For example, the Church of Market Share’s doctrine is that product market share is the most important component in a competitive industry. Microsoft has 80-percent or 90-percent of the PC industry locked up, yet Apple’s Mac is the most profitable of the world’s personal computers. Here’s another that flogs common wisdom. Android is shrinking.
‘What’ Is Shrinking?
The laws of market share dictate that he with the largest market share must be declared the winner, and Android surpassed Apple’s iPhone smartphone share years ago.
Ergo, Android has already won, Apple has already lost, let’s go have a beer to celebrate. There’s just one problem. Other numbers don’t compute.
For example, although the iPhone’s share of the smartphone industry is about one third that of Android, iPhone users account for about twice the online usage of Android devices.
That’s a huge differential which is also corroborated with the latest numbers on mobile advertising and web usage. iPhone and iPad users account for a larger share of mobile ad viewing than Android devices, and it’s nearly two-to-one.
How can Android device usage, as tracked by web usage and mobile ad viewing, be shrinking if the overall market share is growing?
Lies, damned lies, and statistics. Those statistics point out the obvious. iPhone and iPad users use their devices differently than the great unwashed masses of Android device users. They use the web more, they buy more applications, they view and buy more movies, music, and watch more videos, and take and share more pictures and movies.
With few exceptions, Android smartphones have become the 21st century version of the feature phone.
A feature phone is a mobile phone which is priced at the mid-range in a wireless provider’s hardware lineup. It is intended for customers who want a moderately priced and multipurpose phone without the expense of a high-end smartphone. A feature phone has additional functions over and above a basic mobile phone or “dumb phone” which is only capable of voice calling and text messaging.
In general, that doesn’t describe the iPhone or iPad, does it? In fact, the iPad which is more competitive in price than the iPhone to other devices, has an even larger share of online usage, which indicates that a more competitive price point might drive more usage and sales of Apple’s flagship product.
Over four years ago, Apple CEO Tim Cook said, “one thing we’ll make sure is that we don’t leave a price umbrella for people.” Tom Krazit in CNET put it this way:
A price umbrella is a term used to describe the effect a dominant company can have on a particular market with a popular-yet-expensive product: competitors can enter the market with other products at lower prices and gain customers just based on affordability, buying those companies time and profits to use in order to make their product better.
Exactly what Tim Cook said wouldn’t happen has happened and continues to happen. Does that mean it’s time for Apple to be more competitive on price, or simply stay the course?