Today marks 5 years since the launch of the iPhone, and of course some figures related to the way Apple's device has evolved over time had to be presented. Goldman Sachs I am discussing today the value of each owner of an iDevice, but also the value of the entire ecosystem of iDevice owners. Those from Sachs say that at the moment there are 281 million iDevices in use, and for Apple an iDevice owner is worth, on average, approximately $1053. Multiplying the 281 million iDevices by the value calculated for each individual owner, it turns out that the entire ecosystem of iDevices is worth 295 billion dollars to Apple. The figure represents half of the company's market capitalization and is higher than the market capitalization of Microsoft, Google or IBM.
- iOS users have a loyal bunch. 94% are likely or highly likely to stick with Apple for their next smartphone or tablet. More than one in five said there isn't a discount high enough to persuade them to switch.
- It costs a lot to switch. The explicit switching cost (to replace music, apps, etc.) comes to an average of $122 to $301 per device. The implicit switching costs (the "pain in the neck factor," losing Apple's better-than-average customer service, etc.) make the platform even stickier.
- Installed base matters. Shope estimates that by Saturday (when Apple's third fiscal quarter ends), the installed base of iOS units will exceed 281 million, up 72% from the same quarter last year. Using a blended average selling price reduced by Apple's gross margin, platform erosion, etc., he calculates that the lifetime value to Apple of each iOS customer is $1,053.
- Apple's greatest value is its customer base. Multiplying 281 million by $1,053, Shope gets a value for Apple's installed base of roughly $295 billion. That's about 55% of Apple's current market capitalization. And that, he adds, "is before taking into consideration Apple's $110 billion cash balance, the rapid growth of the installed base, the value of the Macintosh and traditional iPod businesses, and the related content, services and peripherals streams."
The most interesting part, however, lies in the fact that iDevice owners do not plan to leave Apple's platform any time soon. In a study done by Sachs in the USA, 94% of the respondents say that the future smartphone or the future tablet will also be purchased from Apple and that there is no good enough promotion to convince them to switch to another platform. Moreover, it was calculated that a user would have to spend between $122 - $301 to replace music, applications, movies and all content purchased from iTunes, so they have an extra reason to stay with Apple.
Basically, Apple has some of the most loyal and valuable customers, now it remains to be seen if it will know how to keep and increase them.
