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Apple is arguably the most dominant company in the mobile market today, but its dominance doesn't depend on market share. Indeed, America's most valuable company doesn't dominate mobile market share, but it does reap the majority of the profit.

That's obviously not what Apple's competitors want to hear, but it gets worse: Apple is far, far better at keeping its customers, and will increasingly have the opportunity to poach theirs.

That's according to a survey conducted by UBS Investment Research which found that once its customers buy an iPhone, relatively few switch away when they buy their next device.

In a survey of 515 higher-end consumers, 89% of current iPhone owners indicated that they plan to stick with the iPhone when it comes time to buy a new smartphone. The next closest manufacturer, HTC, had a retention rate of just 39%. Coming in third, fourth and fifth were RIMM, Samsung and Motorola, with retention rates of 33%, 28% and 25%, respectively.

The significant gap between Apple's retention rate and the retention rates of its competitors should obviously be of concern to Apple's competitors. But there's even more reason to worry. That's because more than 50% of those UBS surveyed who said they'd be switching brands indicated that they'd be buying an iPhone. In other words, if Apple is formidable now, it looks like it's only going to be getting stronger going forward, adding an urgent call to action for the company's competitors: keep your customers, lest Apple acquire and keep them.

Beyond the mobile space, UBS's survey highlights an important point for all businesses: retention is just as important as acquisition. If you can sell and retain, as Apple can, you'll increasingly have the opportunity to sell to customers who didn't pick you the first time around.

Patricio Robles

Published 23 September, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Pete Austin @MarketingXD

There's a fundamental flaw in this analysis. The headline figure does not mean what it seems to.

The important numbers are the retention rates for the ecosystems, Android and iOS. Let's suppose these are both the same, say 89%.

This means that iPhone will have a retention rate of the 89% too - because if you want iOS then you have to buy iPhone.

But any given Android maker, e.g. Samsung, will have a much lower retention rate because their Android customers can also go elsewhere for their next Android phone.

That's the downside, but it doesn't matter.

The upside is that, just as Samsung has a low barrier to losing customers to other Android vendors, it has an equally low barrier to gaining Android customers from those other vendors. On average, these two factors will cancel out.

If Samsung's phones are averagely good, it would get just as many repeat Android customers (89%) as Apple gets repeat iOS customers.

almost 5 years ago

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Angelina Foster

Interesting report, I'm an apple iPhone user and still have the first 3g one that was released. I am hoping to upgrade to an iPhone 5 when it gets to the UK... which surprises me when I think about it... as I haven't even seen the phone yet!

almost 5 years ago

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Matthew Read

It's all about brand for Apple and the iPhone, as Angelina mentions, people already want the new iPhone before they even see the reviews, functionality or new features.

The fact is, HTC and Windows Mobile could be better but Apple's brand is so strong in mobile at the moment that people will stick with them no matter what!

p.s. I love my iPhone!

almost 5 years ago

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SEO marketing

Yes Mathew is right it's all about brand. All iPhone users are very excited for iPhone5 release (me too). Apple is very tough competitor in market.
Thanks

almost 5 years ago

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Robert Green

Saying it is all about brand is like saying people drink coke because of the brand - well yes, but the brand is built on the experience of the product and to an extent the service. People want on iPhone 5 without having seeing it because of their experience of previous generation Apple products and it's not as simple as saying 'it's the brand'

HTC, Samsung et al could do better - but only by building a solid or better product repeatedly, and the Android experience being just right - and of course that is a very difficult task if you are not in control of all the elements.

almost 5 years ago

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Mehdi

I am not suprised by the fact everyone holds on to their iphones. they are lovely to behold and apple's service is excellent.

Unfortunately they don't ever seem willing to allow some basic features, which infuriates me. Such as allow flash or have expandable memory. not to mention how much I dislike itunes.

It just shows that people are more influenced by style and fitting in with the crowd. Rather than functionality.

almost 5 years ago

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Steven Mikellides

Apple has an incredibly strong brand image, and through the brand alone they will retain customers whilst also pulling in new customers. Apple has built their brand over a number of years, and having reached the top of the mobile phone market I feel they will stay there for a while, on brand image alone, even with the reportedly better, latest Samsung Galaxy addition. Samsung just dont have the power to overhaul Apple currently, nor does HTC, and Blackberry, unfortunately are currently fading away it would seem.

almost 5 years ago

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Matthew Read

Robert Green I disagree, I know people who prefer Pepsi to Coke but if we go to a restaurant they automatically ask for Coke, because of the brand.

Also, I know plenty of people who bought an iPhone, having never used one before, just because it was Apple and then actually preferred the functionality of a HTC when they tried one of those instead.

almost 5 years ago

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Richard Sewell

It's not hugely surprising that iPhone users are loyal..
For one its a great phone(s) and track record sets out the next iteration while not groundbreaking will be at least acceptable.
They were first to market with a 'really' usable touch screen they grabbed a market that are not typically technical, more susceptible to brand/style over substance (not to say the substance they get is bad)
Apple from early on had usability and a well supported platform. So is a slightly less usable OS and less supported (for now) going to tempt them away, especially if they are not interested in the power user features that are added in other os's.
Interestingly the card apple choose not to hold is device support compared to WP and Android’s multi vendor devices. They run a yearly refresh which baffles how it can work as hardware wise they are generally down at launch in comparison with other manufacturers, Maybe the clientele don’t care for performance as long as its not slow!? This is also true for the iPad if not more so.

With a figure I've heard that 65% of phones in use are not 'smart' leaves a massive area for growth and with the htc and samsungs throwing new models out the door at lower and lower prices they look sure increase their share over apple. It's just a case if market share can change general opinion and force a representative support shift to reverse the itunes preference many devs have.....and to be honest if this will even lead to apple esq profits

Of course this doesn't take into account apple taking their patents to war and having competitors pull their devices from the shelves. Apparently being better than your competitors isn’t enough anymore.

almost 5 years ago

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