

Illustrated: Apple's Fear of Android - ukdm
http://www.osnews.com/story/24996/Illustrated_Apple_s_Fear_of_Android

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jordanroher
Except Apple doesn't seem to care about achieving huge market share for the
iPhone. They care about money, and by delaying the iPhone 5 they've managed to
make even more money than usual. It must be habit that we go for the market
share argument so often. A corporation's responsibility to its shareholders
isn't to spread its logo across the land like a religion, but to return value
(real dollars, not imaginary market share dollars) for their investment. That
was slightly more ironic than I intended.

Besides, there are plenty of other "hidden" reasons for Apple to sue these
Android handset manufacturers. Steve Jobs feels betrayed by Eric Schmidt,
Samsung makes eerily close copies of the iPhone, Apple doesn't attack HP and
RIM because this isn't about actual patent infringement but taking out the
smaller manufacturers who can't defend themselves against Apple Legal.

~~~
MatthewPhillips
> Except Apple doesn't seem to care about achieving huge market share for the
> iPhone. They care about money, and by delaying the iPhone 5 they've managed
> to make even more money than usual. It must be habit that we go for the
> market share argument so often. A corporation's responsibility to its
> shareholders isn't to spread its logo across the land like a religion, but
> to return value (real dollars, not imaginary market share dollars) for their
> investment.

Citation needed. I'm just a dumb programmer but I'm pretty sure that Apple at
30% market share makes more money than Apple at 19% market share. Please
edutate me if not correct.

~~~
AllenKids
Market is not fixed in place, when one factor changes, other numbers vary
accordingly.

For example 30% of a total 100M units sold is roughly the same of 19% of a
total 150M units sold. IF APU stay the same, it makes no difference financial
wise to Apple. But to achieve 30% of 150M units sold, Apple may have to branch
out another line of more affordable phones, it may have to give more control
to the carriers, it may have to iterate on a faster pace than it is
comfortable with, all of these would hit Apple's margin and equal things out.

With Nokia LG SE and Motorola in the red, Apple is now siphoning about 50% of
industry profit at a market share of, what, 5% of all phones sold?

Which is not to say market share is not important, but it is not the utimate
goal.

For now Apple's more urgent problem remains to be manufacturing capability,
its fancy process or unique components always causes shortage upon new iOS
devices launch and well into the second quarter, it almost forms a pattern
(iPhone 3G/iPhone 4/iPad 2 etc). If the murmurs from Foxconn et al is to be
believed the same backlog will happen to iPhone 5/iPad 3 again.

~~~
trotsky
Yet reports seem to indicate Apple is planning on rolling out a "budget" price
point phone [1], so they probably are worried about market share after all.

Apple is on a long term digital media dominance play. They want to be the one
stop locked in shop for many people's music, software, video and books. Sure
they'll continue to be interested in making good money on their hardware but
their evolving iOS platform strategies clearly point to what they're looking
forward to. And in that version of the world where content sales is king,
market share means a whole lot.

<http://techcrunch.com/2011/02/10/iphone-nano/>

~~~
epistasis
A "budget" price point phone would be better understood in terms of market
segmentation rather than market share; i.e. getting money from people who have
a lower maximum price, now that they've gotten money from those who are
willing to pay more.

If they wanted market share, they would have just led with the "budget" phone.

~~~
r00fus
> If they wanted market share, they would have just led with the "budget"
> phone.

But Apple has a luxury brand, and a "budget" device would detract from that
(even the lowly iPod shuffle fills a niche for well-off folks: it's small and
sleek).

Budget in this context means pre-paid (as per the last earnings ). And I bet
that iPhone will not be compatible with a post-paid plan (or vice-versa)... it
will be interesting to see how Apple navigates this as they've been very deft
at positioning new products in terms of their existing product lines.

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Derbasti
I don't see Apple being fearful to be honest. They are still growing like
crazy and they are serving a somewhat different market than Android is. You
simply don't buy an iPhone because you want 'some phone'.

This is not to say that an iPhone is better than some Android phone, but this
is certainly perceived to be something different than 'the rest' by most of my
friends and colleagues.

~~~
trezor
I work in software development. Almost everyone in my department has Android-
phones bar a few self-confessed iAddicts (and one daring Windows phone 7 beta-
tester). Despite its huge commercial success, the iPhone is among my peers
considered a rather lulzy thing and a the undisputed weakest and least
sophisticated of all the mobile platforms when measured on its own merits.

Not saying this is absolute truth either, but it certainly shows that your
comment about what "most" people might think certainly doesn't ring true
universally.

~~~
white_devil
_the undisputed weakest and least sophisticated of all the mobile platforms
when measured on its own merits._

Oh my fucking God, _please_. I wasn't sure before, but you just outed yourself
as a huge Google -fanboy.

Yeah what's Apple's platform got going for it? -It just changed the whole
industry and showed How It's Done. It's also regarded as technically very
solid, and pleasant to develop for.

~~~
steverb
The iPhone did change the industry and it is technically very solid. However,
it is NOT pleasant to develop for.

