Comments on: Sun Tzu, Android and water: Android is winning because it can evolve in many directions

By: Tom Ross

Tom Ross — Tue, 06 Jul 2010 09:05:06 +0000

iPhone is also very successful in non-exclusive markets. The last 12 months have been all about moving away from exclusivity for Apple.

The brightest examples are France and the UK, where the iPhone is now available on 8 different carriers (and even from Apple without contract or subsidy).

In France, the iPhone now holds more than 50 % of the smartphone market (according to Le Figaro) and in France as well as in the UK, Apple holds 10 % of the overall phone market (according to Bloomberg).

These are fantastic results, and Apple will keep moving in the same direction this year. Germany, Spain, the Netherlands are set to switch from exclusive to multi-carrier, and potentially China, Korea and the US may follow, depending on negotiations there.

I find your water analogy inspiring, and of the top of my head I think we can apply it to two of Apple’s strategies:

- they changed from strong exclusive contracts to multi-carrier contracts
- they changed from a US focus to an international focus (65 % of iPhone sales are now international, about from 10 % in 2007).

By: kevin

kevin — Tue, 06 Jul 2010 04:28:14 +0000

@dissident: First, Apple has exclusive agreements in very few countries (US, Spain, China, Germany, Japan). Second, Apple has said on their quarterly conference call that the iPhone price to carriers doesn’t differ much between exclusive and non-exclusive carriers. Finally, Apple’s margins on iPhone have been deduced to be close to 60%. Shaving $100 off the $400 subsidy would not affect the viability much, yet put it in the same ballpark with other smartphone subsidies. Apple can charge the carriers that much because the carriers are willing to pay that much for whatever benefits they see the iPhone bringing to their network, not because Apple needs that amount to make it viable.

By: dissident

dissident — Mon, 05 Jul 2010 23:39:03 +0000

Yes Mike, but part of the iPhone’s viability depends on the huge subsidies afforded from an exclusive agreement. Which is an inflexibility of the iPhone itself.

Android is like a cat, very nimble.

By: Michael Scharf

Michael Scharf — Wed, 23 Jun 2010 18:47:26 +0000

Two quick thoughts..
1. Sun Tzu never confused water with all liquids. Water does not morph, water does not change, water remains water.
2. Another possibility that Android is slightly outselling the iPhone is that the iPhone is only available to 29% (AT&T’s market share) while Android is available to about 90% of the market (AT&T, Verizon, Sprint, TMo). What can we learn from these numbers…
1. A huge percentage of AT&T’s base has chosen the iPhone and a much smaller percentage of the other three top carriers have chosen Android based products.
2. If the iPhone was on just one other carrier (say the smallest, TMo) it is very likely that the iPhone would best all the Android products combined in the US market.
3. Apple has made this choice for some reason – I don’t pretend to understand why. But they have given up the additional sales for a reason.