Apple’s Diversifying and Maturing User Base

Microsoft’s biggest asset and liability

I’ve long said Microsoft’s enormous and diverse installed base of Windows and Office users is both its biggest asset and its biggest liability. The base commands respect and interest from would-be partners and customers and helps to preserve sales of its software and services. But it also means any time Microsoft wants to make a change to its products, it has to bear in mind the needs of all the many groups and individuals who use it and ensure any new products are not only backwards-compatible but also not too jarring for those who are transitioning from (often significantly) older versions, among other issues. This holds Microsoft back, prevents it from innovating as rapidly as it might, and forces it to maintain a breadth of features and functions often not well-suited to competing in today’s fast changing market.

Apple used to be immune, but is increasingly susceptible

I’ve also contrasted Apple’s position with Microsoft’s: with a much smaller and less diverse user base, Apple has the freedom to innovate without having to please quite so many masters. Its customers have been, for the most part, self-selecting and therefore exhibited a degree of homogeneity Microsoft’s billion plus users have not. Apple has also been able to focus mostly on the consumer market, with education and business markets secondary focus areas, which has also prevented some of the long development cycles often associated with developing software for enterprises.

However, all this is starting to change as Apple has gone from tens of millions of Mac users to hundreds of millions of iPhone customers and to a billion iOS devices sold. Whereas Apple once served a fairly small number of specific niches, it now serves almost every kind of customer imaginable: from the power user to the first time smartphone owner, from the wealthy American to the rising Chinese middle class. It’s also increasingly being adopted in the enterprise market and the IBM deal will only accelerate this trend. To be sure, Apple still isn’t universal in its appeal, especially since its devices tend to be costlier than those from other manufacturers, particularly in markets where phones aren’t heavily subsidized. But Apple’s customer base is becoming ever more diverse over time.

The other thing that’s happening is Apple’s customer base is maturing. I don’t mean it’s getting older (though that is almost certainly the case), but an increasing proportion of its customer base is using its third, fourth or fifth Apple device. These customers are becoming accustomed to a certain way of doing things, becoming “trained” in the Apple way of delivering tightly coupled software and hardware. Their expectations of how Apple will act, therefore, start to harden over time, leading to less flexibility in response to major changes in iOS and OS X.

Far-reaching implications

What are the implications of all this? Well, I think there are several:

  • Apple may start to meet the same sort of resistance to change as Microsoft and other platforms with large and diverse bases, with users responding negatively to major changes, or a lack of backward compatibility. We’ve already seen grumbling in response to the release of Final Cut X, the killing off of Aperture, and the reboot of the iWork suite. Each was a necessary evolution in Apple’s product strategy in the category, but in each case Apple appeared to abandon part of its base in pursuit of new customers or new use cases. This will get harder as the ratio between the existing base and potential new customers continues to change.
  • Apple will start to face a tension between the needs of different segments of its user base. The recent complaints about the quality of Apple’s software reflect this tension. Some users absolutely want iOS and OS X to keep moving forward rapidly and to keep pace with competing platforms, but others would make different tradeoffs, sacrificing speed of change for stability, for example. Interestingly, iOS 8 is seeing the lowest adoption rate of any version of iOS as far as I can tell, and this may in part reflect this bifurcation. Many users would rather see a stable platform than rapid iterations.
  • This, in turn, can start to make it challenging for Apple to roll out new features across its devices, if they’re tied to specific operating system versions. Handoff and Continuity arrived with iOS 8, but didn’t work properly until users were also running Yosemite on their Macs. The irony is Google users complain about not being able to upgrade to the latest version of Android quickly enough, while Apple may increasingly struggle to get some of its users to upgrade even when updates are freely available.

Apple and Google’s shared problem

Interestingly, Ben Bajarin highlighted a similar challenge faced by Google in his piece (for Insiders) on “Facebook vs. Google in 2015” yesterday:

Facebook can be a “one platform to serve all” where I feel Google can not. Google is going to have an extremely difficult time keeping Android interesting to their first billion users AND their second billion users. The primary reason for this is because the next billion Android customers will want and need completely different things than their first billion. A “one size fits all” Android solution is not going to work to satisfy the needs of their most demanding and most profitable customers versus those who are getting online for the first time with their first computer. Completely different set of customers.

