Apple Is Ceding The Ecosystem Battle To Google

Jan 28 2014, 12:00pm CST | by

We now know that Apple mispriced the iPhone 5c badly. Even though this was the first Christmas quarter ever when Apple had two new models ramping up, Apple missed the iPhone volume expectations by 6-7 M units. After earnings misses from Samsung, LG, Nokia, HTC and others, it is clear that the overall smartphone market is suffering from growth deceleration. But Apple is suffering from a very specific problem – it is maintaining such high price levels for its models that it is losing smartphone share heavily in the most important markets of the world.

Asia is in the process of pulling far ahead of other regions when it comes to app downloads and app revenue generation. According to App Annie, Japan became a bigger app market than USA last October. According to a new Distimo survey, Asia generated 41% of the world’s app revenue in December, with North America at 31%. And the revenue gap is expanding at an explosive rate – Asia is delivering 163% annualized app revenue growth, with North America lagging far behind at 46%.

And this is why Apple’s sudden sluggishness in Asia is so alarming. Apple did deliver 29% sales growth in Greater China and 11% in Japan – but its revenue declined at a truly scary, -9% pace in Asia Pacific. The cheap Android devices are triumphing in key growth markets like India, Malaysia, Indonesia and Philippines. Android is already the king in South Korea, of course. Apple’s -1% revenue decline in Americas signals deep trouble in Brazil.

Apple wants to keep focus on China, where it is delivering robust growth – but the long-term threat for the company is that Google may be able to leverage hot growth in Latin America, Africa, Middle East and Asia Pacific to undermine Apple’s once so absolute dominance of the global app revenue generation. Strength in China alone cannot keep Apple in control. Unless Apple finds a way to fight Google’s budget models in emerging markets, the app industry will start favoring Google Play, perhaps sooner than most people realize. Many developers are already starting to rethink the old “First iOS, then Google Play after 6-12 months” playbook. Apple’s tepid, 5%, revenue growth in Europe reflects the strong gains Android vendors are making particularly in Mediterranean markets like Spain, Italy and France.

Of course, many emerging markets are far behind USA and Europe in revenue per app user. But the consumption is growing at breakneck speed and Google also has substantial bases in affluent markets like Germany, South Korea and Japan. Apple’s average sales price (ASP) performance for iPhone was dazzling during the Christmas quarter. But that triumph was gained at the expense of unit volume growth, which fizzled to 7%. Clinging to the luxury niche is a dangerous game to play when the future of the hugely important app market is at stake.

Source: Forbes Apple

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Apple Pay being Released with iOS 8.1
Apple Pay being Released with iOS 8.1
The service of Apple Pay has been launched with the introduction of the iOS upgrade
 
 
Apple On Track To Sell 62 Million iPhones
Apple On Track To Sell 62 Million iPhones
Analysts say that growth will set new records this quarter
 
 
Apple’s Earnings Coming From In-App Purchases
Apple’s Earnings Coming From In-App Purchases
Apple believes the majority of Apple Pay income will come from Apps
 
 
Challenges Ahead For Apple Pay
Challenges Ahead For Apple Pay
This might be the most challenging effort yet for Apple
 
 
 

Latest from the Network

1,074 new dengue cases in Chinese province
Beijing, Oct 18 (IANS) China's Guangdong province has reported 1,047 new cases of dengue fever, health authorities said Saturday. Six people have already died in Guangdong -- five in Guangzhou and one in adjacent...
Read more on Business Balla
 
Blake Lively 'always' wanted to be mum
Blake Lively has ''always'' wanted to be a mother. The 27-year-old actress is expecting her first child with husband Ryan Reynolds and she admits she's been dreaming of this moment since she was a youngster. Speaking...
Read more on Celebrity Balla
 
Kris Jenner 'torn apart' by Bruce's new relationship
Kris Jenner feels ''torn apart and angry'' that Bruce Jenner is dating her former assistant. The 58-year-old matriarch split from the 64-year-old Olympic gold medalist last October following 22-years of marriage but is...
Read more on Celebrity Balla
 
Cheryl Fernandez-Versini won't move to France
Cheryl Fernandez-Versini doesn't want to move to her husband's home country of France. The 'X Factor' judge, 31, who comes from Newcastle, is adamant she won't be relocating any time soon to suit her new spouse Jean-...
Read more on Celebrity Balla
 
Lance Bass sets wedding date
Lance Bass has set a date for his wedding. The former *NSYNC singer and his partner Michael Turchin, who have been dating for two-and-a-half years, are to tie the knot on December 20, 2014, a representative for the...
Read more on Celebrity Balla
 
Nepal avalanche toll reaches 39
Kathmandu, Oct 18 (IANS) At least 39 climbers died while hiking on a key Nepali route after it was hit by a major snowstorm and avalanches earlier this week, BBC reported Saturday citing officials. Over 350 stranded...
Read more on Politics Balla
 
Jake Gyllenhaal says society is complicit in 'nightcrawling'
Jake Gyllenhaal says almost everybody in society ought to relate to his new movie 'Nightcrawlers'. The eagerly-awaited film concerns those people who monitor police scanners and then race to crime scenes to film eye-...
Read more on Movie Balla
 
India eves look for first win in AFC U-16 qualifiers
Dhaka, Oct 18 (IANS) India will hope to register their first win of the 2015 Asian Football Confederation (AFC) Under-16 Women's Championship qualifiers when they take on hosts Bangladesh in a crucial encounter at the...
Read more on Sport Balla
 
Moyes mulling return to management
London, Oct 18 (IANS) Former Manchester United manager David Moyes said that he is ready to revive his managerial career six months after being sacked by the 'Red Devils'. "I am ready to return. I have enjoyed the...
Read more on Sport Balla
 
Ebola fears loom over Ghana hosting AFCON
Accra (Ghana), Oct 18 (IANS) The Ghana Medical Association (GMA) cautioned the government Saturday against hosting the 2015 African Cup of Nations (AFCON), despite a request by the Confederation of African Football (...
Read more on Sport Balla