Andrew Orr
Over the years, Apple has benefited greatly from Android users switching to iPhones. The models that the switchers are picking now is a short-term strategic challenge for Apple, but a long-term gain.
In the June 2024 quarter, 17% of iPhone buyers were former Android users, the highest percentage in the last five years. The numbers represent a substantial increase from the same period in 2023.
Despite the influx of switchers, Apple has experienced a decline in sales of its latest models, with older iPhones stepping up to fill the gap. The underperformance of the iPhone 15 is offset by the robust performance of older models like the iPhone 14, iPhone 13, and iPhone SE.
The recent data from Consumer Intelligence Research Partners (CIRP) indicates a rise in the number of Android users switching to iPhone. However, these switchers opt for the older, more affordable models.
Why older models are more appealing to switchers
Price sensitivity likely plays a significant role among Android switchers. These older models are more affordable and appealing to Android users who are used to various budget-friendly options.
The value perception of the older models also plays a significant role. Despite being from previous years, these iPhones offer features that attract new iPhone users.
Although not the latest, the technological advancements in these models still represent improvements over Android devices, reinforcing the soundness of Apple's product strategy.
Switching operating systems is a significant change, and many Android users prefer a cautious transition. They may start with a cheaper iPhone to test the waters before committing to a higher-priced, more advanced model.
That slower approach allows them to familiarize themselves with iOS without making a substantial financial commitment.
So, short-term challenges to Apple's margins. But, potentially, a longer-term gain as the users upgrade down the road.
Finally, the availability of deals on older iPhone models makes them even more attractive. These models are often available with significant discounts or through trade-in programs.
Such deals are less common for the latest models, steering price-sensitive switchers toward older options.
"With mobile carriers offering two-year phone contracts and rapid changes in phone screens, cameras, batteries, and network technology, Apple could rely on its installed base of owners to drive new iPhone sales," CIRP comments. "This lower percentage of iPhone upgraders is a sign that, at least for now, the consistency and urgency of those upgrading iPhone owners is at an apparent low point."
Malcolm Owen
Amber Neely
Andrew O'Hara
11 Comments
This says to me that people an are moving to iPhone because they like the Apple ecosystem (“walled garden”) and view these less expensive phones as an affordable way to enter.
All of the DIY propeller heads and EC micromanaging bureaucrats might not like it, but curation, privacy, security, and frictionless interoperability arising from vertical integration are VALUABLE things. The propeller heads can whine without consequence but the EC bureaucrats might face consequences if they deprive e European citizens of something they clearly want.
Price sensitivity isn’t limited to switchers. I have friends, a couple, that keep their iPhones for a long time and when they upgrade opt for one that is low cost. For example, they both upgraded 2 years ago. He had an iPhone 6, I don’t recall what she had. They asked me for input on what they should get. I urged them to go with a 14 or maybe a 13 but they went with SE (I think). About a year later their first grandchild was born and, unsurprisingly, they were both upset that their phones didn’t take photos as good as their daughter’s phone did, so the photos they took looked worse. He’s still using the same phone, and still complaining about photos, but she “upgraded” to an iPhone 12 Pro she found on eBay (and then had to replace the battery almost immediately).
I don’t really get it and it isn’t the way I would go but there are lots of people that take the price conscious route.
Wow 17% purchase for June Q were former droid holders? Unless I’m not seeing something thatis pretty significant
Apple cares very much about their Services business, which has better growth and margins than other divisions at Apple, and in many cases yields recurring revenue which shareholders love. And for Services to thrive, they need as many active users on their devices as possible. So this provides a strong motivation for them to get more people using Apple devices, even if the margins on some of the older devices may not compare favorably with the latest models. And there’s always the hope that the customer will upgrade to a higher tier next time, and maybe sooner than they would if they started with the best Pro model.
Who really cares what models Android switchers are buying, at least they are buying Apple devices. They are now part of the Apple ecosystem, with the potential for iCloud storage upgrade, app purchases, other services such as News, Music, etc. Great for the bottom line.