Neil Hughes
With a current installed base of about 225 million iOS-powered units, Apple customers have invested about $22 billion in content, cumulatively, for those devices, analyst Chris Whitmore with Deutsche Bank said in a note to investors on Monday. He sees the install base growing to more than 300 million units by the end of calendar year 2012, with sales more than $30 billion by the end of next year.
"This averages to (about) $100 of content for each installed device; suggesting switching costs are relatively high (not to mention the time required to port)," Whitmore wrote. "While Apple's best in class user experience is combined with these growing switching costs, the resulting customer loyalty is unparalleled."
Whitmore sees the "stickiness" of the iOS platform growing even more later this year, when Apple offers automatic, free syncing of data with iCloud. The new service, which will back up purchases, application data and device settings while offering storage of documents and photos, will further differentiate iOS from competing platforms.
The analysis comes after Apple revealed that it has reached a new milestone of 15 billion applications downloaded through the iOS App Store last week. A separate report from earlier Monday indicated that 18 percent of applications on the App Store are paid.
It's the investment in those paid applications, along with the purchase of content through the iTunes Store like music or movies, that Whitmore believes will make it even harder for users to switch to another platform.
He expects the development of applications for iOS devices to accelerate even further this year, when the iPhone and iPod touch are expected to receive hardware refreshes. Whitmore predicted last month that Apple will introduce a new iPhone hardware model priced at about $350 contract-free, addressing a huge market of 1 billion pre-paid mobile customers worldwide.
"In addition to new hardware, we expect the combination of an enormous iOS ecosystem, iCloud and a lower priced iPhone will extend AAPL’s market reach and leadership with developers and customers alike, further enhancing the overall value of the iOS platform," he said.
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Charles Martin
William Gallagher
Malcolm Owen
Christine McKee
Marko Zivkovic
Wesley Hilliard
51 Comments
While maybe weaker, since Android users tend to purchase less than iOS users, "stickiness" on the part of Android users is presumably still there also. Perhaps Apple should have done more to thwart the dramatic growth of Android in 2008 and 2009, when it would have been much easier to do so. Maybe a $2 billion patent purchase would not have been necessary too.
That's right in line with a similar report today from TotalTelecom. They also concluded that iOS and Android users are committed to their platforms, with no evidence that either camp is prone to change to the other. And that's at least in part because of the applications that users have collected and become accustomed to on their existing device.
http://www.totaltele.com/view.aspx?ID=466170
That's right in line with a similar report today from TotalTelecom. They also concluded that iOS and Android users are committed to their platforms, with no evidence that either camp is prone to change to the other. And that's at least in part because of the applications that users have collected and become accustomed to on their existing device.
http://www.totaltele.com/view.aspx?ID=466170
Well, I am an Android phone user and I would switch to the iPhone if it had a few things that I want like a larger screen (a must for my bad eyes) and text reflow in the browser, and as a Verizon user, LTE. The other limitations I can mostly overcome by jailbreaking (especially now that A Swype like app is being developed). iOS5 will also add some much needed improvements.
For now I use iPad for my iOS needs. As I have an iPad, I could switch back and forth and not lose my iOS app investment.
The really interesting calculation is what will happen if Microsoft and Nokia can get their act together and release a compelling alternative to Android.
While maybe weaker, since Android users tend to purchase less than iOS users, "stickiness" on the part of Android users is presumably still there also. Perhaps Apple should have done more to thwart the dramatic growth of Android in 2008 and 2009, when it would have been much easier to do so. Maybe a $2 billion patent purchase would not have been necessary too.
Except Android/Google's primary business model is to give apps away and charge for advertising. Not only is that not as "sticky", it creates ill-will every time an annoying ad appears.