I absolutely agree with this assessment and, to be sure, Google faces the challenge I’ve been talking about in an even bigger way given the diversity of its base. However, I think the challenge is in some ways easier for Google to overcome because Android is already very diverse in its applications. Since Google doesn’t have to address every possible market segment itself, but can serve these needs through OEMs, it can (and does) meet a more assorted set of needs, much as Microsoft has always done through its Windows OEMs. Apple’s challenge is it has always met all its customers’ needs itself and yet, it likes to keep its product portfolios very simple and focused. How does Apple continue to meet all its customers’ requirements while preserving this strategy?

How to solve this problem? There’s an app for that

I think the answer partly lies in the richness of the app ecosystem that has grown up around iOS. From the beginning of the App Store in 2008, Apple’s approach was to highlight the ability of apps to extend the utility of the iPhone well beyond the functionality Apple itself provided. In some ways, as time has gone by, the core functions Steve Jobs originally highlighted in introducing the iPhone (iPod, web browser and phone) have become less and less important, while the functionality provided by apps has become all the more important. I think the increasing importance of apps is ongoing and will continue as the user base for the iPhone (and Apple products in general) continues to diversify.

However, I’m not convinced apps are the entire answer here. Apple is going to have to think through the implications of its diversifying and maturing user base and figure out how to avoid being stretched too thin by the need to continue to move its various platforms and products forward and capture new customers without alienating that base.

Published by

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

599 thoughts on “Apple’s Diversifying and Maturing User Base”

  1. “Most people”, is not most people, most of the time. 🙂
    What makes the PC “personal” is it not being exclusively dependent on who you bought it from. Rather, it’s what the owner can do with it, and the owner deciding what they can do with it. Breadth of function matters, and breadth of function is what will make it valuable to “more people”. Breadth of function also makes possible both the simpler subset (of today’s iOS) and the more liberal usage desired by others.

    1. More “open is open” rhetoric . The use cases of the vast majority of users fit completely within the parameters of the walled garden and hence it feels as open as an unwalled quagmire. Those who love wading in the quagmire are a small proportion of total users (tho a much larger proportion of the geeks on here) and as such do not drive the market in direction or success.
      Windows openness is largely coincidental to its success with almost zero meaningful competition. The fact that another OS has managed to build almost as large a user base (counting consumers and enterprises as 1 user each) in just 7 years and with a much more profitable demographic at a much higher ASP suggests that open is not as winning a strategy as Windows history might have suggested.

      1. Tell that to a schoolteacher that may have coded some programs for their students. They are not a programmer, but learned to program in Java for instance. Those applications are personal to them, not “most people”.

        “The use cases of the vast majority of users fit completely within the parameters of the walled garden and hence it feels as open as an unwalled quagmire.”

        Not entirely without merit. Still it’s the very definition of “dumbing down”, of “least common denominator”. I will grant you that it DOES tend to RAISE the least common denominator. The “illusion” of openness. Hmmmm…we’ve seen this before in other contexts.

        What’s wrong with wading as far as your comfortable?

    1. Thanks for the feedback Dave. 🙂 I’m certainly getting mixed feedback. But our goal is to showcase the content. So always tough to do so and many different ways. But if you have specific suggestions we are happy to keep making modifications.

      1. The article pages are fine, except you need to make the body text darker, there isn’t enough contrast. It seems that you already fixed the very small pullquotes?

        The home page is kind of messy. But Dave’s example below is also a mess (The Inquirer). A better/quicker format is along these lines:

        But I don’t mind the new home page from a layout perspective, there’s just too much going on with shadow overlay text on an image that also has a hover effect. Very difficult to read the headline as I hover over it. The overall effect feels ‘heavy’. It’s much better down the page in All Recent Articles. All that said, the headlines at the top with images can be read nicely as long as you don’t hover on them. Maybe I’ll get used to it. It is easy to scan those top five headlines. You’ll have data on views and paths and such, that’ll tell you how well it’s working.

  2. Fine article. Your take on the “maturing” user base is a valid reading that I appreciated.

    From my limited vantage point, the resistance to change seems to be almost entirely on the Mac OS side. IOS is still maturing, whereas OSX is established and the niche users and general-purpose users have refined their workflows and their needs.

    Apple may do well to acknowledge the “bifurcation” you noted. Power users and dedicated niche users (audio, video, animators, etc.) may prefer an OS that doesn’t include Handoff and Continuity and iCloud integration. These things cause many issues with network reliability and security. I know Apple doesn’t want to make these a third party opportunity, but I can certainly see making them an option, rather than a core feature.

