Apple, Inc. Chips Away at Android in the U.S.

Source: Apple.

With Apple's (NASDAQ: AAPL  ) iPhone 6 unveiling expected in just over a month, the Mac maker continues to grow its presence in the U.S. smartphone market. That's despite the typical seasonal trend in which potential iPhone customers delay purchases ahead of fall product launches.

Can I get your digits?
comScore yesterday released its latest estimates on the domestic smartphone market for the three months ending in June. The market researcher pegged Apple's market share of U.S. smartphone subscribers at 42.1%, up from 41.4% in March. That's well ahead of Samsung's 28.6% share, although the South Korean conglomerate put up the biggest sequential gain among OEMs from last quarter.

On the platform front, Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  )  Android remains the dominant platform in the U.S., with 51.9% of subscribers. That's a modest downtick from March, when the search giant grabbed 52.2% of the market. Both Microsoft (NASDAQ: MSFT  ) and BlackBerry (NASDAQ: BBRY  ) sit in the low single digits.

Smartphone platform

March 2014

June 2014

Android

52.2%

51.9%

Apple

41.4%

42.1%

Microsoft

3.3%

3.4%

BlackBerry

2.7%

2.4%

Source: comScore.

The iOS and Android duopoly isn't going anywhere. In fact, it's further solidifying.The Apple and Google operating systems combined owned nearly 94% of the U.S. smartphone market, up from 92% a year ago. Microsoft has been slowly growing its position, but mostly at BlackBerry's expense.

The bigger picture
There are now 173 million smartphone subscribers domestically, which translates into 72% penetration. Even with all the recent talk of smartphone saturation in developed markets such as the U.S., penetration has risen steadily. Mobile penetration was just 59% a year ago.

When it comes to market share figures that investors watch, there are typically two main flavors to keep a close eye on: unit sales and installed base. Market share estimates on unit sales from the likes of IDC or Gartner provide good insight into where the market may be heading, but installed base figures give a broader picture that encompasses more historical performance. Installed base estimates are less volatile in the short run, and it takes a lot more to move the needle.

For Apple specifically, installed base figures are extremely important because the company enjoys the highest customer loyalty in the industry. Looking at Apple's installed base gives a pretty good indication of how reliable its recurring revenue from iPhone upgrades will be. In contrast, Android OEMs typically have very little loyalty, even if those users are very loyal to the platform.

History repeats itself
Apple has steadily grown its installed base in the U.S., which is now an estimated 72.8 million iPhone users. That's a healthy uptick from the 68.7 million it had last quarter. That also shows Apple is successfully winning over new customers and first-time smartphone buyers in the U.S., who are among the most valuable buyers. Android now has 89.8 million domestic users.

Last year, Apple put up a pretty impressive gain with its installed base during the iPhone 5s/5c launch quarter. The company's installed base increased from 60 million in September to 65.2 million in December. While the preference for larger smartphones is much more prevalent in markets such as China, the two larger iPhone models that are expected next month will give Apple a better shot at converting Android users.

At the same time, existing iPhone users who have been longing for larger displays will all rush to upgrade. Apple still has plenty of domestic iPhone opportunities. It should be a "very busy fall" indeed.

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  • Report this Comment On August 08, 2014, at 8:41 AM, mds wrote:

    Same is true the world over. Where the latest model cannot be afforded; older models are selling like hot cakes. After all...Would you rather have a two year old BMW, or a brand new Kia.

    (Sorry if I insulted your intelligence, LOL)

    Read this and realize that AAPL is timeless:

    "By Bianca Vázquez Toness Aug 7, 2014 7:58 PM ET "

    "Aug. 6 (Bloomberg) -- ISI Group Senior Managing Director Brian Marshall and Bloomberg’s Cory Johnson discuss the demand for bigger screens and more improved battery performance on Apple’s iPhone. They speak with Emily Chang on “Bloomberg West.” (Source: Bloomberg)

    Apple Inc., which has struggled in emerging markets because of the price of its new iPhones, has devised a strategy for India that’s starting to pay off: It’s pushing older models that offer cachet at affordable prices.

    The iPhone 4, which was released in the U.S. in June 2010, is still available. So is the iPhone 4s that went on sale in October 2011.

    “You flaunt an iPhone, but you don’t flaunt an Android,” said Punit Mathur, a 42-year-old vice president of a digital media company who switched to a new iPhone 4s from a Nexus 4. An iPhone 5s that would cost 53,500 rupees ($874) is too expensive, “but the 4s is still an upgrade,” he said. "

    They are eating the bottom with 5year old leftovers, refurbished trade in's; and making more of the old at insanely low costs to AAPL.

    AAPL's old news is new for these people and a gateway to continue consuming behind the curve; giving AAPL a base to count on in this portion of the market.

    ENOUGH SAID ???

  • Report this Comment On August 08, 2014, at 8:54 AM, mds wrote:

    This is one of the main reasons AAPL has the trade in/resale value that it does. Minor repairs and they resell it for $400 without a contract; to India, Indonesia, China, Vietnam, etc.......or a payment plan w/a contract, giving it more appeal.

    This is the reason AAPL smiled as they welcomed the one case Samsung one.....the ban on the 4 selling in the US.

    Shot Samsung right in the foot; as AAPL uses it everywhere else to eat their lunch.

  • Report this Comment On August 08, 2014, at 9:05 AM, mds wrote:

    Also....To start the morning off on the right foot....

    I assume everyone knows by now that the story on the Chinese ban was false.

    AAPL failed to put the devices on an approval list for energy efficient equipment. It had nothing to do with security.

    Also it was a list heretofore; meaning all AAPL has to do is file the appropriate paperwork.

    THERE IS NO BAN !!!!!! China owns the networks; which they just upgraded to handle AAPL's newer devices. It would be counter intuitive to ban what they make money on. Also; these carriers have purchase commitments with AAPL that must be met. Which means what they buy they must sell.

    Since AAPL has a two week manufacturing cycle now; China can do nothing to create channel inventory problems; and AAPL can still hold them to the contracts.

  • Report this Comment On August 08, 2014, at 9:25 AM, mds wrote:

    I find it appalling that not one site has mentioned the story on a ban on AAPL by the Chinese Government offices as patently false.

    It even went into sorted details about security problems; that had nothing to do with the issue.

    WHY DOES THERE SEEM TO BE NO RESONSIBILITY !!! ?

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