Tuesday, 17 April 2012

Does Apple condemn itself to second place in the smartphone race?

March’s analysis of ‘the future of mobile’, from the enterprising Henry Blodget of Business Insider, paints a picture of smartphone operating systems rapidly outstripping all other software platforms, and of iOS growing more strongly than Android. But today’s reports from Kantar Worldpanel Comtech (What a mouthful! And what a web site!) suggest that iOS is heading for second place in the smartphone Olympics.
There’s good reason for that.
Despite the technical strength and impeccable marketing of Apple’s offering, its market positioning ensures that it can never become the dominant brand in terms of volume of sales.
For Apple’s marketing strategy appears to be based on the good old-fashioned vices of pride and envy. We buy Apple products not because they work a little better than the cheaper alternatives, but because we wish to have the best product that money can buy, and to be seen to have it. Highly expensive and highly visible portable devices from an elite design house like Apple fit the bill ideally.
It is a testament to Apple’s marketing that it has captured nearly 30% of the UK handset market, even though the price of an iPhone4S in the Apple Store today is ‘from £499’. In 2011, the UK median hourly wage was £12.56; so the price of an iPhone4S represents more than thirty-nine hours of labour for most of us.
But I reckon that Apple will be unable to increase its market penetration much beyond its present position. That’s because of the social dynamics of envy and pride. If Apple products became so affordable that most people could have them, they’d immediately lose their cachet of exclusivity, and Apple’s sales would fall back to whatever level their products’ undoubted excellence merits.

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