Apple Is Becoming the New IBM

on November 10, 2011
Reading Time: 3 minutes

“No one ever got fired for buying an IBM.”

That phrase was popular when IBM, in conjunction with Microsoft, was becoming the standard business workstation in the mid-to-late 80’s. Deciding to purchase products from the industry leader was the safe bet, the one with the least risk. This was the underlying psychology of corporate IT buyers and it served them well for many years.

In our conversations with consumers, we find a similar sentiment toward Apple products. Consumers who are purchasing smartphones or tablets for the first time are tending to go with Apple because they are the safe bet in their minds. Other companies may have competitive products with price or feature advantages, but often come with greater risks.

Many consumers we interview have heard mixed feedback or negative stories from Android customers about devices acting up after 6-8 months, containing buggy apps or malware, and getting terrible customer support from their carrier or manufacturer. The reverse is true for first time smartphone and tablet consumers who note the overwhelming amount of positive feedback they hear from people who own iPhones and/or iPads.

It is essential to understand that consumers are very savvy, they do actually shop around, and do research both online and with friends and family. When they constantly hear positive stories and how much those they know love their iPhones, it becomes pretty hard to not go with the safe bet. The decision is even easier now that the iPhone is on all the major US carriers besides T-mobile and rapidly becoming available on all major carriers world-wide.

It is also important to know that when we do consumer interviews and analyze consumer buying habits we are not interested in “early adopters.” Early adopters are predictable and don’t always represent the mass consumer market. We focus more on those who are not in the tech elite, but are practical and desire technology without the hassle of having to manage technology.

This is fundamentally why I believe the analogy of IBM being the safe bet for business rings true with consumers and Apple for the time being. As I stated in my Dear Industry piece last week, this market will evolve and mature quite quickly. I do not expect any one single platform or piece of hardware to control the majority of market share. However, for the time being, a very large portion of consumers are choosing Apple products. The iPhone is the single best-selling phone on the market by far. The iPad is forecast to continue to control over 70% of tablet market share in 2012 and still hold healthy market share in 2013.

Both the smartphone category and the tablet category are in a growth phase. The global smartphone category is projected to grow at 49.2% over the next 5 years and tablets are projected to grow at 200% in 2012. When you look at the numbers and the expansive and rapidly growing TAM for these products going forward you do not need to be the market leader by any means to still sell a significant amount of devices. This is why we need a more informed conversation on market share and include profit share as a part of that discussion.

For many consumers, I am willing to bet, their first smartphone and their first tablet will be an iPhone and a iPad … and for the same reason that an IBM was the business user’s first computer: it’s the safer bet.

Lastly to further make my point, have you ever seen an Apple retail store anywhere close to empty?

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