The cost disparity between Android and iOS smartphones is greater than ever.
New figures from ABI Research published by The Wall Street Journal reveal that the difference in average price between Apple- and Google-powered devices has grown markedly over the past year. Twelve months ago, an off-contract iPhone sold for an average of $US600, and an off-contract Android device for around $US350; today, the iPhone is going for $US687, and Android devices for $US254.
The Journal’s Christopher Mims writes that the trend reflects “the world’s growing income inequality,” arguing that the “distribution of profits between these two markets mirrors the distribution of wealth between the buyers of these goods.”
It is also indicative of how Android increasingly cannot compete with Apple’s offerings at the higher end of the market. The larger design of the iPhone 6 and 6 Plus has allowed the devices to make unprecedented headway. In South Korea, for example, it is historically unheard of for a foreign smartphone manufacturer to achieve a market share of more than 20%. Apple is now at 33% and rising fast — and the profits of South Korean manufacturer Samsung are cratering as a result.
In short, the iPhone 6 is bad news for high-end Android manufacturers, and this data proves it.
It’s also going to harm higher-end app developers, as iOS remains the more profitable platform. Apple customers are richer, spend more on apps and in-app purchases, and the platform fetches higher advertising rates. As Android continues to skew towards a poorer customer base, those with high development costs may be put off.
Despite this, the trend can still be seen as a good thing for Google and low-end Android manufacturers. Western markets are approaching saturation point, with little room for expansion beyond increasing market share over successive product cycles. Developing markets across the world, in contrast, are a huge opportunity for growth.
Google’s Android already has a vast global smartphone userbase that Apple can’t hope to rival for years to come. More than 1 billion Android devices were shipped in 2014, five times more than Apple’s 192.7 million.
Apple’s iPhone may be a luxury product (and an incredible, profit-generating machine), but as the next 1 billion people come online in emerging markets, they won’t be looking for a luxury smartphone. They will be looking for an affordable device that fits their needs. (And let’s be serious: There’s very little an iPhone can do that an Android smartphone can’t.)
Instead, it’s companies like Xiaomi that stand to benefit massively. It’s referred to as the “Apple of China,” but as the Wall Street Journal figures show, its phones actually retail for less than the average Android device — $US220 to $US254. But the broader low-end Android ecosystem, not just Xiaomi, stands to benefit, as the disparity between their offerings and Apple’s huge pricetag becomes clearer than ever.
With this shift in demographic, Google is at increased risk from forks, versions of Android developed independently of the company. But for now, they remain firmly in the minority. As it stands, there’s a whole new front in the smartphone wars opening up, and Google is almost totally unchallenged.
Of course, Apple recognises the possibilities of developing countries too. But it’s more concerned with profits than market share, even as it expands aggressively in the higher end of the market of countries like China. (Senior VP of retail Angela Ahrendts said that “China is a huge and important market for every global company today.”)