Having developed private apps for iOS, Android and Windows Phone 7 I
personally find Windows 7 to be the best platform for development, with
Android a distant second. iOS is by far the most painful dev platform of the
three.

Unless you really like programming like it's 1985 (a not insignificant number
of people really do), in which case it's great.

~~~
white_devil
_Unless you really like programming like it's 1985_

Care to elaborate?

~~~
prodigal_erik
It's 2011, and iOS developers are somehow persuaded to accept a crude
imitation of Smalltalk and waste time on "do I need to box this int in a
NSNumber?" and "did I get a SIGSEGV because I called [super dealloc] before
[field release]?", when the first Smalltalk implementation handled this
minutiae automatically on less powerful hardware nearly forty years ago.

------
saturdaysaint
Flamebait.

Jobs played up the IP that went into the iPhone at its launch and
(paraphrasing from memory) vowed to defend it vigorously at the time, well
before a single Droid or Galaxy S or _iPhone_ shipped. I'll dig through the
WWDC transcript if someone forces me ;). They knew that they'd be copied,
presumably by low-cost imitators as their products have always been imitated,
and were always prepared to use IP law to defend their advantage.

I'm not agreeing or disagreeing with this strategy, but Apple saw these market
pressures coming a long time ago.

~~~
mrcharles
I recall that as well, but I think this article is still valid, because it
speaks to Apple's vigor in enforcing them, as much as anything. I'm not going
to say Apple is desperate yet, but I think that Apple foresees that
desperation if they don't very actively pursue anything and everything.

~~~
Loic
For once I totally agree. You must also add, that the vast majority of people
are price sensitive and do not really care if they use an Apple, Samsung or
HTC device. A lot of people around me bought the iPod (not iPad) because they
were the cheapest and nice looking at the same time.

Look around you at people having a decent normal job, kids, a house to repay,
etc. At the end of the month, not a lot of money left for the high end Apple
stuff. These are not even the majority of the people.

In Europe, basically you have 30% of the people paying no taxes because no
money, 30% with money but in fact nearly nothing left at the end of the month
and 30% with extra (here I am generous).

The iPhone is selling good in Europe only because it is subsidized by the
mobile operators.

So, if you continue following this line, this means that at least in Europe,
Apple will simply not be able to grow past the 30% mark if not subsidized by
the operators.

Then you hit the last problem, the iPad is seen as a "big" iPhone by people.
They use it in addition to a normal computer and buy it with a contract.

Now you have Apple, depending for 60% of their income on hardware which most
of the time requires the help of the mobile operators to be sold.

This is not an easy position to be in. I do not own any Apple device, but I
thank them for what they do, because they drive the general quality of the
smart phones up.

~~~
saturdaysaint
People have been predicting Apple's death by the commoditization of consumer
electronics since before Jobs' return. It hasn't happened because their
expertise in both hardware and software is unparalleled and they have a
sterling quality reputation, meaning they will always come out with cool
products first and sell them in quantity.

People forget that they're not afraid to disrupt themselves either. If they
can create a great $500 tablet, don't be surprised if they can make a great
$200 unsubsidized phone if they think the competition demands it.

------
S_A_P
I think that if apple were concerned about market share, iPhones would be on
every carrier, there would be more iOS phones available and the pricing would
be more competitive. I think that they are more happy to be a 20-30% market
share with a semi premium product than a commoditized less capable product.
The reality is that apple will never be able to compete with hardware vendors
that crank out good-enough phones with a cheap yet very capable OS on them. I
don't think they want commodity products in their line up. I also think that
they may feel similarly to what steve jobs said about Microsoft in the 90s.
For apple to win, google/android doesn't necessarily have to lose.

As for the litigation, I don't know that it is necessarily tied to the fact
that android has taken off so well. Like it or not, most hardware vendors use
apple as a hardware benchmark, so copying their products is inevitable. I
would not want to sit idly while other people make knockoffs of my products
either.

~~~
AllenKids
As a almost exclusive Apple product user I am happy with Apple having about
20%-30% market share in major category it is competing as well. (Mac may never
reach the goal, but then again as long as it is doing well.)

I'm uncomfortable with iPad's share to be honest, it's not healthy.

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rimantas
There we go again. Market share. Author did not even bother to consider, at
whose expense Samsung and HTC are gaining said share. Apple did grow too. Now
47% of their revenue comes from the product which was launched into the market
where Apple had zero marked share and was laughed at for even trying. Another
21% comes from product which did not even exist 1.5 years ago.

Author did forget to include these graphs:
[http://www.intomobile.com/2011/05/02/apple-has-50-profit-
sha...](http://www.intomobile.com/2011/05/02/apple-has-50-profit-share-
smartphone-makers-cant-hear-haters-behind-huge-wall-cash/)

Yep, Apple should be afraid very afraid.

~~~
anghyflawn
Um, no. He pointed out that as the smartphone market grows (at the expense of
feature phones, probably), HTC and Samsung are riding that wave much better.
It's not horribly surprising, since Apple's product is not likely to be
immediately affordable to many of those switching from feature phones, but as
the smartphone (and eventually tablet) market becomes commoditized it is not a
given that Apple will be able to successfully uphold their profit margin by
charging relatively high premiums for their value proposition. Of course they
might do just that, but that is not something we can take for granted.

