War for Market Share vs. War for Profits

Business Insider’s Dan Frommer published an interesting article this morning titled “Why the iPhone’s market share war with Android actually matters.” In his piece, Frommer is spot on when he explains that gaining market share is important because this is what will build the dominant mobile platform for the next decade.

Historically, Apple never cared much about market share. Sure, it’s happy when it’s gaining slices of a market, but Apple is all about profitability and brand value. When Google makes $10/year from each Android user, Apple makes about $300 per iPhone sold. At this rate, it’s not surprising that even though Apple may have a small share of the smartphone market, it’s still owning about 50% of the entire industry’s profits

Like Frommer says, this market share war is more important than ever because it will determine who will be the winning platform and ecosystem for the next decade or so:

And a big part of that is getting that platform into as many hands as possible, teaching the world how to use it, and building an addictive experience around it that people can’t easily switch away from. And it’s harder to dominate when you are being outsold 3-to-1.

Android is outselling iOS right now, but Google is doing anything but creating a compelling and addictive product. There is no “Android experience” because all Android devices are so different from each other. Maybe even more importantly, there is no brand loyalty because Samsung, HTC, Motorola, etc. aren’t very sexy companies, and they all fight each other in the same space.

I am not saying this to bring these companies down, but you can only admit that the brand value, or brand recognition of these companies doesn’t compare to Apple’s. People love brands that create emotions. Emotions sell. HTC doesn’t create any emotions. They just create products.

There will not be a winner in the mobile platform war. Instead, there will always be several competitors, with Apple and Google ahead of everyone else, at least for the next few years.

Apple may not sell the most devices, but with a combination of branding, outstanding products, customer service, and an integrated ecosystem, they’re setting themselves up for some profitable years ahead. And at the end of the day, that’s all that really matters.