Must-know: Why customer loyalty is so important for Apple (Part 1 of 6)
Apple depends heavily on binding users to its ecosystem
Apple (AAPL) users are generally loyal to Apple products. They also tend to buy more Apple products through the “halo” effect. For example, a user who bought an iPhone for the first time will also tend to buy an iPad and then a Mac.
Apple’s app ecosystem is also strong. This means users find using products from the same vendor convenient. The same trend applies to Google (GOOGL), which also has a strong apps ecosystem for its operating system Android. So if a user switches from Apple’s ecosystem to Google’s ecosystem, it hurts Apple in more than one way. That’s why loyalty plays such an important role for Apple—and for investors.
Apple could continue to grow its ecosystem gradually
According to a report from Gartner and as the chart above shows, Apple’s worldwide device market share could gradually increase from 10.4% in 2013 to 12.4% by 2015. The point you should note here is that the device market includes PCs (notebooks and desktops), mobile phones, tablets, and other ultramobiles.
The report predicts that Android could continue to show strong growth in the device market, with its market share increasing from 38% in 2013 to 52% by 2015. This rise would be mainly due to Apple’s dominant position in the relatively large mobile market.
The top smartphone vendors in emerging markets, like Samsung (SSNLF) and Lenovo (LNVGY), have adopted Android as their operating system. This is why Android dominates the worldwide smartphone operating system market. Microsoft’s (MSFT) Windows OS is expected to maintain its share in the worldwide devices market mainly due to the company’s continued dominance in the PC OS market.
Browse this series on Market Realist:
- Part 2 - Apple’s iPhone still dominates Britain despite Samsung’s advances
- Part 3 - Why US smartphone users remain most loyal to Apple’s iPhone
- Part 4 - Why did Walmart reduce its prices for Apple’s iPhone?
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- Handheld & Connected Devices