Are Apple’s New iPhones Less Effective at Attracting Android Users?
A new report from Consumer Intelligence Research Partners (CIRP) found that a smaller percentage of iPhone buyers are migrating from the Android platform this year, when compared to last year. According to a CIRP survey of 300 iPhone buyers conducted from October 18 through November 4, 2014, only 12% of iPhone buyers claimed that they moved from an Android phone. In a survey of iPhone buyers conducted after last year’s launch, about 23% of iPhone buyers claimed to have migrated from an Android device.
“The vast majority of new iPhone buyers were already iPhone owners,” observed CIRP partner and co-founder Josh Lowitz. “Current iPhone owners accounted for over 80% of buyers after this launch, compared to less than 65% after the iPhone 5S and 5C launch in September 2013. Android owners accounted for a much smaller share of buyers immediately after this year’s iPhone launch, and with smartphones so prevalent in the US, we also saw a smaller percentage of iPhone buyers moving from basic phones.”
Until recently, Apple was one of the few smartphone makers that did not offer a device with a screen size larger than four inches. Rival Samsung pioneered the large-screen smartphone/tablet hybrid category known as “phablets” when it introduced its line of Galaxy Note phablets in 2011. Since then, larger-screen smartphones have been steadily increasing in popularity and by the first quarter of 2014 over one-third of the smartphones shipped in the first quarter of 2014 had displays that were five inches or larger, according to market research firm Canalys. For this reason, it was widely assumed that the debut of the 4.7-inch iPhone 6 and the 5.5-inch iPhone 6 Plus in 2014 would attract more Android users who may have been holding out for a large-screen iOS-based device.
However, just because there was a lower percentage of former Android users buying iPhones this year, doesn’t mean that Apple’s overall iPhone sales were down. As reported by Apple, the first weekend sales for the new iPhone 6 and iPhone 6 Plus set a new record of 10 million units this year. This was made possible thanks to the greater number of current iPhone owners buying another iPhone. For this reason, it is possible that the proportion of former Android users shifting to the iPhone may have appeared smaller this year simply because there were so many more current iPhone owners buying a new iPhone this year compared to last year. In other words, the debut of two larger-screen iPhone models drove more current Apple users to upgrade their devices than it attracted former Android users.
Former Android users were also more likely to purchase a more expensive iPhone model this year than they were in previous years. According to CIRP, 85% of iPhone buyers that previously owned an Android phone bought the latest iPhone 6 or iPhone 6 Plus model this year. Last year, only 52% of former Android users opted to buy the latest iPhone 5S model.
“Former Android owners were attracted to the iPhone flagship models in greater proportion than last year’s launch,” stated CIRP partner and co-founder Mike Levin. “The addition of the flagship premium iPhone 6 Plus accentuated that improvement. If we look at the price points of the iPhones that Android owners bought, this year 59% of them bought the $649 unsubsidized price iPhone 6 compared to only 52% who bought the new similarly priced iPhone 5S in the same period last year. In addition, another 26% of former Android owners bought the $749 unsubsidized price iPhone 6 Plus.”
As noted by Levin, this contrasts with previous years in which Android owners tended to buy more of the lower-priced iPhone models. However, the debut of a phablet-sized iPhone appears to have pushed more former Android users to spend the extra money for a flagship Apple device. In fact, a greater percentage of former Android users opted for the iPhone 6 Plus than current iPhone owners did. “31% of former Android owners who bought an iPhone opted for the 6 Plus compared to only 25% of existing iPhone owners who chose the larger format flagship phone,” observed Levin.
According to Apple CEO Tim Cook, this year’s launch of the iPhone 6 and the iPhone 6 Plus was “the biggest iPhone launch ever.” While there’s no question that Apple sold a record number of iPhones after this year’s launch, some industry watchers have wondered if Apple could have secured a greater share of the overall smartphone market if it had released a larger-screen iPhone model even earlier. Apple co-founder Steve Wozniak was the latest pundit to raise this question in a recent interview with CNNMoney.
“Apple could have had a much bigger share of the smartphone market if it had a larger-screen iPhone for the past three years,” Wozniak told CNNMoney. “It could have competed better with Samsung.”
According to the latest data from market research firm IDC, Apple held a 12% share of the worldwide smartphone market in the third quarter of 2014, compared to a 23.8% share held by Samsung. On the other hand, Samsung was the only company among the top five smartphone vendors to see its shipment volume decline compared to last year. It should also be noted that Apple has consistently managed to take the lion’s share of the smartphone market’s profits, despite its lower shipment volumes. For example, according to Canaccord Genuity analysts cited by Apple Insider, Apple took approximately 65% of the handset industry’s profits in the first quarter of 2014. In this sense, regardless of how many iPhones are sold to former Android users, it appears that the Cupertino-based company is still dominating the industry’s most important metric: cash.
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