21% of iOS users say they wouldn't leave Apple at any price
iPhone and iPad users are so loyal to Apple and unlikely to switch to another platform that one analyst has pegged their total collective value at nearly $295 billion.
Bill Shope with Goldman Sachs said in a note to investors on Friday that he believes the average single iOS customer is worth $1,053. That assumes the average selling price of an iOS device for the June quarter is $535 with 5 percent erosion, gross margin is 45 percent, and annual defections are 5 percent.
"This implies a cumulative iOS customer value of nearly $295 billion on today's installed base, without any consideration for the content, services or peripherals streams, or for the platform's growth potential," Shope wrote.
At a value of $295 billion, iOS customers represent about 55 percent of Apple's current market cap. That's before including the company's $110 billion cash balance, an iOS install base that continues to grow at a tremendous pace, or the value of the company's Mac and iPod businesses.
Goldman Sachs recently conducted a consumer survey of over 1,000 respondents, in an effort to better understand the costs that customers face when they switch platforms.
The survey found that 21 percent of respondents said no discount, regardless of the amount, would make it worthwhile to leave Apple's platform. Among those who said they would consider switching, more than half of those said they would need a discount greater than 30 percent.
Among those polled, 71 percent said they are "highly likely" to choose an Apple device for their next tablet or smartphone purchase. Another 23 percent are "likely" to stick with Apple's ecosystem, while only 1 percent were "unlikely" to stick with Apple.
Switching costs for customers only grow when they own more than one device in the Apple ecosystem, and the new iCloud service adds yet another layer to the switching costs, Shope said. Among those polled by Goldman Sachs, 30 percent said they are paying for extra storage capacity or iTunes Match with iCloud.
"Considering that apple has disclosed that it has 120 million iCloud users as of its earnings release on April 24, this is quickly becoming yet another high-margin revenue stream for the company," Shope said. "More important, however, this also suggests that a large portion of Apple's installed base is adding yet another source of explicit switching costs."
In all, he estimates that the switching cost per iOS user ranges between $122 and $301. That implies the average user would need a discount of 49 percent to switch to a competing platform.
Bill Shope with Goldman Sachs said in a note to investors on Friday that he believes the average single iOS customer is worth $1,053. That assumes the average selling price of an iOS device for the June quarter is $535 with 5 percent erosion, gross margin is 45 percent, and annual defections are 5 percent.
"This implies a cumulative iOS customer value of nearly $295 billion on today's installed base, without any consideration for the content, services or peripherals streams, or for the platform's growth potential," Shope wrote.
At a value of $295 billion, iOS customers represent about 55 percent of Apple's current market cap. That's before including the company's $110 billion cash balance, an iOS install base that continues to grow at a tremendous pace, or the value of the company's Mac and iPod businesses.
Goldman Sachs recently conducted a consumer survey of over 1,000 respondents, in an effort to better understand the costs that customers face when they switch platforms.
The survey found that 21 percent of respondents said no discount, regardless of the amount, would make it worthwhile to leave Apple's platform. Among those who said they would consider switching, more than half of those said they would need a discount greater than 30 percent.
Among those polled, 71 percent said they are "highly likely" to choose an Apple device for their next tablet or smartphone purchase. Another 23 percent are "likely" to stick with Apple's ecosystem, while only 1 percent were "unlikely" to stick with Apple.
Switching costs for customers only grow when they own more than one device in the Apple ecosystem, and the new iCloud service adds yet another layer to the switching costs, Shope said. Among those polled by Goldman Sachs, 30 percent said they are paying for extra storage capacity or iTunes Match with iCloud.
"Considering that apple has disclosed that it has 120 million iCloud users as of its earnings release on April 24, this is quickly becoming yet another high-margin revenue stream for the company," Shope said. "More important, however, this also suggests that a large portion of Apple's installed base is adding yet another source of explicit switching costs."
In all, he estimates that the switching cost per iOS user ranges between $122 and $301. That implies the average user would need a discount of 49 percent to switch to a competing platform.
Comments
The chances that my next laptop will be Apple is 100%.
The chances that my next tablet will be Apple is 100%.
The chances that my next phone will be Apple is 100%.
For any of those to not come true, Apple would have to screw up so badly, we're talking about a fuckup of RIM or NOKIA proportions, and I see that as extremely unlikely.
Quote:
Originally Posted by Apple ][
The chances that my next laptop will be Apple is 100%.
The chances that my next tablet will be Apple is 100%.
The chances that my next phone will be Apple is 100%.
For any of those to not come true, Apple would have to screw up so badly, we're talking about a fuckup of RIM or NOKIA proportions, and I see that as extremely unlikely.
Maps...
I found this pretty startling I myself will by products based their performance and quality. If I find another device at a similar price that functions better then I will buy it. Sticking to an inferior product regardless of the brand name is kind of cheating your self. If a superior tablet comes compared to my iPad I will buy it regardless of the company.
Quote:
Originally Posted by Apple v. Samsung
I found this pretty startling I myself will buy products based on their performance and quality. If I find another device at a similar price that functions better then I will buy it. Sticking to an inferior product regardless of the brand name is kind of cheating your self. If a superior tablet comes compared to my iPad I will buy it regardless of the company.
So you would buy mostly Apple products too, eh?
Gives us a new view of the 1 percenters. They are the ones who say they are "unlikely" to buy Apple products, or say their next purchase is going to be a Droid. Gives you a new insight to the posters around here who say they switched from Apple to Droid and love it.
Any androids lambasting Apple users for this are being hypocritical. They would LOVE for Android to have this kind of dedication and loyalty, but are too tightwadded to admit to it.
