Weekly Stat: Top Brands Fueling iPhone Gains

Last week, we completed our fall smartphone market study and came away with a pretty clear picture of the market and confidence outlook for the next year. You can read the top level results at our company blog here.

One of the things that has been top of mind the past few years has been the dramatic increase in customers leaving competing brands and ecosystems for the iPhone. Years ago, a colleague named Carl Howe, who was then an analyst at the Yankee Group, put forth the theory of “The Android Leaky Bucket”. Carl’s position was Android’s ecosystem was less sticky than iOS. Consumers who owned Android devices tended to shop with more of a focus on hardware capabilities than any specific pull of the Android OS when they looked for new devices. His conviction was loyalty in the Android ecosystem was far weaker than loyalty to iOS.

I agreed with Carl then and I still agree with him today. His theory has played out and we have been able to track and quantify it for the past few years. Since the iPhone 6/6 Plus cycle, the leak in the Android bucket got a little larger and is leaking faster than before. We also noted a significant correlation of length of smartphone ownership to the likelihood of switching to iPhone, which I point out in our findings. Our interpretation of that point is, the longer consumers have owned a smartphone, the more refined their interests become. At that point, the iPhone, combined with the proven lack of loyalty to Android, begins to become more attractive.

When looking at the iPhone as a continued long play for Apple, I’m convinced this way of understanding the story (over time, as consumers value basis refines and matures, the iPhone becomes more attractive) is a key way to look at Apple’s prospects to grow their base. This is a patient game Apple is playing and they are waiting for customers to come to them, which, while appearing to be contrary to popular wisdom, is exactly what is happening in many markets.

We dug into the catalysts for switching brands and ecosystem quite a bit in our study but I wanted to share the top brands consumers are firing in order to hire the iPhone. We architected a series of questions that allow us to look at brand switching by year but, at a high level since 2007, these are the top brands consumers said they left behind to buy an iPhone.

It is quite interesting how the corporate factor worked so well for Apple with iPhones when it did not work out well originally with PC hardware. As the market moved away from Blackberry, Apple benefitted the most. Gains coming from Samsung were predictable but also a much smaller part of the yearly switcher pie as Samsung’s brand loyalty and re-purchase intent remains the highest of all other brands. This has only changed slightly since the Note 7 incidents and we do not expect dramatic defections from Samsung to iPhone any more than is usual per the brand switching rates we currently see.

While I can isolate brand switching data by year, this chart paints a picture of the brands consumers have left to jump into Apple’s ecosystem since 2007. One quite fascinating point is the top write-in answer for “other” was Verizon Droid. Lots of consumers got their first smartphones around the Verizon Droid timeframe and, while at the time it was viewed as negative for Apple, the data suggests this actually helped Apple in the long run as those customers onboarded with Android but, over time, a good chunk of them switched to the iPhone.

Overall, from the depth of market data we acquired from US and UK consumers, we stil believe there are gains ahead for Apple. The Android Leaky Bucket theory remains intact and we are observing points of time in the year when the leak is slow and times when it is faster.