Some Theories about Apple’s Market Resilience
Given that Apple doesn’t necessarily produce “best-in-class” smartphones relative to their price points, the question of market resilience (at least in the U.S.) can be estimated in historical terms.
First, the company’s excellent relationship with telecom service providers meant that the product’s high costs were “belayed” across a two-year period. Historically, this meant that the provider would earn a little more than the phone’s upfront cost over a two-year period while locking the customer into a contract for that period. In exchange, Apple is able to transfer the “payment default risk” off its books. Recent initiatives, however, have drawn the two-year payment plan’s costs largely on par with that of the upfront cost across all carriers, including Apple’s “in-house” store.
Second, Apple’s PR campaigns have helped foster a unique sense of “social equity” among the buying public over the years. This sense of “social equity” from the mere act of owning a device has led to some rather amusing consequences: over the years, media outlets have highlighted surveys indicating that iPhone users in the U.S. prefer not to date Android phone users. For example, a survey by Match.com confirmed this in 2017 while a survey by Decluttr confirmed it again in 2018. In 2022, a survey by British price comparison platform MoneySuperMarket (which also received significant mentions in digital media) on dating sites across the Western Hemisphere which indicate the device used show that Apple users get more matches than Android users.
However, a word to the wise: surveys are only as good as their sampling techniques and ripe for all sorts of interpretation. For example, in 2022, app-based motor insurance startup Jerry found that Apple users tend to be poorer, have lower credit scores and are worse drivers than Android users. All the surveys mentioned were done on relatively smaller scales and aren’t as carefully designed as those executed by, say, the Pew Research Center.
The popularity of the optics associated with this imputation of “social equity” is an important lesson in “branding” that business school graduates, startup founders, “tech gurus” and social media influences have studied and emulated ever since it became apparent that not having the “best-in-class” doesn’t necessarily exclude one from being able to lead in a race.
The third point is rather intuitive: switching devices is a relatively easier experience if the new device has the same operating system. iOS is exclusive to iPhones while Android users have a wide range of phone makers to choose from. Thus, it’s more likely that an existing iPhone user will switch to another iPhone. It bears noting that this is largely a matter of perception: given that the “range of use” for most phone users is rather standardized, this implies a rather flat learning curve for device switching in either direction.
The choice of “paying more” for “less” isn’t necessarily a choice that most customers would be comfortable with in more recent times.
Global Smartphone Shipments Are Falling
It has been estimated that, as of Q2 2021, Apple’s share in global smartphone shipments have shrunk back to nearly Q1 2021 levels:
