New Stats Make iPhone Look Unstoppable in U.S.
06 SEPTEMBER 2022 - Headed into new iPhone week, an absolutely insane stat from market tracker Counterpoint Research. A piece from the Financial Times has the firm saying that iPhone accounted for over half of smartphones in the U.S. last quarter. The numbers aren’t tied to sales for the quarter. Rather, Counterpoint seems to have been looking at active devices running iOS versus Android. According to the Financial Times:
This is a wider and more meaningful category than new phone shipments, which fluctuate from quarter to quarter (…)
The active installed base takes into account the millions of people brought into Apple’s ecosystem through the used phone market, as well as those who use iPhones purchased years ago.
We’ll come back to that used phone market in a bit.
How Many Gs?
As far as new phones on the near horizon, CNET ran a report Monday predicting a surprising killer feature for iPhone 14: 5G. Yes - writer Ian Sherr knows that iPhone has had 5G for a couple of years now. “But increasingly,” Sherr writes:
…data is piling up that indicates 5G wireless is becoming nearly as important in today's iPhones as battery life and storage, the two features people watch out most for when buying their phones.
The piece seems to move back and forth between “people are going to upgrade for 5G” and “people upgrading are going to get 5G anyway.” He points to the perennial assertion from Wedbush analyst Daniel Ives - that:
…about 240 million of the 1 billion iPhones being used worldwide haven't been upgraded in the past three-and-a-half years and thus aren't running on 5G networks.
They are ripe for an upgrade. That means they are likely to make the 5G leap, and soon.
Perhaps you’re thinking, “In this economy?” Well, “yes” is the thinking of Lopez Research principal Maribel Lopez. The CNET piece has her arguing:
If you're going to buy a smartphone, you're going to buy the best you can at a certain price point… People have to make serious choices when they're looking at 30% increases in food costs and doubled gasoline prices… No one, unless you need a value phone, would buy a 4G phone today…
Got Anything Less Shiny?
This looks like a job for that used phone market to which I said we’d come back. A piece from ZDNet points out that:
That second-hand market effectively creates an alternative affordable on-ramp to the Apple ecosystem for people who might otherwise buy a mid-range Android handset.
That same ZDNet piece cites numbers from CCS Insight that fold in nicely with Wedbush analyst Ives’ assertions. CCS “found that 1.3 billion phones will reach their first end-of-life in 2022.” While around half of those will end up landfill or at the back of a drawer, a growing percentage will find itself on the second-hand market. According to ZDNet, “iPhones make up over 80% of this ‘circular’ economy, thanks in part to what CCS calls the ‘high residual value’ of iPhones.”
That takes us back to Counterpoint’s count putting iOS on over half the smartphones in the U.S. Commenting on that stat, Counterpoint research director Jeff Fieldhack said:
Operating systems are like religions — never significant changes. But over the past four years the flow has consistently been Android to iOS… This is a big milestone that we could see replicated in other affluent countries across the globe.
Seeming to agree is CCS Insight analyst Ben Wood. The Financial Times piece had him saying:
It’s not that we are seeing a big year where Apple grows its market share 10 or 15 per cent, but there’s this slow burn where they quietly just grab more share every year.
Wood went on to say:
[Apple CEO Tim] Cook has taken what Jobs gave him and has built an empire out of this… Because anyone who buys an iPhone — whether it’s second-hand, third-hand, or fourth-hand — will probably give Apple some money buying apps, paying for iCloud, using Apple Music, or transacting on Apple Pay. And that’s a model that no one else, really, has been able to replicate.
Worth noting: All of that is practically independent of anything Apple does with iPhone 14 hardware. Simply introducing a new phone practically guarantees growth for iOS, which practically guarantees growth for Apple’s Services segment.
Which - as I indicated at the start - is absolutely insane.
