and our DNA will not let us ship that.” But Apple knew how to make $500 tablets and $700 phones (before subsidy) that weren’t pieces of junk and that proved to be very popular.

Importantly for Apple, customer loyalty seems high - iPhone owners are more likely to stick with their current platform next time they buy. Earlier this year, mobile analytics company Zokem published figures showing that while loyalty to Android phones was strong among users in the US, it was 84 per cent higher among iPhone owners.

Not only were BlackBerry, Symbian, Windows Mobile and Palm Pre owners more inclined towards iPhones than Android, but a bigger proportion of Android owners intended to switch to iPhone than vice versa.

Apart from general satisfaction, there is a degree of lock-in with mobile platforms. If you’ve purchased a bunch of apps (and to a lesser extent accessories), you’d rather not have to buy them over again. Apps may only cost a few dollars each, but that soon mounts up. If a subsidised smartphone costs you $200 upfront, do you want to spend another $200 replacing your apps? It might not be as big an obstacle as it is to switching from Windows to Mac OS X or vice versa, but it is a consideration.

As for developers, it seems that most of the market leaders have decided to go with iOS and Android rather than one or the other. That’s not surprising, as Millennial Media’s latest stats show that 50 per cent of app-driven advertising revenue came from iOS, compared with 39 per cent for Android.

As long as Apple maintains its pattern of regular - but not too frequent - updates to the iPad and iPhone lines with improved performance and new and desirable features, the company seems likely to maintain a strong position while it works on the Next Big Thing.

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