The Impact of Android: Examining Declining Apple Mobile Market Share
By Karla Robinson
November 20, 2012
November 20, 2012
- In terms of profit share in the mobile market, Apple is undoubtedly the winner. But as Android gains in market share, Apple could face a downfall if it doesn’t forfeit some of its profit margin to compete with cheaper — yet quality — devices.
- Mobile is largely a “platform market,” meaning third-party companies build products and services on OS platforms, Business Insider explains.
- “Building products and services for multiple platforms is expensive, so platform markets tend to standardize around a single leading platform,” the article states. “As they do so, the power and value of the leading platform increases, and the value of the smaller platforms collapses.”
- “In a platform market, having dominant market share is critical to maintaining long-term profit share,” the article continues, rebutting the idea that Apple is safe by just dominating profits.
- Both Android and Apple have grown market shares at the expense of other platforms. But Android has grown substantially more by appealing to customers with smaller budgets.
- The article debunks some arguments against Android, such as: it is hugely fragmented; Apple is in the “premium” segment of the market and doesn’t care about the rest; Apple’s content, apps, and services ecosystem is better than Android’s; and, developers can’t make money on Android.
- “As the market matures, Apple will not be able to protect both its market share and its profit margin — it will be forced to choose between one or the other. And given the importance of market share in a platform market, the smart strategic decision is almost certainly to protect market share,” BI concludes. “Unfortunately, protecting market share will almost certainly mean that Apple’s extraordinary profit margin will drop in the coming years, probably significantly.”
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