This Christmas, the Apple (NASDAQ: AAPL ) iOS and Google (NASDAQ: GOOG ) Android paradox continued. While Android may have rapidly snapped up market share in terms of units over the last several years, the quality of this market share appeared to be poor this Christmas for online retailers -- at least when compared to the quality of Apple's iOS market share. Of course, this trend isn't anything new.
The market share paradox
In the U.S., Android has an installed user base of 52.4%, according to ComScore data earlier this year. Among the top smartphone platforms, iOS comes in second at 39.2%. But despite Android's lead in unit market share in the U.S., Apple continues to dominate in terms of web usage and online spending.
For instance, on Christmas day, sales on iOS trumped Android by an incredible margin. Of total online sales, iOS as attributable for more than five times the sales as Android, according to just-released data from IBM. Even more, when iOS users made a purchase, they spent nearly twice what Android users spent, on average. The same phenomenon was true in traffic: iOS accounted for 32.6% of overall online traffic on Christmas day versus just 14.8% for Android.
This wasn't the first time there was such a disparity between spending on iOS and Android devices versus estimated unit market share on those platforms. IBM pointed to the same pattern on Black Friday weekend.
Notably, IBM's data also includes tablets, and comScore's data of U.S. installed market share is only referring to smartphones. But the disparity between iOS purchase behavior and web traffic over Android is large enough that the conclusion is irrefutable: A unit of iOS market share, in general, is more valuable to online retailers than a unit of Android market share.
Apple's qualitative mission
Of course it shouldn't be a surprise that Apple's market share quality is higher than Android's in the U.S. After all, market share for the sake of market share has never been an apparent priority to Apple. Apple CEO Tim Cook made this clearer than ever in a September interview with Businessweek:
Does a unit of market share matter if it's not being used?' Cook asks. 'For us, it matters that people use our products. We really want to enrich people's lives, and you can't enrich somebody's life if the product is in the drawer.
It doesn't take any complex analysis (or even marketing expertise) to conclude that an emphasis on high-quality market share over low-quality market share is likely a better long-term approach in marketing. It's like the comparison of delayed gratification over instant gratification. For example, it may result in greater immediate happiness to eat whatever we want now, despite the quality of the food; but it's clearly smarter to delay gratification and opt for those higher-quality calories. And in an interesting twist, the latter will likely result in greater overall satisfaction in the long run.
Case in point, one study suggests that Apple is going to make massive gains in unit market share in the U.S. over the next few years thanks to higher levels of retention on its iPhones.
For Apple investors, therefore, IBM's latest data is good news. Higher usage on Apple's devices suggests iOS owners find the devices to be more useful. By this measure, high-quality market share seems to still be a priority for Apple. In the long run, focusing on the high-quality market share that likely means greater retention and enduring economics. Ultimately, it strengthens the case for Apple stock, too.
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