I’ve been browsing around Google’s Android Market. For all the complaints some have when using iTunes Store for the App Store—and, admittedly, there’s an awful lot going on in iTunes—it sure seems to work well compared to Android Market, which is typical Google—barren, sterile, lifeless. Market came out just a month or two after the App Store, yet has just crossed the 50,000 app threshold vs. nearly 200,000 for the App Store in roughly the same period (App Store developers had a head start, though).
Through a lot more attention to detail, usability, and quality, Apple was able to carve out a healthy and growing niche against Windows with the Mac. They squashed all comers with iTunes, the iPod, iTunes Store by doing the same thing—creative functionality, non-intimidating interface, and a seamless system that made it all ‘just work.’ Frankly, I see the same thing taking place with smart phones, except Apple is no longer just the Mac or a niche player. Apple’s whole connected, seamless, ecosystem is tough to compete against.
I have no doubt that Android OS for smart phones will eventually outsell the iPhone in sheer unit market share numbers. After all, Android is free. Cell phone handset makers and cell phone carriers have to like that. Fortunately, Apple doesn’t care much about unit market share. Who does better on profit market share and revenue market share than Apple? Nobody is even remotely close and it’s unlikely that anyone will be in the foreseeable future. Google doesn’t make any revenue or profit with Android, banking their investment in the OS on cloud services of the future, and, of course advertising. Cloud services can be easily replicated and integrated into Apple products, and Apple sure put a knife into Google’s mobile advertising hopes with iAds (trust me—advertisers will love iAds far more than Google search ads).
I’m also curious to know what makes up and defines the so-called smart phone market segment. What constitutes a smart phone? I see plenty of WinMo, BlackBerry, and Symbian smart phone models that are pretty crude and stupid when compared to an iPhone. Windows Phone 7 doesn’t have much going for it to differentiate itself from iPhone or Palm or Android, and isn’t even available yet. BlackBerry does email quite well. What else can BlackBerry do? Are cheaper BlackBerry models as smart as more expensive models?
Market share is a loose and undefined term, not fully understood by average folks, and seemingly not well understood by techno media pundits. There’s unit market share, revenue market share, profit market share, and segment market share (among others). The iPod and iTunes are the only places where Apple competes on unit share. Everywhere else, the company focuses on market segments (play where you can do well), with special attention to revenue and profits. Without those two, unit market share doesn’t mean too much.
At best, Microsoft’s Windows Phone 7 will get the company $25 for every non-Microsoft smart phone sold by carriers or other handset makers. If Apple gets $600 per iPhone, Microsoft will need to sell 24 times the number of iPhones simply to match Apple’s revenue from iPhones. If Apple dropped the iPhone price by 30-percent then Microsoft becomes even more challenged as a significant price drop also increases iPhone unit sales accordingly. Microsoft has no choice but to make their own phone if they plan to compete. Fortunately, handset makers don’t care whose name in on the device.
Apple is selling nearly 3-million iPhones a month (far more if iPod touch is lumped in to the numbers of iPhone OS). RIM may sell a few more BlackBerry models, but RIM doesn’t sell well outside North America, and many of their BlackBerry models do not appear to be as smart as an iPhone. Windows Phone 7 isn’t even on the streets and will take years to gain significant traction in the smart phone market segment. The death bells are ringing for Palm and webOS. Nokia appears to be in complete disarray with an aging product line and yet still flat footed three years after the iPhone’s debut. Who stands in line for hours for a new BlackBerry or Windows or Nokia phone?
Apple’s iPhone may not ever win the unit market share wars against Android or whatever else RIM, Nokia, Microsoft and other also rans bring to market. Apple doesn’t care. The real gold is in revenue and profits, and Apple owns that territory. Apple also owns customer loyalty in ways other manufacturers only dream.
Competition is a good thing, and Apple has plenty of it. But the competition isn’t very good yet.