~~~
MrScruff
From the article, HTC's market share growth in the given interval was 4%,
compared to Apple's 3%. Considering they achieved that growth on significantly
lower margins than Apple (and consequently much less revenue growth), I don't
think it's reasonable to claim HTC are riding the smartphone market growth
much better than Apple.

Samsungs 10% growth is more impressive, but again was achieved with much lower
margins. Apple could afford to cut their margin significantly if competitive
pressure forces their hand, and unlike RIM they have a product which is high
demand.

~~~
anghyflawn
Percent is not the same as percentage points, you know. Growing from 6% to 10%
is actually a growth of 66% percent, which sounds much more impressive. Fair
point about the margins, but the fact is that Apple's entire business model is
built on ensuring their margin stays high by charging large premiums for
products that are clearly better than the competition. This is not guaranteed
to last forever. The other companies on the other hand are used to living in
commoditized markets with razor thin margins. I'm not saying Apple are doomed,
but they clearly cannot just write the whole competition off, and they
obviously aren't.

~~~
MrScruff
Sure, but by a similar logic going from 0.1 to 0.2% represents 100% growth.

But yes, I agree that Apple are very aware of the competition and the pitfalls
of potentially losing marketshare. It would be silly for them to be otherwise.
I just don't thing they're running scared yet in the way the original article
infers they are.

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allenp
The author makes the mistake of equating market share with revenue - it is
quite possible that Apple's 19% market share is makes more for them than Nokia
at 24%, or even Nokia at 40%.

~~~
p0ppe
"iPhone share of phone market in Q1: 5% volumes, 20% revenues, 55% profit" -
[http://www.asymco.com/2011/05/16/iphone-share-of-phone-
marke...](http://www.asymco.com/2011/05/16/iphone-share-of-phone-market-
in-q1/)

~~~
Synaesthesia
Q2: 66% Profit (!) <http://news.ycombinator.com/item?id=2820784>

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tobylane
Android's need isn't Apple's fear. Android's need is high market share,
Apple's need is user engagement/entertainment (not market, as flash and so on
'badly' prove). Apple do perfectly well with low market share, I wish they
wouldn't bother trying getting any further but when you make something so good
you can only do so much to keep it out of the hands of some people.

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MatthewPhillips
What I don't get is why they aren't offering choices of different handsets.
They offer 4 different versions of the iPod and 1 version of the iPhone. There
should be at least 3 iPhones - the standard version, one with a 4.3 or 4.5
inch screen, and one with a slide out keyboard.

~~~
pooriaazimi
That is called fragmentation. It's hard for devs to optimize their apps to
look good on different resolutions or aspect ratios. Even making your app to
look & work "well" on both portrait and landscape modes is hard (by well I
mean pretty, slick and sound).

~~~
jff
It's somehow worked out for the incredibly fragmented Android environment.
Their method of creating images that specify which parts of themselves can be
safely stretched (NinePatch,
[http://developer.android.com/reference/android/graphics/Nine...](http://developer.android.com/reference/android/graphics/NinePatch.html))
is a pretty neat technical aid for that situation.

~~~
ceejayoz
NinePatch etc. are neat, but break down on complicated design elements.

------
cwp
Samsung and HTC aren't eating Apple's lunch, they're eating Nokia's lunch. The
author notes that makers of Android phones are gaining market share faster
than Apple, and assumes that this will eventually mean _taking_ market share
from Apple, but that's far from given.

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notatoad
i'm assuming that the app store revenues are counted as part of the iphone and
ipad revenues?

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programminggeek
Apple is not afraid of Android any more than Porsche is afraid of Ford. They
are targeting effectively two distinct markets.

Android doesn't do a great job of competing at the high end of the market
outside of tech nerds. Seriously, the one year old iPhone 4 is still
outselling even the newer Android phones on Verizon and AT&T.

What Android is killing is becoming the default smartphone at every price
range with every feature set you can imagine. Android covers all the
smartphones that iPhone doesn't. iPhone isn't for everyone, Android tries
harder to be. Android is much less focused as a platform than iOS.

Android is going to keep working hard to be upmarket, and iOS is going to keep
working to go downmarket with prepaid devices, more iPod Touch type devices
with 3G or GPS or both.

As a developer I just care about getting paid and in my experience people on
iOS are more willing to buy my apps. Android users tend to be cheapskates.
This can and will change at some point, but Apple is doing better now than
they ever have. I doubt they are truly afraid of much right now. They are
executing better than ever before.

~~~
watty
You sound a bit biased. There is love for both iOS and Android in and out of
the "geek" community. My dad who is far from a geek has owned an iPhone and
iPad. Now my mom owns them both and he owns a Droid X and Xoom.

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hackermom
Come on, man. Stop riding around on your inflated high horse. There's no
platform war here for you to win, you ridiculous anti-Apple crusader wannabe.
These actors all in the same boat, knee-deep in shitty lawsuits coming from
all angles. And, remember, Apple fervently stressed the breadth of their IP
portfolio of the iPhone long before Android showed up, along with promises to
defend it.

