Stickiness of Apple ecosystem prevents users from buying cheaper phones, says report

The global smartphone market declined by 14% year-over-year in Q1 2023, according to a new report from Counterpoint. This comes alongside Apple's 2023 fiscal second-quarter earnings call where the company revealed that its iPhone division alone raked in over $51 billion in the quarter.

The claims of a declining smartphone market have been echoed by IDC and Canalys in their respective reports. However, Samsung is the one leading the market share race in Q1 2023 with Apple just an inch behind. Counterpoint notes that this is majorly due to the South Korean giant's Galaxy S23 series and the mid-tier A series devices. The report also says that Apple witnessed the least shipment decline among the top five brands and recorded its highest-ever Q1 share of 21%.

With that said, Apple has also captured almost half of the total revenue share, leaving behind Samsung, Xiaomi, Oppo, and Vivo. One of the factors behind Apple's performance is "the stickiness of its ecosystem prevents its customers from choosing a cheaper smartphone even in times of economic difficulty," according to Counterpoint research director Jeff Fieldhack.

Here, brand or customer stickiness is a marketing term used to determine the likelihood of a customer "sticking" to a brand by making repeat purchases. It's different from customer loyalty which focuses more on the emotional and relational value people get from a brand.

An earlier study found that around 80% of iPhone users who own a smartwatch own an Apple Watch. Apple was followed by 71% of Pixel users who own a Pixel Watch and 40% of Samsung users who own a Galaxy Watch.

With sustainability becoming a priority for many, Apple has been able to attract customers "who are willing to spend more for longer-lasting devices," Fieldhack added. Speaking of which, it was recently known that Apple captured almost half of the global refurbished smartphone market. Moreover, the company has been able to become a preferred brand for Gen Z customers in the West and is "thereby positioning itself for sustained success."

Apple's increased sales have watered down the iPhone 14 manufacturing issues it faced last year due to the pandemic. Its ecosystem is made up of devices such as iPhone, iPad, Apple Watch, AirPods, and Mac computers. These devices can share a common set of online services, for instance, iCloud enables online device backups and data to be synced across devices. Also, there are Continuity features such as AirDrop, Handoff, Continuity Camera, auto unlock Mac using Apple Watch, etc.

More recently, Apple One has arrived on the market as a single subscription that bundles iCloud storage with other services like Apple Music, Apple TV+, and gaming subscription Apple Arcade. The company also revealed in its Q2 earnings call that its services business crunched $20.9 billion in revenue in the March quarter and the number of its paid subscriptions reached 975 million.