Android by Apple
A few days ago, shortly after watching the WWDC keynote, I made a short quip on Twitter that went completely unnoticed at the time: “Posit: Apple doesn’t need to build low-end phones: it has Android.” I expected to get some pushback on that statement, and so partly because I did not and partly because I believe it an observation worth exploring, I have decided to expand upon it today.
It’s no secret that Apple has almost completely captured the high-end smartphone market, leaving the mid-range and low-end segments to, primarily, Samsung. For quite a while, that worked out great for both companies: Apple took the majority of the industry’s profits, and Samsung took the majority of its market share. The problem came in, however, when churn entered the equation: by virtue of the two companies’ positions in the market, Android users always had to weigh the attractive proposition of upgrading to an iPhone against any dissatisfaction experienced over the duration of their contract. And even if they were completely satisfied with their Android experience, the prospect of upgrading is no less compelling — even to a layperson. Dissatisfied iPhone users have a similar opportunity, except downgrading is a much less attractive proposition than its opposite — much less attractive, even, than simply waiting for the device’s next iteration, which is the course of action I imagine most in this situation take. And so gradually at first and then with greater speed as of late, Android has started bleeding users that Apple subsequently picks up. The same process occurs in the iOS ecosystem, it is important to note, but whereas Android is now losing users faster than it is gaining them, the opposite is true for Apple. It is the natural function of a healthy market for all those within it to eventually attain the best of a commodity that they can for their money, and that is exactly what we see here.
Many recommend Apple enter the low-end as a way to capture some of the mid- to low-end that Samsung currently dominates, and to provide a way in to the Apple experience at a lower price. But, to put it quite simply, Apple has absolutely no need to either target those market segments or make it any easier to enter this ecosystem: as Tim Cook explained during the keynote, Android users are flocking to iOS in search of a better experience — “a better life”; in coming to iOS, they have completed a journey full of unsatisfactory experiences. Why would Apple ever want to be a part of that?