Has Apple outsmarted Google?

Once allies, now clearly foes, Apple and Google have been in an intense battle to win the hearts and minds of people across the planet. And while Apple has lost its dominance and market-share to Google’s Android, you could argue that the Cupertino-based giant has outsmarted its Mountain View rival.

If we look purely at the numbers then we all know that Google is the clear leader. Relying on various brands, like Samsung and HTC, Android has swamped our markets with phones ranging from the low-cost Galaxy Pocket to the more sophisticated Samsung S3. Samsung has a clear edge on the market.

But while inroads are being made in the mobile arena, Android is still dominated by Apple’s iPad in the tablet market. It’s still the “tablet of choice” for the discerning user and Apple fired three volleys this year with the launch of the “New iPad” in the first quarter of 2012, followed by the “New New iPad” and the iPad Mini.

Google entered the fray itself this year, launching the Nexus 7; low-priced and accessible to the masses.

Which is actually my point.

While we all seem to think that Google and Apple have the same target market, I’d like to suggest that they don’t. Apple firmly remains the world favourite. Thirty-five percent of school students in the US who use a smartphone are using iPhones. Those who use Android wish they were using iPhones (yes, yes, I concede there is a growing group of fandroids out there who prefer Android phones).

But by and large Apple is targeted at the more affluent user. Apple has made very little effort to compete on price. In fact its tablets and phones are substantially more than the Android offerings. While Android offers a range of phones from entry-level to top-spec, Apple chooses to only produce one model at a time. There is no US$100 iPhone (we’re talking cash-prices here).

So why would Apple choose to have only one model?

I do not believe it is as much of elitism and snobbery as it truly is about economics. And this, I believe, is where Apple has outsmarted Google.

When I speak to my friends who are fandroids, they will always bring up the fact that the apps are free. They boast about the “open-source” nature of Android and that apps are readily available. In fact many of them will denounce any app that does not provide a free alternative (even if they are laced with adverts).

Apple fanbois seem to be very different. One of the first things a fanboi will do is link his iTunes account to his iDevice. And then link his credit-card to his iTunes account. While it’s true that there are many, many free apps on the AppStore, the very nature of the iPhone user is to push the button and pay the once off US$1 to remove the irritating adverts.

Because iPhone users have paid a premium for their phones it is not improper to consider they are sitting in a higher LSM bracket. It means they’re more amenable to buying apps. And since the disposable income of this group is so much higher, they are certainly more open to buying apps.

Conversely, the average (and I highlight average) Android user is using a low-specced device. Lower cost, lower LSM group. And far less likely to buy apps on the Google Play store.

So the question about whether Apple or Android is more successful, I believe, cannot simply be reduced to the number of users, but rather the number of economically active users.

In my opinion Apple has strategically targeted the group of people who are more likely to buy apps in the AppStore. Android has gone for sheer numbers, in the vain hope of swallowing out the competitors.

Apple, however, remains resilient. iPhone and iPad sales remain in the millions. And each user is more inclined to buy an app.

Has Apple outsmarted Google? I believe so. It’s not the profit per device sold that matters, but rather what the user is doing with the device. A sneaky strategy, but one that I believe has paid off.