Apple’s quest for massive market share

Posted on April 9, 2010 by Ian Betteridge

John Gruber has an excellent post up on Apple’s apparent-restriction of cross-platform development tools on the iPhone. I largely agree with him – from Apple’s perspective this makes perfect sense, although it puts a massive spanner in the works for magazine publisers, who love Flash like a brother.

But there’s one point that I disagree with John on, and it’s this:

“I don’t think Apple even dreams of a Windows-like share of the mobile market. Microsoft’s mantra was and remains ‘Windows everywhere’. Apple doesn’t want everywhere, they just want everywhere good.”

I think this is wrong: I’m certain that Apple would love, and intends to get, a massive market share for the iPhone.

Why? Because it has already tasted the fruits of massive, dominant market share with the iPod – and it’s seen exactly how much that can do for a company’s fortunes.

Why wouldn’t it want to repeat the trick with the iPhone? The phone, after all, is as ubiquitous as personal music players. And the margins, at least at the moment, are better. If you think Apple is profitable now, imagine how profitable it would be if it sold 60% of every phone in the world.

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  • smithsocksimon

    I think it depends on how you define the market. I agree with you that Apple wants as big a share as possible of the smartphone market. But of the wider mobile market — no, leave that to Nokia et al.

  • Ian Betteridge

    The thing is, though, that “wider” mobile market will ultimately go away, as every phone becomes a smartphone.

    Compare the situation to the iPod. At first, Apple launched a premium product and left the low-end to everyone else (Creative, et al). Gradually, it expanded its range and pushed down, and basically ate everyone else’s lunch. Now, iPods are everywhere, in every market, and “MP3 player” is synonymous with iPod.

    Why wouldn’t it repeat the trick with iPhone? Because phones are a more established market than MP3 players were, it will take longer – but it makes absolute sense to do so. Not now, not this year, probably, but I’d expect the range of iPhones to expand at some point in 2011.

  • http://www.adambanks.com adambanksdotcom

    Remember a lot of mobile phones (unit-wise, if not profit-wise) are in third world, extra urban China etc – these won’t all be smartphones in the foreseeable future. And this is where most of the new customers are. And I don’t believe Apple will ever manufacture a phone you can drop.

    So I agree with smithsocksimon that it’s two markets, of which Apple wants one. But I agree with you that Gruber underestimates Steve’s megalomania.

  • Ian Betteridge

    Yes, it’s a different existing market situation to iPod, but that’s why it’s a longer game.

    It basically took Apple, what, four years to go from one hugely expensive iPod to the shuffle/nano (which were squarely in the cheap Creative rubbish market). In fact, it was three years before they moved from a single model to two models.

    I think you can double that timescale for iPhone.

  • http://www.sulka.net/ Sulka Haro

    “Remember a lot of mobile phones (unit-wise, if not profit-wise) are in third world, extra urban China etc – these won’t all be smartphones in the foreseeable future.”

    This sounds very much like the “640k ought to be enough for everyone”. I personally think it’s going to be exactly the opposite with the smartphone penetration. If there was a cheap iPad available, why wouldn’t that compete directly against getting a computer if you have no history of using computers in the first place?

    The interesting potential angle of discussion here is Cory’s argument of tinkering. I can see value in tinkering with computers in case of the poorest areas of the world – there’s tremendous value in being able to create computers from spare parts in a part of the world where you can’t walk into a store to buy a new one.

  • http://www.marybranscombe.com Mary Branscombe

    all the figures say featurephones die in favour of smartphones, or at least smartphone OS possibly powering featurephones. operators are still praying they can support fewer phone platforms. But I wonder how much data costs in developing countries will slow that down; yes phones are common in the poorest countries but with prepay and topup. you can do that with smartphones – there’s a prepay blackberry – but the usage cost has to fall worldwide too.

    Apple wants all the *profitable* market it can get.

  • RichardL

    Gruber’s wrong in his assessment that this paranoid move has no impact on developers or customers. Gruber argues that good developers have nothing to fear, but that’s not true. Profitability on the App Store is elusive without Apple’s help. Developers should be allowed to take their code wherever they choose. Adobe, Unity, Titanium et al are trying to provide options to give developers and content publishers options to extend their reach and reduce their development costs. Developers shouldn’t be required to sign the equivalent of a loyalty oath and give Apple an exclusive option on their inventions just to develop on the platform.

    Plus Gruber’s all wet about the inherent inferiority of any app that uses middleware. That’s just a rationalization by an Apple apologist. And if middleware does lead to some inferior apps, it’s not as if Apple does not already have a mechanism to filter out apps which don’t meet certain arbitrary standards for quality.

    This is just a power play. Developers and middleware producers suffer the consequences. There are consequences.