iPhone and iPad users ‘worth $1,000’ to Apple


Apple customers are highly loyal, with just one in 5 (21%) of iOS device owners saying they wouldn’t switch platforms, even if offered huge discounts, according to a new study. The study, from Goldman Sachs, highlights the loyalty of iPad and iPhone users, who are so unlikely to switch from Apple’s iOS to another platform that an analyst believes they are worth almost $295billion (£188billion) cumulatively, which is more than half of Apple’s current market cap.


Apple Insider reports that Goldman Sachs analyst Bill Shope has conducted consumer survey of more than 1,000 Apple device owners, and has reached the conclusion that the average single iOS customer is worth $1,053 (£672) to Apple.

That figure is based on the assumption that the average iOS device for the June quarter is sold at $535 with 5 per cent erosion, gross margin is 45 per cent and annual defections are 5 per cent.


“This implies a cumulative iOS customer value of nearly $295 billion on today’s installed base, without any consideration for the content services or peripherals streams, or for the platform’s growth potential,” Shope wrote in a note to investors on Friday.

Through his survey, Shope found that 71 per cent of the iOS device owners polled said it is highly likely that their next smartphone or tablet will be an Apple device. Only one per cent said that it was “unlikely” that they would choose Apple again.

When asked whether a discount would convince them to switch to another platform, 21 per cent of the Apple device owners said that no discount would make it worthwhile. A discount of 21-30 per cent was the most popular choice, with 23 per cent claiming that they would consider platform switching with a price discount within that range.

Overall, 61 per cent of the participants said that it would take a discount of 30 per cent or more to get them to choose a non-Apple mobile device.

Shope’s research found that 30 per cent of his poll’s participants are paying for extra storage capacity in iCloud or iTunes Match, services that could add switching costs for customers with more than one device.

“Considering that Apple has disclosed that it has 120 million iCloud users as on its earnings release on April 24, this is quickly becoming yet another high-margin revenue stream for the company,” wrote Shope. “More important, however, this also suggests that a large portion of Apple’s installed base is adding yet another source of explicit switching costs.”

Overall, Shope’s survey has led him to estimate that it costs iOS users between $122 and $301 (£78 - £192) to switch to a different mobile platform, implying that it would take a discount of almost half price in order to make a switch inexpensive.

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