    In the end, I’m speaking for myself, but many of the quality issues Apple is facing directly stems from the tight inclusion of these services into the OS, rather than making them an optional install like Facetime used to be. And then there’s the bloated beast that iTunes has become…

    1. There’s a bit of a Coke issue here. People like that Coke is the same anywhere in the world. If Apple start fragmenting their userbase (remember how that was a huge Android bogeyman, all of 2 yrs ago ?), say with a slower-going, safer “Entreprise” version, on top of fragmenting their userbase, they’re acknowledging 1- their fast-going version isn’t safe (or fast, reliable…), and 2- they’re contradicting themselves and their “our customers pay us a lot of money to make the right choices for them”. That wouldn’t be the first time though, apparently customers don’t pay them enough money to choose a phone size these days.. or that speech was bunk to start with ?

      1. The user base is already fragmented. Not all users are the same. Apple’s action didn’t cause the fragmentation, its a natural emergence. Acknowledging that many people use Macs in a dedicated mode –as a workstation in professional facilities involving auxillary equipment beyond the needs of “average” users– will only help Apple.

        The one-size-fits-all OS may well have run its intended course. Apple is now the de facto tech leader, so catering to the more advanced users is also necessary.

        1. I was talking about technical fragmentation, where some iOS apps don’t run on some iOS devices because they’re not using the right version of iOS, even though they’re using their last one.

  3. If you haven’t already, I strongly recommend listening to the Debug podcast where they invited Nitin Gantra, a former Mac OS and iOS software development director. The triology is more than six hours, but even the first podcast only is gold.

    Nitin, who started out developing for the classic Mac OS even before they acquired Next, describes how the culture changed from a “backward compatibility with old systems is a must”, which was prevalent in the classic Mac OS days, to a “it’s OK to screw some of our customers for the larger benefit” approach. That approach was what gave birth to the Carbon APIs.

    My sense is that Apple clearly understands that trying too hard to satisfy all your old users with their old systems, prioritising stability too much over new feature, adding features to satisfy a wide variety of customers as opposed to simplifying, is what made them almost go bankrupt. They know that they have to periodically make dramatic changes and cut features, even if they piss off some of their loyal and valuable users.

    I’m sure that Apple is very conscious about this, and even as the pressure mounts to slow down and satisfy the current massive customer base, I’m quite sure Apple executives will continue to prioritise simplicity and new innovations.

    Therefore, even as Apple’s user base matures as you describe, I’m sure that Apple will keep doing what it is doing now. They know what they are doing and they know that successful companies often get derailed. They know where their North Star is.

    This is again something that is described in Clayton Christensen’s theories. He suggests that attending too much to your best customers will blindsight you from disruption.

    The admonition to always satisfy your best customers tends to make it difficult to see the future impact of disruptions on a core business

    1. You bring up an interesting point. If this is true;

      “My sense is that Apple clearly understands that trying too hard to satisfy all your old users with their old systems,….”

      Why put so much time and resources into re-engineering the Mac Pro, or to some extent the Retina iMac? It’s clear that Apple is rapidly transitioning to a consumer mobile devices company.

      1. I think the way to understand it is that having to maintain old systems or users who are reluctant to change, will constrain your ability to innovate. It’s very, very hard for complex systems to be new while at the same time being old.

        This is what makes a one-size-fits-all approach fundamentally problematic. Think about what strangled the classic Mac OS and prevented it from doing pre-emptive multi-tasking. It was something that could not be overcome by resources. It could only be overcome by killing some old APIs.

        The question for the Mac is, will the presence of the Mac constrain innovation in iOS? If so, then they will most likely kill the Mac.

        I don’t think its a marketing or resource allocation issue. I think it’s more of a technical issue. And from a technical point of view, I don’t see how the Mac will be problematic for iOS. Hence I see no reason to abandon it.

        1. “It’s very, very hard for complex systems to be new while at the same time being old.”…while shrinking them at the same time. Otherwise, it’s not that hard. Heck, even MS can add new features without throwing out the old. Even when they do cut out stuff (after decades), it’s only because it suits them and when no one will complain.

          1. And in mobile, that makes sense, to a point. Even there, tablet phones are bucking the trend to a certain degree. Shinking in other contexts makes no sense at all. I cite, most prominently, the thinning of the iMac. Same visual cross section, zero added value, huge impact on serviceability.

            In mobile as well…what if todays iPad were as thick as the original (which was no size monster)? It would still be elegant, but don’t you think battery life would be far better than what it is right now? Wouldn’t the improvements made from the original have benefited further?

