Apple's iPhone Battle Plan: 6 Factors

Apple's forthcoming iPhone 5S, iPhone 5C and iOS 7 could help the company win back some of the market share it has lost to Android devices.
3. Owning the premium markets means having the customers who are best educated, wealthiest and most likely to buy accessories.

Premium device sales produce immediate benefits in the form of increased profit margins, but they also engender a number of recurring benefits.

CIRP's data suggests Apple users are more educated and affluent than Android users, for example. The firm notes these users are more likely to buy accessories, and that Apple has more users between the ages of 18 and 34, which is widely considered by advertisers to be the demographic that drives taste. As Forrester's David Johnson told InformationWeek in a recent interview, Apple still has the customers that everyone else wants.

CIRP also found that iPhone users upgrade devices more regularly than most other mobile phone users, although some high-end Android OEMs, such as Samsung, have also fared well in this area.

4. Premium customers attract premium developers.

Despite Android's massive advantage in global market share, surveys regularly show that iOS is still developers' biggest priority. Why? Some of the imbalance has to do with logistics -- Android is much more fragmented than iOS, which often forces Android developers to rewrite their apps for various OS versions and device types. Developing for iOS, thanks to Apple's stricter control, is often simpler.

But here's a bigger reason: Apple's customers are the ones spending money. A billion users don't mean much if they only download free apps. This explains why only 60% of the top 50 iOS apps are also available on Android.

Android's profile among app makers has increased over the last year, and at some point, the platform's superior volume could overwhelm whatever loyalty Apple enjoys from more affluent users. But that will only happen if Apple continues to lose ground. If the new iPhones and iOS 7 help Apple reclaim lost territory, its privileged status among developers will only become more ingrained.

5. Apple's problem: Most of the opportunity for growth is in low-end devices.

Here's the problem for Apple: Even if the company continues to hold down the premium market, all of the potential growth at the moment is in emerging markets, where first-time buyers gravitate toward cheap smartphones, and where many of the most experienced smartphone upgraders are already using Android.

Both the iPhone 5C and Apple's reported plan for a gold-colored iPhone 5S seek to blunt this trend by targeting the biggest growth market of them all: China.

Some have speculated the gold casing is aimed squarely at the Chinese market, where evidence suggests high-end smartphone shoppers associate the color with prosperity. It remains to be seen if this tactic will work, but there's also evidence that China will be receptive to the iPhone 5C. According to a study by Morgan Stanley and AlphaWise, Chinese customers might be willing to pay more for the device than Apple intends to charge. Given China's population and status in the smartphone universe, Apple can meaningfully improve its global market share by growing within this country.

6. Apple could still be its own worst enemy.

As the preceding attests, Apple has a lot working in its favor. One big variable that could stall the company's progress? Arrogance. Once-upon-a-time smartphone leaders such as Nokia and BlackBerry demonstrate how quickly a dominant player can fall.

On the hardware front, Apple seems content that new budget models and a modestly upgraded flagship will sustain sales over at least the next year. The company also seems content that iOS 7 will satisfy many users' hunger for new features. If the update is well-received, then Apple might be right. But if users perceive iOS 7 as a superficial overhaul that's more about looks than functionality, other smartphone platforms could have a chance to capitalize.

Android and Windows Phone 8 phablets are expected throughout the fall. Apple doesn't even compete in this space, and so far it hasn't needed to. But if iOS 7 and the new iPhones seem stale, Apple -- after setting the standard for several years -- could find itself playing catch-up.

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