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Why the Falling iPhone Loyalty Story Is Bogus

7/20/2019

 
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​CNET launched a bombshell article this week by Corinne Reichert citing data from a study that says iPhone loyalty is on the way down. But, she only reports half the story. Here is the crux of what she said.
​The company which lets you sell your used phone and upgrade to a new one, collected data from over 38,000 people trading in their phones since October through June to track Apple brand loyalty during the upgrade cycle. It found that 18.1% of iPhone owners were trading in their phone for a Samsung device in June, the highest level it's been in the study. 
 
Samsung loyalty was higher, BankMyCell said. Just 7.7% of Galaxy S9 users switched over to an iPhone and 92.3% remained on the Android operating system. In comparison, 26% of people trading in their iPhone X moving onto another brand. —Corinne Reichert, CNET 
 
The problem with this study is that it omits another very important data set. The other half is, what kind of phone are young people starting out with?
 
Piper Jaffray does an annual survey to see what phones young people want to get. They’ve found that the iPhone growth is almost unbelievable. A few years ago 60% of young people preferred iOS over Android. In October of 2018 the percentage has grown to 86%. It’s amazing how overwhelming young people desire Apple over Samsung or any other Android maker.
 
In its biannual "Taking Stock with Teens" survey, the investment bank notes 86 percent of teens surveyed said their next phone would be an iPhone. By contrast, a paltry 10 percent of teens said the intend to buy an Android device, according Business Insider.
 
The 86 percent figure represents the highest intent to buy Piper Jaffray has seen in its seasonal report. 
 
"Overall, we view the survey data as a sign that Apple's place as the dominant device brand among teens remains intact," Piper Jaffray analysts Michael Olson and Yung Kim said in the report.—Mikey Campbell, AppleInsider 10/22/18
 
Taken by themselves, both of these studies seem unbelievable. They don’t make any sense if you think about them very long. 
 
If Apple was truly losing 26% of their customers to Android, they’d be in panic mode. That would mean losing almost half of their business in 2 years. That’s obviously false.
 
On the flip side, if over 86% of teenagers want iPhones and not Android. Android would cease to exist in about 5 years as Apple scooped up all the new users. Android would be steadily losing market share in double-digit chunks. 
 
These two surveys are probably more accurate than not. But they go hand-in-hand. More teenagers than ever are starting out with the iPhone as their first phone. So unless the defection rate goes up, Android will cease to exist and iOS will inherit the Earth.
 
Less Android users are trading in their Android phones for iPhones because there are less new Android users still in the experimental stage. And more iPhone users are trading in their iPhones on Android phones because more and more new users start with iPhones. 
 
I’m amazed that no one seems to be connecting the dots on this data. It’s as plain as can be. CNET themselves reports on both the iPhone-Trade-In-Story and the Teenager Survey. At the very least, CNET should’ve put both trends in context with each other.

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    Robert Perez

    Manufacturing and distribution analysis since 1993.

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