            Edit: And that’s not even getting into the wastefulness in natural resources and money that comes with non-expandability.

        2. I think 2 saving graces for Apple is that there’s a lot less custom software for iOS/MacOS than for Windows, and Macs and iPhones are a lot less embroiled in complex Entreprise IT (networking, authentication, hardware, software…) schemes.
          Apple have trained their iOS devs to update their software frequently, and there aren’t that many MacOS devs to start with.
          Getting EA to release a new version of an iOS game is a piece of cake compared to getting a large Corp to roll out a brand new production control system with its attendant hardware interfaces, servers, clients, interfaces to other apps, all that networked, real-time, and fault-resilient.

          1. Yes, totally agree.

            The question as I see it is whether Apple will consciously try hard to keep the situation simple, or whether they will succumb to the pressure of a huge and maturing customer base.

            In my view, ever since NeXT effectively took over Apple, they have actively done the former. I think that everything that we are seeing has been a result of a conscious decision at Apple. Therefore, I expect nothing to change.

    2. To me, the “”it’s OK to screw some of our customers” part is a big damper on Apple’s Entreprise hopes. They’ve done just that in that segment already (dropped a commitment to maintain a line a servers), and Corps have long time horizons, need stability and backwards compatibility. It’s mirroring MS’s difficulties with Mobile in Consumer because they’re beholden to staid Corp on Desktops.

      I’m wondering at what point, even for an existing line, a brand new, incompatible, product line starts to make sense. Say, ARM-based laptops, desktops and servers, with an OS more iOS-like than MacOS-like. Bad example surely, because this is not a huge growth segment so probably not worth the trouble, but still, if the concept of a phone that can be docked and be used like a PC takes off…

      Also, Apple have a strong branding issue. Being luxury is nice, and working very well for them, but it means they can’t do anything non-luxury.

      1. Completely agree with your description of corporate needs. And I think in many ways, Apple is OK with that. They know what they are doing and I very much doubt that they will change in the near future.

        Regarding ARM based laptops, I think it would be more Apple-like if they were completely re-imagining a laptop. I’m hoping for a laptop without a hardware keyboard for example.

    3. Sorry, no time in the foreseeable future to listen to the referenced podcasts, so this will be a blind response.

      Having lived through all of the major transitions Apple has undertaken (68000-to-PowerPC, OS 9-to-OSX, PowerPC-to-Intel), I believe people’s fierce loyalty to Apple is a direct result of Apple’s historical unwillingness to piss off its customers.

      I’d go so far as to say that “bankruptcy” was avoided precisely BECAUSE Apple provided seamless transitions. Any other reading is revisionist nonsense (including the oft-repeated myth that Apple was 90 days away from bankruptcy, which is provably untrue –despite many myth-building Steve Jobs quotes to the contrary– Apple’s public filings throughout the mid 1990s showed $1 billion+ in the bank and assets 10-15 times that).

      So put me down as completely disagreeing with the premise that Apple changed after Jobs came back, that Apple somehow embraced a new outlook on legacy products. If anything, Jobs was even more careful to keep the Apple brand elevated and differentiated.

      And I am referring to Macs, not phones. Phones are disposable.

      1. I have no issue with your not having time to listen to the 6-hours-in-total series of podcasts. I do have issue if when you say that words that Steve Jobs himself uttered were “revisionist nonsense”. It makes me feel that any argument that I put forward to you may be a complete waste of time.

        The thing is, Apple made transitions. Whether you view them as seamless or not is your point of view. For me, OS 9 to OS X was not seamless in the very least. I actually briefly switched to Windows 2000 for a while in disgust at the slowness of 10.0 Cheetah (10.1 Puma was not much better).

        Microsoft Windows has never made a big transition. They still have 32-bit versions of Windows 8.1, for example.

        That’s the difference. Apple does transitions. Microsoft does not.

        1. “.. It makes me feel that any argument that I put forward to you may be a complete waste of time.” Yes, Steve Jobs was prone to hyperbole, exaggeration, and showmanship. Hard to believe!!! Gasp. But true.

          Since we’re wasting each other’s time, please explain which software titles were so important to you that you needed to switch from OSX 10.0 to Windows for speed?

          ‘Cuz my memory serves me very well and in those early days there wasn’t a single major (cross-platform) software title that required OSX. Not one. Every major title in 2001-to-2002 was available on OS9.

