iOS 'stickiness' grows as average Apple user has $100 in content per device
With an average of $100 in content purchased on every Apple mobile device, it is increasingly difficult for users to justify the switch from the iOS ecosystem to a competing platform like Android, a new analysis has found.
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.
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.
Comments
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.
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.
I've looked briefly around the Android market and it's complete garbage. Hardly any music apps for a person like me, and the majority of apps looks like it was made by complete amateurs and people with no sense of style and piss poor design skills, not to mention the fragmentation problems that Android has.
If the average iOS user has $100 in content per device, how much does the average Android user have? I will guess less than $10.
Also, I would imagine that many apps that are purchased are no longer used (I know that is the case for me) so that the actual amount of money that each user would need to spend to get the main apps that he/she uses on a regular basis will be smaller than the user's total history of expenditures on apps.
The really interesting calculation is what will happen if Microsoft and Nokia can get their act together and release a compelling alternative to Android.
With the Zune brand rumored to come back as a subscription service, I don't think MS will get its act anytime soon.
racist comment removed
Wow really...I'm surprised you could see he "racist comment removed" with your hood still on...
I've always said that Android users are cheap, and here is yet more evidence proving my point. Most Android people primarily base their purchasing decisions on price alone, and they go for what is cheap. The cheaper, the better, and free is best of all, even if it comes with a ton of annoying ads.
I've looked briefly around the Android market and it's complete garbage. Hardly any music apps for a person like me, and the majority of apps looks like it was made by complete amateurs and people with no sense of style and piss poor design skills, not to mention the fragmentation problems that Android has.
If the average iOS user has $100 in content per device, how much does the average Android user have? I will guess less than $10.
You and I would get along just great.
With the Zune you could "Squirt"!...
With the iOS eco system and money invested there is a "Stickiness"?! Quick, somebody, a Thesaurus!
Stickiness! Yuck!! It just sounds so perverse... How about cohesiveness?... May we can get a better choice of descriptive words in the future?
Please.....
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racist comment removed
This is the stupidest comment I have ever seen on these boards, and that is saying something.
Wow really...I'm surprised you could see he "racist comment removed" with your hood still on...
Yeah, when there is an air of "I'm better than you" and the feeling one is above all, don't you just hate it?
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Who the heck comes up with these words?!
Stickiness has been a concept in economics for years
http://en.wikipedia.org/wiki/Sticky_(economics)
I'm afraid your victorian maidenly sensibilities will just have to cope.
Who the heck comes up with these words?!
With the Zune you could "Squirt"!...
With the iOS eco system and money invested there is a "Stickiness"?! Quick, somebody, a Thesaurus!
Stickiness! Yuck!! It just sounds so perverse... How about cohesiveness?... May we can get a better choice of descriptive words in the future?
Please.....
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Wow, you must be really bothered by "Hard Drive", "Input", heck, even "iPad" sounds kinda dirty if you think about it long enough (hehehe I said "long")...
Of course, the app store on each platform would have to support that redemption. But a strong incentive to do so would be there. If Apple refuses to support the idea, then it'd be easier to move from iOS to Droid than vice versa. Apple and Google would both have reason to subsidize the move to get more market share.
To think that at least a quarter of the iPhones out there are jailbroken and running pirated apps, so the amount spent on apps by legit iPhone owners could be $150+.