So, what happens when Apple's customer retention rate meets fractured Android's inability to inspire loyalty? Apple has many fanatical and loyal customers - no doubt - but if the ranks of first-time iPhone users are growing slower than the broader smartphone market because new prospects are choosing Android phones that cost less but do more, that will still lead to dwindling market share. It's what we've been seeing for months now. No matter how you paint it, your math doesn't add up. The ranks of first time smartphone users is the limiting factor. Market growth is already slowing. Customer retention is paramount to longer term company growth. It's the tortoise and the hair story. In this case the race is in the consumption of a market. A company must win over and retain its customer base. Look at P&G, Philip Morris, and Wrigley.
Even Apple's retention rate, which is their strong suit, has been dwindling. Middle-aged males who pay for their own phones (as opposed to those who have their company pay for them, meaning they're not price sensitive) are leaving in droves. I could just as easily say that about Android and it would be just as true, or not. Point is, you can't back up that statement with anything but your opinion.
A two thirds customer retention rate means a company can achieve sustained growth more easily and efficiently.
Again, for each person who will say the iPhone 5 is better than the S3, you'll find someone who says the opposite. A pointless exercise if there ever was one.
The objective fact is that the Note 2, Nexus 4 (and upcoming successor), S3, S4, HTC One, and a few other Android phones all have specs equal to or greater and are growing sales at a faster rate. Sometimes specs are equal. Sometimes they're not. However, your collection of tin soldier manufacturers do not an army make. Most of the companies are not making any money for their efforts.
I do think that a cheaper iPhone will take back some of this market share, but at the expense of profits. You focus too much on market share. Markets are fluid and dynamic opportunities for growth and profits. In some markets, like the burgeoning computer market of the 80's, ownership of market share defined a company's power over evolving standards. Today, standards have mostly been set, and it is the adherence to these standards and the ability to define new ones that defines the ability to gain and hold market share. The model of grabbing a large chunk of the market by hook or crook before the rest of the competition can only work if you can retain it. So far, it seems that no single company offering an Android device has shown itself capable of doing that.
Plus, there is a contradiction in your statement. There is no incentive to buy market share with profits unless the retention of that market share can lead to higher profits which leads to a higher stock price. |
