updated 10:02 pm EDT, Wed March 13, 2013
Cites higher satisfaction figures, questions 'shipments' mentality
In a rare interview, Apple Senior VP of Worldwide Marketing Phil Schiller revealed research from Apple that showed that customers switch to the iPhone from Android at about four times the rate they go the other way. He also pointed out the problem that platform fragmentation in Android -- where the vast majority of users are running very outdated and insecure versions of the OS, and cannot upgrade without buying a new device -- and the overall poorer user experience, on the eve of Samsung's introduction of the Galaxy S4 smartphone.
The Samsung Galaxy phones have been widely acknowledged to be a legitimate competitor to Apple's iPhone 5, and has been duly rewarded for that by becoming the most popular non-iOS brand of smartphone. However, Samsung's sales in North America -- the largest market for smartphones outside China -- have recently suffered as buyers withdraw, waiting for the forthcoming new flagship, the S4.
Schiller pointed out -- in a move seen as "defensive" by the recently-down-on-Apple Wall Street Journal -- that real-world usage shows the iOS platform to be very healthy, questioning the reliance of publications and the industry to rely on "shipments" rather than end-user sales to determine "marketshare." He added that although Android units in total do indeed outsell the iPhone line, "Android is often given [out as] a free replacement for a feature phone," a factor that would also help explain the enormous disparity between "shipment" numbers and "usage" numbers, that often paint Android users as not engaging with any of the smartphone services their units offer -- including things like surfing the web, watching videos or online shopping.
Schiller promoted the iPhone as a better experience for users due to its hardware and software integration, pointing out that "when you take an Android device out of the box, you have to sign up [for] nine accounts with different vendors to get the experience iOS comes with," saying flatly that "the experience isn't as good as an iPhone" and that the disconnect between hardware manufacturers, carrier software (often forced on users, along with customized themes and limitations) and service providers "don't work seamlessly together."
He also assailed the importance of market-share figures generally. As someone with rare access to exact sales figures from carriers and his own company, Schiller said he wasn't sure that the "estimates and the modeling" of sales divined from shipment data -- since no other company apart from Apple actually gives out end-user sales figures -- "gives an accurate picture of it all." Apple's ability to dominate revenues in the global smartphone industry -- it currently gets about 70 percent of all income from smartphone sales -- would seem to support Schiller's view.
Apple's stock has declined precipitously over recent months over concerns about increased competition, speculator-planted stories that turned out to be untrue, and genuine impatience among investors who await the company's next market-changing innovative new product like a child at Christmas. Both the iPhone 5 and the fourth-generation iPad, while well-received, were seen as relatively minor updates rather than complete overhauls or reinventions. It will be interesting to see if the Samsung Galaxy S4 -- which appears to be a minor "spec bump" and refinement of the Galaxy S III -- will be met with the same indifference.
Apple's notorious secrecy about new products and release timeframes may also be hurting the company in Wall Street's view. The arrival window of the Galaxy S4 was widely known by February, giving investors time to work out strategy for capitalizing on the company's fortunes. Its debut next week will likely put increased pressure on Apple to bring out a newer model of iPhone before the first-year anniversary of the iPhone 5, which debuted last October.
Finally, Schiller commented on the trend among other phone makers to keep increasing the size of the display to sometimes-impractical levels. Despite conventional wisdom that the rise of large-screen "phablets" was to appeal to customers who could not afford both a genuine smartphone and a tablet, Schiller said he felt the bigger screens were a reaction to the iPhone 5's light weight and better battery life. "The reason that people are making their devices bigger is to get up to the battery life the iPhone 5 offers," he said.