“I say, I say, I say. What is the difference between an Apple iPhone and an Android smartphone?” Er, nothing actually. That’s the rather intriguing finding from a new study from Market Strategies International.
The smartphone OS sector is more competitive than ever. Apple and Android are slugging it out for overall market share and highest usage bragging rights, whilst Windows Phone is trying to muscle past a wobbly BlackBerry to claim the distant third place. Then we have the open source developers beavering away to get Firefox ready to enter the fray next year, all whilst Symbian settles into a quiet retirement.
As we await the results of holiday season devices sales, and all the inevitable speculation that will be extrapolated from the figures, we can at least investigate what influences the buying decisions.
Do we choose smartphones based on whether a device fits into a single ecosystem with other tablets, PCs and TVs? Or do we think of smartphone purchases as standalone decisions, based on price, brand or appearance?
The brand loyalty implications are clear: If consumers think of their world as a single ecosystem, platform providers can leverage their installed base to enjoy brand premiums for new device sales in the ecosystem. So, are ecosystems differentiators?
To find out, Market Strategies International conducted a study in October this year of 1,000 smartphone owners in the US aged 18 and older. Cutting to the chase, it turns out that consumers do not place high importance on staying within the same brand family or selecting devices based on how easy it is to share content across devices. These two factors fell near the bottom of potential criteria for consumers selecting a smartphone or switching from an Apple phone to an Android phone.
Instead, smartphone purchasers are more interested in a specific operating system and access to more apps, which the study found was particularly important to those moving to iOS. Specifically, 34 per cent of respondents said access to more apps was a reason for choosing iOS, followed by liking the Apple brand (24 per cent) and access to iOS (23 per cent). Looking at the more general smartphone drivers, for people choosing iOS, the camera ranked highest (88 per cent), followed surprisingly by the large screen (79 per cent). Price came last, of course, at 61 per cent.
By contrast, those moving away from the iPhone were focused on form factor issues. The large screen available on some Android devices scored the most (92 per cent), followed by flexible customisation (87 per cent).
The firm says that these factors do not appear to extend to a fully conscious decision to buy into a single ecosystem, but by choosing a specific operating system they are entering into an ecosystem by default.
It says that iPhone users have already bought into the Apple brand promise to create “plug-and-play” devices that share content seamlessly, and are more likely to agree there are benefits of having an ecosystem of devices in a single brand family.
However, 60 per cent of consumers surveyed indicated they have different brands and OS across their devices such as computers, laptops, tablets, e-readers and mobile phones. Shifting content between device types and shopping in multiple “app” stores has become routine for these consumers, with the vast majority (90 per cent) describing themselves as highly satisfied with their ability to share content across devices.
Market Strategies International concludes that differentiation by ecosystem is not currently a primary driver in the selection of mobile devices. The so-called “pain point” of transferring content from one OS to the other is not such a problem – it’s a one-time experience that can be worked through.
If these results prove to be representative of the overall market, then what can the consumer electronics giants do to persuade us that having a suite of products connected across the same OS is the best direction to go? Will the much-anticipated Apple iTV (if it ever happens) be a catalyst for further change? Or will the vendors making products that are competing for the distant third place in the mobile sector seize this information and make deeper inroads into being more serious competitors?
An unrelated research report from Analysys released this week suggests that smartphone upgrades will drive three out of every four smartphone purchases by 2017, compared to less than half of all purchases in 2012. According to Ronan de Renesse, principal analyst for Analysys' mobile broadband and devices research programme:
“This will create a significant strategy shift for stakeholders. Operators will have to increase the value of smartphone contracts by offering early handset upgrades and larger data allowances to retain customers, and handset vendors will have to develop stronger app and content ecosystems (as Apple has done) in order to increase loyalty.”
A third report, this one from Intermedia, which manages more than 500,000 premium-hosted e-mail accounts with Microsoft Exchange, looks at the growth of iOS devices in business. It says that Apple’s iPhone represented 68 per cent of smartphone activations by its SME customers from September through to November. Android came a distant second with 25 per cent of activations during the three-month period, followed a long way behind by RIM’s BlackBerry platform with 4 per cent and Windows Phone with 3 per cent.
For tablets, the gap was even more striking, with Apple’s iPad accounting for 93 per cent of SME new activations, followed by BlackBerry’s PlayBook with 5.3 per cent and Microsoft’s new Surface tablet with 2 per cent.
And talking about also-rans in the OS market, Analysys has come up with the interesting observation that the number of Windows Phone-powered devices shipping worldwide in 2017 will match the number of iOS units shipped by Apple in 2012. However, it says that despite this growth, to reach 136m sales in 2017, the Microsoft platform will still account for only 9 per cent of global smartphone shipments at the end of the forecast period, behind iOS at 23 per cent and a pretty stagnant Android at 58 per cent.
Analysys says that annual smartphone shipments will leap from 700m in 2012 (41 per cent of total handsets) to 1.37bn by the end of 2017 (70 per cent of total handsets).
Finally, a personal observation. I’ve just bought a new smartphone for my wife (don’t worry, it wasn’t a Christmas present and I haven’t just given away the surprise). Her choices were in marked contrast to the findings from Market Strategies International. She was keen to have a phone that connects better and more easily with her Apple laptop and iPad, having struggled with an Android HTC device, so ecosystem was her main reason for switching. The larger screen of the Samsung Galaxy SIII was deemed to be too large to be practical. And showing willingness to consider even Windows Phone, the Nokia Lumia was just too big and clunky. The iPhone it was then. Score one for Apple’s connected ecosystem.
And if Santa brings you a new smartphone this Christmas, do try and grab him and ask why he made his particular purchase decision. And for goodness sake, leave him a mince pie and a small sherry. Merry Christmas.
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