Apple has created a fantastic all-in-one ecosystem. Unless there is a huge screwup of biblical proportions, count me as one of the loyal folks as well.
Android users are loyal until the next gee-whiz android device that comes out.
I only buy Apple products.
There are other factors to consider:
1. The cost of changing - not only in terms of buying apps all over again, but also things like time spent learning the new system, replacing all the spare chargers that I keep in strategic locations, etc.
2. The unknowable factors. When looking at a new product, it is impossible to know everything you need to know - there are always some uncertainties or questions you forgot to ask. So buying a new device of any type from any manufacturer entails some risk that it will fail to meet expectations. My experience (and obviously a lot of other people based on the above) is that the risk is low with Apple products because they are consistently great products. When buying from other manufacturers, I have been disappointed on many occasions.
3. Experience vs hype. There is a constant stream of hype and noise trying to encourage me to switch away from Apple products, but much of that is pure FUD and often comes from people with very different perspectives or usage patterns. So do I listen to FUD from unknown sources or rely on my own personal experience?
I would consider switching, but the alternative would have to be significantly better than the Apple product to overcome those issues. And I probably wouldn't even consider it until I had obtained a lot of feedback from people who had used the product for an extended time.
Quote:
Originally Posted by Apple v. Samsung
If a superior tablet comes compared to my iPad I will buy it regardless of the company.
Well, that's just the thing. There is nothing superior, yet we constantly have to hear about so-called iPad killers for years now, and they all turn out to be duds and flops which quickly get sold away in desperate firesales. It's like the boy who cried wolf. Eventually people choose to simply ignore these lunatics and liars.
And it's not just about the hardware, Apple has the eco-system nailed down with a ton of great apps, and that's mighty hard for anybody else to surpass.
If people use something and they are very happy with it, they're not going to switch. Most of the people who complain about Apple on the internet are people who couldn't afford the superior Apple device and they somehow have to justify their purchase of a cheap copycat product which leaves much to be desired.
But when it comes to actual Apple owners, people who actually buy and use the devices, the majority of them are happy as pigs in shit.
Quote:
Originally Posted by mstone
Maps...
Hahaha, too soon!
Most of us buy into Apple on quality, ease of use and percieved value for money. That rational applies throughout.
If Apple doesn't offer good value then it's a no sale. (eg New Macbook Pro).
Apple live and thrive on the grounds of its customer's perception of Value. Once that is dented or lost, Apple will slip from grace just like any other company and rightly so too.
Quote:
Originally Posted by Smiles77
So you would buy mostly Apple products too, eh?
Phone is a galaxy nexus. I love the larger screen and stock google experience got an iPad last month. My computer is a custom made box with an Asus motherboard, Amd processor (Best performance for you buck) and video card, Western digital hard drive, Cooler master case, with a rosewell power supply. I run unbuto most of the time except for games and netflix, then its windows 7. I give my money to who ever has the superior product when I walk into the store.
I would love to see the same survey applied to Android customers, and more specifically Samsung customers, especially those using the latest hardware.
Recent reports put iOS app retention rate well ahead of Android, and we know that that customer satisfaction surveys again put Apple far ahead of Android, but I'd be still interested to see if Google's attempts at an Apple-like ecosystem are starting to gain traction.
What are the terms of accepting the $100K? Maybe you can invest it and use the profit to buy Apple then return the $100K?
I am out and proud as of 2008 - I pretended to be a PC when all along I was a Mac. I actually prefer their "ecosystem" as it makes my life simpler. I have more important things to worry about in daily life than crashes, fragmentation, viruses, hardware failures, gaudy chrome plating, dead batteries, and cracked plastic. I want a durable product that feels good, is beautiful to look at, and "just works". I previously spent my life constantly tinkering, tweaking, upgrading, repairing PCs with Windows. I'm glad to have finally rid myself of all that. Then again, there are people who are extremely loyal to products on the other end of the scale. Just look at the people who repeatedly purchase Sansui brand televisions from the like of Wal-Mart and those who purchase Dodge trucks instead of Ford or Toyota.
Quote:
Originally Posted by ghostface147
Everybody has a price. Someone puts 100k in my face, adios Apple.
I wouldn't. Maybe for a million, I'd consider other alternatives, but my Macs make me money, I am highly dependent upon them so it would be dumb to get rid of them.
Quote:
Originally Posted by Apple v. Samsung
I found this pretty startling I myself will by products based their performance and quality. If I find another device at a similar price that functions better then I will buy it. Sticking to an inferior product regardless of the brand name is kind of cheating your self. If a superior tablet comes compared to my iPad I will buy it regardless of the company.
You're reading something into it that's not there. If you ask somewhere whether they're likely to x again, they're going to tell you based on their experience of x, not their unquestioning loyalty to the suppliers of x. That's what this survey is measuring. If Apple came out with a complete turd next product cycle, people's opinions would change, but that's factored into their assessment. Apple is unlikely to suddenly start doing everything wrong.
There was a Business Insider poll done last year that asked Apple and Android users questions about whether they would switch over and what reasons would they switch for. 23.8% of iPhone users said they would never switch, which is close to this result. 59% said they would if they found a phone better than the iPhone in most key areas. For Android users 31% said they would consider an iPhone if it worked better with non-Apple products. A whopping 56% of Android users would never switch to Apple, with the reason being stated "I hate Apple".
How pathetic that your decision as to what you buy isn't based on liking one company, but hating another one.
http://www.businessinsider.com/smartphone-survey-results-2011-4?op=1