A new study has highlighted 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 US$295 billion 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 US$1,053 to Apple.
That figure is based on the assumption that the average iOS device for the June quarter is sold at US$535 with five percent erosion, gross margin is 45 percent and annual defections are five per cent.
“This implies a cumulative iOS customer value of nearly US$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 last week.
Through his survey, Shope found that 71 percent of the iOS device owners polled said it is highly likely that their next smartphone or tablet will be an Apple device. Only one percent 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 percent of the Apple device owners said that no discount would make it worthwhile. A discount of 21-30 percent was the most popular choice, with 23 percent claiming that they would consider platform switching with a price discount within that range.
Overall, 61 percent of the participants said that it would take a discount of 30 percent or more to get them to choose a non-Apple mobile device.
Shope’s research found that 30 percent 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 US$122 and US$301 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.