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Apple may not dominate market share, but rules other critical metrics

Aaron Pressman

In the smartphone battle raging between Apple (AAPL), Google (GOOGL) and a host of other players, who's winning depends on how you measure. While some analysts warn Apple’s relatively low overall share of the market leaves the company vulnerable, by other metrics Apple is stronger than ever.

The most obvious, but not necessarily most insightful, measure of winning is market share — who is selling the most smartphones. On that measure, Google’s Android, led by Samsung-made phones, has long been in the lead. Apple shipped only 15% of all smartphones worldwide last year, according to Strategy Analytics.

But by several other important measures, Apple has been crushing the competition. A look at fourth quarter smartphone profits by Canaccord Genuity analyst Mike Walkley, for example, calculated that Apple had captured 93% of the total, a dominant share if ever there was one. Samsung (005930.KS) was second with 9%, leaving nearly the rest of the field in the position of losing money. (The share of the two leaders adds up to more than 100%, but nearly all the other phone makers are losing money, giving them a negative share of the profits, Walkley notes.)

To be sure, there are some limits to Walkley’s analysis, which is based on his estimates of profit margins and leaves out Chinese phonemaker Huawei, the third-largest seller in the world. And Apple had a particularly strong quarter on the strength of its updated iPhone line. In prior quarters, its profit share has ranged from 53% to 86%.

Still, Apple also looks healthy and powerful when considering user activities. IPhone owners not only spend more time browsing the web and using apps, they also spend more money. They spent some $15 billion last year on paid apps and in-app purchases. Google’s Android, with many more users, had only about half the app revenue of iOS. And iPhone owners are more loyal to Apple, with 76% of customers planning to buy another iPhone in the future compared with just 58% of Samsung phone owners planning to stay loyal to their current brand, according to a survey last year by WDS.

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Apple has also lately been confounding the notion that its phones are too expensive to compete in less-wealthy regions of the world. Apple had $50 billion of sales in emerging markets last year, including $38 billion alone from China, Apple CEO Tim Cook disclosed this week at a Goldman Sachs investing conference.

Strangely, despite Apple’s massive fourth quarter of iPhone sales, the company appears to have made little headway expanding its share of users in the U.S. That’s the message in the latest Comscore data about how many of the 182 million smartphone owners are actually using each operating system, at least.

Unlike most market share reports, which measure sales of new phones, Comscore looks at which phones are actually in use over time. And over the final three months of 2014, when the new iPhone 6 and 6 Plus went on sale, the percentage of people actually using an iPhone fell just a smidge to 41.6% from 41.7%, while Android usership rose to 53.1% from 52.1%. The latest iOS share is also slightly down from the 41.8% usage share measured in December 2013.

How can Apple be selling so many more phones in the fourth quarter without increasing its usage share in its largest market? One reason, mentioned above, is that Apple is growing much faster outside of the United States (especially in China). Another key reason is the company’s powerful brand loyalty, also mentioned above. Most of the people buying new iPhones in the U.S. were upgrading from previous Apple models.

That suggests competitors will have a hard time cracking the company’s dominance, at least as measured in profits, app sales or usage.

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