This Is What Tim Cook Cares About

Stop me if you've heard this one before: Apple (NASDAQ: AAPL  ) is losing unit share in both the smartphone and tablet markets. These two facts have contributed to the Mac maker's decline over the past nine months.

According to market researcher IDC, Apple's share of the smartphone market fell to 17.3% in the first quarter, while archrival Samsung's ballooned to 32.7%. Over the past year, Samsung has widened its lead over Apple by a healthy margin. IDC's data also shows Apple's tablet share falling to "just" 39.6%.

Vendor

Market

Q1 2012

Q1 2013

Apple

Smartphones

23%

17.3%

Samsung

Smartphones

28.8%

32.7%

Apple

Tablets

58.1%

39.6%

Samsung

Tablets

11.3%

17.9%

Source: IDC.

All the while, Apple CEO Tim Cook has not been perturbed. In numerous appearances so far this year, Cook made it clear that there are many metrics that he considers when gauging the health of Apple's business, with unit market share among the least relevant, in his opinion. Instead, Cook has been citing statistics like usage and customer satisfaction at the top of that list.

Online ad network Chitika just gave Cook some more ammo: iPad usage share just hit a five-month high in May. After posting a small downtick in April, Apple regained its usage share and then some and now grabs 82.4% of tablet usage within Chitika's ad network that measures "tens of millions' of ad impressions in North America. Chitika calls iPad users "prolific" when it comes to web browsing. The ad network believes that increased sales of refurbished iPads could be helping boost Apple's usage share.

In a distant second is Amazon.com's (NASDAQ: AMZN  ) Kindle Fire, at 6.5% usage in May, followed by Samsung's Galaxy tablets with 4.7%.

Tablet

May Usage Share

All iPads

82.4%

Amazon Kindle Fire

6.5%

Samsung Galaxy tablets

4.7%

Source: Chitika.

That's actually quite impressive for the e-tailer, considering its own unit market share has also fallen. Amazon rushed out the gate with a 15.9% market share when it first launched in Q4 2011; Amazon was just 3.7% of the market in the first quarter. The company gets holiday spikes since Kindle Fires make for perfect stocking stuffers, but maintaining a No. 2 usage share amid Samsung's rising tablet volumes is nonetheless an achievement in itself.

Investors tend to focus too heavily on unit share. Higher usage share translates into a higher likelihood of upgrades and repeat purchases, which is why Apple's declining unit shares don't bother Tim Cook all that much.

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  • Report this Comment On June 25, 2013, at 12:26 PM, st0815 wrote:

    For device makers unit share is kinda important though.

    Higher usage share might translate to repeat purchases and upgrade, but then those would be reflected in unit share. So if we are measuring unit share we already have that factor included. There is no reason to expect that the influence of that factor would be more significant next year.

    And of course Chitika is a US and Canadian network - coincidentally measuring usage share in those markets in which Apple does particularly well. I suspect we'd get rather different numbers if we were to look only at usage share in Samsung's home market in South Korea. Maybe that's not such a good idea for internationally operating companies?

    Also it's a bit of a stretch to equate web browsing to tablet usage. We don't really know if that's a good indicator of overall usage. It might well be, however the reason it's picked is not because that's a particularly attractive application for tablets (rather than games, books, videos, maps, viewing pictures etc), but because that's the only usage Chitika can measure.

  • Report this Comment On June 26, 2013, at 2:16 AM, GreatBoo wrote:

    Maybe Tim Cook looks at what Apples share of the profits are, maybe he looks at how the amount of phones and tablets Apple are selling is increasing year on year. Maybe he looks at the iOS ecosystem which his competitors can't compete with and maybe he looks at the customer satisfaction rating and thinks "all the customers we have now - and all the new ones we're getting, are going to be with us a long time".

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