          OS9 was fully supported at that time, and every one of Apple’s Macs could boot into it. Furthermore, OS9 on a G4 tower was blazing fast and could beat any Wintel running Windows 2000. So why would Cheeta or Puma cause you to abandon the Mac platform?

          Why would anyone truly requiring speed opt to use the nascent OSX instead of sticking with OS9?

          I hate accusing anyone of being a poser, but your story doesn’t ring true.

          1. In the Cheetah and Puma days, it was clear that Mac OS X was the future of the Mac. Unless Apple could make applications run in a satisfactory manner on that new platform, Apple would not survive. That was absolutely clear.

            After years of development, Apple had not yet been able to do that. It was not clear and even starting to become doubtful that Apple would manage the transition to Mac OS X. In my opinion, it was Tiger was the version that finally made it clear that Apple had achieved what was necessary to remain a relevant platform.

            Going back to OS 9 for speed may have been a good idea to get some work done, but so was buying a Windows machine. However, the performance of OS 9 in those days had absolutely no relevance for the viability of the Mac.

          2. Revisionism is fun, isn’t it?

            ” Apple would not survive. That was absolutely clear.”


            It wasn’t absolutely clear.

          3. On the other side, Adobe enjoyed many professionals moving to Windows while dragging their feet on OS X.


          4. Large companies with firmly established niches and fiercely loyal customers do disappear in a puff of smoke

            Unless of course, you still think that Nokia, Quark are happily surviving in the markets that they used to command.

          5. Quark had fiercely loyal customers? Nokia had a niche in a larger market? Wow. Revisionism run amok.

            These companies have (had) almost nothing in common with Apple. Better analogies might be Harley Davidson, or DigiDesign (the creators of ProTools who were bought by Avid), or Gibson Guitars.

            What is the point of speculating what might have happened to Apple if it had been absorbed by Sun Microsystems (to pick one of the many possibilities that were floating around at the time)? It didn’t happen. And it’s irrelevant.

            My disagreement with your original post stands. Apple didn’t jettison its installed customer base when they purchased Next.

            If there was any major change in Apple’s attitude toward legacy products, it happened MUCH later, around the time it changed the name from Apple Computer to Apple, Inc. And that was long after Apple’s business fortunes had changed.

  4. OK at a very high level but lots of supposition based on dubious “facts”.
    First of all, conflating installed base of units with “users” is not very helpful. So much of windows is in large corporates vs. most of Apple’s base is consumer or small business. I would think that the number of real, differentiated, purchase decision-taking “users” counting corporates as 1 vs. many (since their decisioning and needs are determined centrally) would be much more even than you suggested.
    As others have mentioned, stability and backwards compatibility are much more highly valued in corporate than consumer markets (where innovation and features are much more important) so Apple should be far less constrained than MS. MS’ policy of one platform for all only makes things much worse for them while Apple’s 2 OS approach works much better for users.
    Apple’s “base” creative types were left in the margins years ago from a leadership position. They should be happy that Apple still creates Mac Pros and 5K iMacs for the minimal financial gain they produce. They have not constrained Apple in a decade, yet Apple still does a pretty fine job of supporting them along with their main user segment. Let’s face it, Apple built professional software to drive hardware sales when Adobe was threatening to pull Mac support. These days, there are strong alternatives for Aperture and FCP and a safe, stable platform. There is no news here.
    Apple still has a strongly defined niche, just a much larger demographic one than they ever had before. Middle class and above in almost every country in the world who can afford to buy into the Apple ecosystem. Pricing every major product at over $500 guarantees that. This is a pretty homogenous 500MM+ users across the globe. Those users noted above are an irrelevance to Apple. Their complaints are just much more visible to the technorati that visit these pages but no more relevant for that.

    Apple has built a new ecosystem that is about as valuable as all of Windows (from a profit POV) in just 7 years with vastly less baggage than MS whilst cherry picking most of the hardware profits in MS’s traditional PC business. While MS is digging itself in deeper to the quagmire with Win10 – one platform for everything/everyone, While I’m not trying to excuse the bugginess of Apple software, their biggest constraints are those of self-imposed innovation and delivery schedules… meaningful annual OS releases are not demanded by the market but Apple’s attempts to create competitive advantage.

  5. Too many large areas of intense colors on the home page. Less like a respected technical site and much closer to a cheap New York newspaper yelling for attention with headlines 6 inches high in bold font. I really wish you’d cut it out and go back to being nice.

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