Every so often some analyst publishes an article talking about changes in market share of iOS vs Android as a way to get people to read their articles. Like marketwatch just did.
And those articles are just so wrong and simplistic in their analysis that I want to scream.
Let me help you read them a little bit better…
There are three ways you make money in the mobile market:
- Selling devices
- In app purchases / subscription services
- Selling advertising
There are two costs in the mobile market:
- user acquisition (basically getting people to download the app)
- development costs
And then there is the reality of income inequality – there are a small number of people with a lot of money to spend on shit.
Given all of this the most important question isn’t what is apple’s market share but:
of the people who have money how many does apple reach?
In this game, apple is dominating the competition and the competition is getting screwed in three ways:
(a) Apple’s lead in manufacturing is astonishing.
(i) They are simply building shit that other people can’t
When they build the Mac Pro with the sold aluminum case they bought all of the lathes that could make that case and two years worth of production of the lathes. That meant their competitors could only build a case like Apple’s 3 years after apple had already shipped the mac pro.
(ii) Their supply chain is magical. Tim Cook, a supply chain dude, became CEO of Apple to reflect the importance of supply chain management.
And this lead results in – better products – than their competitors can make
(b) Because of the share of people who have dollars, app developers are making better apps for iOS than android
If you have an android device, buy an ipHone and use the same apps, and you’ll see the difference immediately. The iOS are simply better built. And Apple has gone to great lengths to make it necessary to build two copies of the App. And given 5$ of investment, companies will go with 4$ on Apple and 1$ on Android.
(c) Because of carrier subsidies
People are paying significantly less than list price for a phone and because carriers want to get people to use their networks, they will happily subsidize phones … This allows Apple to sell a high value product at a low price.
Consumers always buy the best value, and the best value is the best built phone running the best apps at the best price and Apple has an incredible lead in both areas.
Then why do people focus on reach?
Because I lied about the three ways.There is a fourth:
Use the phone to sell a service (Uber/Google Search/Facebook/Amazon) or enterprise customers like Microsoft Outlook/Prezi etc.
For those vendors, having an app on the widest set of platforms is crucial to business success because it affects reach.
But because they have to be an all platforms, they have to port to every platform.
The real observation hear is that as long as Android has 80+% market share, for reasons of reach app developers will port to Android. But because the $$$ they expect to make, the ports will be crappier than the iOS versions. Maybe for some guys – like Facebook or Uber – they will have apps that are equivalently great – who knows.
There is this theory – Android has reach, and eventually it will make enough money. There are two problems with this theory:
Reaching the top 10% of income earners is more valuable than the remaining 90% because of income distribution. I would rather have 100% of the top 10% than 100% of the bottom 90% of global earners.
Reaching 90% of the people is more expensive than reaching 10% of the people – in raw dollars. And so the value of each guy with less money is less than one guy with more money.
If Android had no reach, we would be talking about anti-trust not about Apple’s demise.
The real numbers to pay attention to with Apple is:
(1) What is their share of market share $$$ (and here it’s crushing the competition silly)
(2) Are enough apps making more money on Android that would cause the general App vendors to pivot their top resources to Android vs IOS
until (1) or (2) slip apple owns this baby reach ## be damned.