Android’s Leaky Bucket

John Paczkowski over at AllThingsD covered a report written by Carl Howe, VP of the Yankee Group. Carl makes a bold statement, indicating iPhone ownership in the US will exceed Android US ownership by 2015.

Carl has developed an analogy using the idea of a leaky bucket. In short, he proposes that if platforms are a thought of as a bucket and their buyers comprise the water that fills it. Therefore how "leaky" a bucket is refers to a consumer intent to buy something else. What Carl's consumer survey research shows is that the Android bucket is leaking faster than the iPhone bucket.

A couple of stats to highlight from the Yankee Group survey.

  • 91 percent of iPhone owners intend to buy another iPhone
  • 6 percent plan to switch to an Android device with their next purchase
  • 76 percent of Android owners intend to buy another Android phone
  • 24 percent of Android phone users plan to switch to another platform
  • of those professed (Android) switchers, 18 percent plan on buying iPhones.

While 76% plan on remaining faithful to Android, 91% plan on remaining faithful to the iPhone. Carl's point is that the Android bucket is leaking faster than the iPhone's.

So ultimately platform loyalty is the key indicator here from a sustainability standpoint. The key to Carl's theory, however, will be the decisions of the lower end and new smartphone buyers, not necessarily purely switchers.

I'd again argue that the anticipated behavior of both the lower end market, who probably bought a cheap or free Android devices as their first smartphone, along with smartphone intenders, favors Carl's theory. How many smartphones on the market will be able to compete with a $99 subsidized iPhone 5? Probably only the Galaxy S3, arguably.

I'm not sold on the idea that everyone in the US who wants an iPhone has one. However, I'm also not convinced that the category is fully mature from a consumer adoption standpoint. What I specifically mean when I say that is, i'm not sure the market has fully experimented with different devices, platforms, software, etc., in order to fully define their needs, wants, and desires. Once this happens we will truly see a much clearer picture of platform share and sustainability.

One thing our research continually shows, as does the Yankee Groups and a host of others, is that once consumers get into the Apple ecosystem, they rarely leave.

Which makes one single point perhaps the most significant. The key for Apple is not necessarily to get consumers to buy all their products at this very moment. Rather, to just get consumers to buy one, which acts as the gateway to their ecosystem.

* Caveat. Surveys are, of course, not always an exact indicator of future behavior. However, I have seen more than a few solid data points that support this data. Also, without knowing specific device plans of Apple or competitors the timing is also hard to predict. What Carl proposes could happen sooner or later. This is why I mentioned the market adoption cycles and experimentation still taking place.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

709 thoughts on “Android’s Leaky Bucket”

  1. Ben, Do you see this behavior outside the US, where Apple’s ecosystem is more often not as well-developed as in the US?

    1. Global behavior is a bit more nuanced than the US. It’s easier to look at specific segments within other markets to find some similarities. We do see this within certain demographics of Europe for example. Places like the UK (although small) show some similar patterns. Other parts of Europe like Germany for example contain much more pragmatic buyers, who tend to value cost the most.

      To this point though, its important to recognize how big Samsung is in the rest of the world. By my number and approximations the US only makes up roughly 10% of Samsungs smartphone sales. The breadth and depth of their product mix is what helps them in the rest of the world where as the US, focus works a bit better.

      This is ultimately why I think a strong case can be made for Apple to at least offer a lineup of current generation devices, which over time also gives them a lineup of legacy devices, which will still do well. Thus creating a strong iPhone line of products, which would ultimately help them globally IMO.

    2. That is the key question, and my main uncertainty in my own analysis (for my own purposes). I’d like to see data but it’s not available. So for now, my comfort is that (a) for the average iPhone user, the iPhone doesn’t have to be very sticky to be an effective hurdle, just a little sticky is enuf, (b) at 10% of global phones, 15% growth in iPhone means it gains 1.5 percentage points (law of small numbers — isn’t that ironic), in fact 15% annual growth sustained means in FIVE YEARS, Apple gets to 20% (vs Samsung’s 33% now).

    3. Oh, one more thing … Google doesn’t work in China. How well does an Android phone work w/o Google?

      1. China has services – Baidu, Alibaba, etc. – to ride on top of Android. So the phones have the services, just not as polished and integrated as iPhone. But I would think there’s little loyalty to Android. Android is just a convenient and free modular piece that enables any kind of phone (from $50 to $600) to be made quickly and cheaply. You should read today’s post at stratechery(dot)com on the two bears.

        1. “The Google Play store doesn’t support paid apps in China and many overseas developers choose not to publish their apps to local consumers on it.”

  2. Freedom of choice people. Can’t handle the technology of Android? Don’t let the door hit you in the butt on the way out.

    1. I think you’ve hit the nail on the head and speaks to why many of the features that define a smartphone are not used by many Android users. I think they would find a more natural home on iOS, and the data presented here shows that they are beginning to understand that.
      So whilst Android is exclusive, because some people, as you say, “can’t handle the technology of Android”, iOS is inclusive by design and is therefore a much more sensible choice for most.

  3. To me this question is really simple. If you look at desktop and laptop computers, I believe data shows that Apple owners switch to Windows computers much less frequently than the reverse direction. The Yankee Group survey indicates the same behavior in phones. The explanation seems pretty clear: Apple offers a better experience than their competition.

    1. I would say only to a certain extent when VS windows. Microsoft is working on creating a better UX through metro and touch, and WP8 and Windows tablets will become phenomenal product offering much better experiences than Android. At this rate, its MS and Apple vs Google.

  4. Probably irrelevant at that stage: much of the action is still in the new user segment, not in the upgrader segment.

    Also, intent is not action: once faced with the price, limits, and small size of an iPhone, most will change their minds.

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