Tuesday, January 29, 2013

Apple vs. Samsung, and what nobody gets (it seems)

First off, it's not a battle between Apple and Android anymore. It never really was. Android phones, for the most part, have replaced the old "free with contract" Nokia feature phones and Motorola RAZRs that used to be the standard "I just want a phone" phones. They don't buy apps on them. They barely use the Internet. They don't do e-mail, though they are heavy text users and might even use Facebook on the phones. And that's why virtually none of the Android or other OS phone vendors are even profitable. They play to a low-profit market and don't make any money off the apps sold (partly because there are very few apps sold).

Samsung, on the other hand, has in fact found a niche as the "un-Apple". They are selling a wide array of phones and devices, in every form factor imaginable (from tiny phones to "phablets"), to every carrier, and with their own skin on top of Android to "Samsung-ize" the experience. Apple sells 3 phones - the current iPhone and the last two models before it. Samsung sells dozens.

Here's where it gets kinda interesting. Apple's sales are all cumulative (because the iOS ecosystem generally locks people in), but the upgrade process is typically a lot tougher on Android phones - including Samsung's. That's important. When you are ready for a new phone in the Android world, there isn't much difference between buying your next phone from Samsung, Motorola, LG, or, for that matter, Apple. But when you are ready to replace your iPhone, it's really easy to replace it with another Apple. Not so easy to move away if you've bought any apps.

Customer loyalty. That's still the key advantage Apple retains in the cellphone market, and it's why they still generate most of the profits. Keep that in mind when comparing companies and ecosystems.