This Is How Apple Will Grow Share in a Mature Smartphone Market

Apple (NASDAQ: AAPL  ) investors have been fretting lately over where future iPhone growth will come from, as data continues to pile up that the high-end segment of subsidized, developed markets approaches maturity. Before even including the very distinct possibility of an affordable iPhone, Apple still has a powerful weapon in grabbing share from Google (NASDAQ: GOOGL  ) Android: customer loyalty.

That's the conclusion of a Yankee Group report, which expects Apple to top Android in the U.S. by 2015. The researcher surveyed 16,000 consumers over the past year, asking questions about smartphone ownership and purchasing plans. Current trends support the current duopoly structure of the market, with 84% of respondents planning on buying either an iPhone or Android in the next six months.

However, where the two dominant mobile platforms differ is loyalty.

Source: Yankee Group via AllThingsD.

That's a big difference in platform loyalty, and the effects in the long term will be a gradual shift toward iOS. There will always be defectors, but in this case the number of turncoats is extremely asymmetrical. Only 6% of iPhone users are looking to move to the other side, while 18% of Android users are eyeing iPhones.

Rival platforms from Microsoft and BlackBerry are hardly in the picture, with only 3% of iPhone users and 6% of Android users interested in abandoning the top two platforms.

By the time 2015 rolls around, Yankee Group is projecting iOS to surpass Android in U.S. market share. By 2017, Apple could be enjoying 42% of the domestic smartphone market, while Android sits idly by with a 34% slice. Yankee Group exec Carl Howe compares the platforms to leaking buckets of water, except that Google's leaks a lot more than Apple's.

Even as unit growth in the U.S. slows, Apple can still gain share through Android defectors.

Even though Apple boasts the highest loyalty rates, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Read/Post Comments (6) | Recommend This Article (13)

Comments from our Foolish Readers

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  • Report this Comment On April 27, 2013, at 11:34 PM, techy46 wrote:

    It takes a game change like ecosystem switch or real innovation to get customers to switch brands. Microsoft has the same power among enterprise IT workers and that's going to be interetsing to watch as Windows 8 starts to gain momentumn in 2013 and beyond.

  • Report this Comment On April 28, 2013, at 12:32 AM, Oldmonkey wrote:

    For many cell owners being loyal to Android, has nothing to do with disliking a locked Apple ecosystem. Apple's refusal to play well with small time competitors like Realplayer on a PC didn't win them content so much as cost them device sales. Using Realplayer to sync mobile devices since 2000, there was no compelling reason for me to buy an Iphone or use Itunes.

    Until introduction of the G3 Iphone and IOS 4, Iphone couldn't keep up with a Treo Pro released a year before the G2. I was surprised it took over a year after its introduction before you could stream webcasts since I was streaming on a Palm Treo 600 since 2003

    Iphone hardware is reliable, but Apple devices can't be cutting edge because they reman 100% tied to a locked Apple ecosystem . If Apps could have been sideloaded like an Android sideloads from Amazon, or other site without jailbeaking; Apple would now be in a better position to maintain market share.

    Using virtual machines Apps now bounce between any mobile OS. Many of the favorite Apps I used on my Treo 600 I still use on my Anbdroid tablet, personal phone, and work Iphone. Increasingly other than content source and new features, the OS is less an issue other than feel.

    Two platforms have a chance to take out a bite out of Apple and Android. Ubutu runs on smartphones, tablets, PCs & servers, and so does Microsoft.

  • Report this Comment On April 28, 2013, at 2:23 AM, applefan1 wrote:

    China Mobile will definitely add more market share to Apple. They JUST signed on T Mobile as a carrier, so I'm sure they'll sell a decent quantity which will add market share. IF they build a larger screen iPhone, that will tap into another market of people that are buying larger screen smartphones.

    I see Apple easily obtaining 35% over the next year in Global market share without too much trouble. Plus the smartphone market is still growing.

    On a personal note, I already know several people that have recently switched from Android to iPhone and know several others that are planning on switching from Android to iPhone. But that's just people that I know. I don't know how much of an indicator that is, but most of the people I run into aren't happy with their Android phones, they complain about a lot of different things, most importantly ease of use.

  • Report this Comment On May 01, 2013, at 8:26 PM, dwilh51183 wrote:

    ANDROIDS ARE NOT AS COOL, VERY CONFUSING TO WORK ...IDK AAPL SEEMS TO HAVE THE COOLEST PHONES AND THEIR NEXT IPHONE WILL BE OFF THE CHARTS COOL. AAPL IS A STATUS SYMBOL, ESPECIALLY AMONG THE YOUNG GENERATIONS.IF YOU OWN AN IPHONE OR IMAC PEOPLE THINK YOU ARE SUCCESSFUL

  • Report this Comment On May 01, 2013, at 10:11 PM, dj1962 wrote:

    I used to travel to China often. I think the China Mobile deal will be huge. China Mobile is much more dominant in China than Verizon is in the US. In fact, China Mobile's market cap is about 50% larger than Verizon's. The iPhone is highly coveted in China. It is a status symbol as well as considered a cool gadget.

  • Report this Comment On May 02, 2013, at 3:12 AM, edahms wrote:

    im not sure i fully agree with this. there is one important variable not discussed here, in my opinion: the advances that will be made to the Android OS.

    people being surveyed most likely have had an Android OS phone for some time - 1,2,3 years maybe. these versions of Android pale in comparison to what Android will become in the next 6-12 months.

    Android users are moving to iOS because theyve been INTRODUCED to the smart phone through a cheap Android smartphone, realize capabilities of smartphones & how its changed their lives, and now they may want the "king" smartphone, the iphone, that has maybe been too expensive for them in the past. now they're willing to pay that price after seeing the value of a smartphone.

    im in London, and i hear more people talking about switching to Android phones than switching to iphones. of course, thats no market survey, but i work in a digital industry so these smartphone users are innovators/early adopters - the groups of users that usually tend to lead the market in the coming months. i myself am a mac fan, have an iphone, but am considering an Android switch.

    Also, i'm starting to believe more in Google's "open data" perspective. Apple's closed model will start to negatively affect sales, if not corrected in the next 2-3 years. (best example: dropping Google maps for a horribly built iOS maps - arguably Apple's biggest mistake since the creation of the iPod.)

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