What do Fisher Price phones and Android smartphones have in common? Simple. They are for first-time users, that much is abundantly clear. In other words, Android smartphones are training wheels until the user can be a big boy or girl, and ride on two wheels like all the older kids in the neighborhood.
Apple’s second quarter iPhone sales shocked analysts with stronger than anticipated sales, largely due to increased sales in China. But it is the overall base of iPhone users, coupled with a steady flow of Android users converting to iPhones, that continues to grow iPhone share in the U.S. and Europe.
The slow and steady growth for Apple’s iPhone is largely due to one key area that Android manufacturers cannot get a handle on — loyalty.
Smartphone penetration in the western world is nearly mature, and it won’t be much longer until the same is true for Asia, India and other regions currently experiencing strong smartphone growth. As the entire world peaks in terms of smartphone sales, the focus will not longer be on which smartphone was purchased first, rather, it will be about which smartphone platform are consumers settling into for their second, third and forth generation product?
91% of iPhone customers plan to purchase another iPhone as their next smartphone, while only 76% of Android users plan to purchase another Android device in the future.
With the trend of iPhone and Android purchases being nearly dead even in the U.S. (at 42% each), loyalty becomes the key factor as to which platform wins the smartphone war over time. Loyalty trends continue to get worse for Android. A fresh report from Piper Jaffray which interviews 6,000 U.S. teens reveals 61% plan to buy an iPhone in 2014, a figure that has moved north from 48% last year. Of those teens that own an iPhone, 66% of them also own an iPad.
Apple’s growth due to loyalty is one slice of the pie, but if the latest data proves out, the company is on the verge of blowing the doors off its market share figures. A late April Morgan Stanley survey reported that Apple could sell an additional 15 million iPhones in the U.S. alone, should it release a larger screen iPhone. Rumors have been flying across the globe that Apple is on the precipice to release an ultra thin, yet larger screen 4.7-inch iPhone. T-GAAP believes it will be marketed as the iPhone Air, and will be announced at Apple’s WWDC in June 2014.
The loyalty for iPhone and the iOS ecosystem is simply stunning. Apple’s smartphone growth continues in the face of low-cost alternatives, while continuing its march against Samsung’s mammoth advertising campaign (the largest in smartphone history). While the smartphone market is rapidly maturing world-wide, Apple is poised to see market share growth it hasn’t seen in years, and nearly all of it will come at the expense of Android’s first time buyers. The training wheels are about to come off en mass.
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