If Apple manages to slow down its market share loss over the next two years it will be difficult for other players to challenge its supremacy for a long time after.
These findings are taken from our new Smartphone App Market Monitor Vol. 2.
When Apple launched its app store the market for smartphone apps already existed, but on a very low level. Independent stores like GetJar and Handango were the place to go to if you wanted to download a mobile application. With the introduction of the Apple App Store, Apple reinvented the app market and immediately managed to gain 81% of market share in 2008. (Note: The market share is being measured by the number of free and paid downloads an app store generates per period)
In 2009 and 2010 competitive offerings from other OEMs, OS vendors and MNOs increased. In only two years the number of app stores jumped from 18 (2008) to 57 (2010), by 217% in two years. Amongst those rival app stores the Android Market turned out to become the strongest competitor, but the mass of smaller app stores also helped to eat up some of the market share from the market leader. As a consequence Apple’s app platform lost some of its dominant market position. In two years Apple’s market share dropped by 24 percent points to 57% (2nd HY/2010).
The first quarter of 2011 showed a kind of stabilization, as Apple’s market share stopped its down turn and even increased by 2 percent points to 59% (Q1/2011). One of the reasons for this recent development is the download support the Apple platform gets from iPad users. iPad users belong to the “heavy downloader” user segment. This support will remain as long as the other app store operators fail to come up with a competitive app store offering which addresses the tablet app users, and non-iOS based tablet shipment numbers are low.
Despite the market share drop over the last two years Apple still defended its position very well against software giants like Google and Microsoft, and all those global MNOs with their existing millions of subscribers and billing relations.
Next two years are critical
If Apple manages to slow down its market share loss over the next two years it will be difficult for other players to overtake Apple for a long time. There are two main effects that narrow down the time for competitors to catch up.
- Mass market effect: Smartphone penetration will reach 50% in most of the developed countries by 2014/2015. The more smartphones become a mass market phenomena the less app downloads a new user will add.
- Lock-in effect of downloaded apps: The more apps a smartphone user has downloaded and the more money he has spent on those apps, the less likely it is for him to switch his mobile platform and, in the case of Apple, to put aside his iPhone, iPod Touch or iPad.
Even though Apple’s competitors might be able to push Apple’s market share down to less than 40% by 2015 (assuming same market share drop as within the last two years), Apple will still keep the “heavy-downloaders” from the early days for a long time.
We invite you to comment and tell us your thoughts on Apple’s future market position.
Find more of the most current market analysis on the smartphone app market in our new update of “Smartphone App Market Monitor Vol. 2”.