Apple's iPhone continues to be a dominating player in the smartphone market. Can we predict iPhone success using operating system (OS) market data? In this article, we use country-level economic and smartphone OS data versus country GDP per Capita to uncover where and why iPhones sell best. 

Where do iPhones Sell Best? A Look at Mobile OS Share vs Country GDP per Capita

By Conor Henrie and Ginny Tang

The smartphone market is nearly mature in most countries. As it evolved from a new growth category to near saturation, two operating systems (OS) have dominated the market: Apple’s iOS and Google’s Android. On a global basis, Android has over 85% of all smartphone installations, while iOS has just 12.5%. However, these shares are not consistent across countries, and a detailed evaluation reveals that economic prosperity is highly correlated with the respective shares of the two operating systems.

Apple has restricted iOS use to Apple’s own premium hardware products, e.g. iPhones and iPads[ii]. Averaging $690 per device, iPhones are in the high range of the market in terms of price, and iOS usage can serve as a macro-indicator of disposable income. Android, on the other hand, has achieved dominant share through its open source model. This facilitates its use on a diverse ecosystem of devices offered by a multitude of hardware firms, ranging from low cost budget phones costing less than $50 up to premium models with prices often exceeding $600. There are only a handful of Android devices that compete at the same price points as iPhones, the majority are budget phones purchased for its functionality and not status.

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Given this clear difference in the price of devices which use iOS (all are expensive) and which use Android (range from cheap to expensive), we would expect to see a trend of higher iOS market share in developed, wealthier economies where there will typically be more high-income residents. We obtained country-level economic and smartphone OS data to test whether this is true, and confirmed the overall trend, which is shown in the dashboard "Mobile OS Share by Country"

The broad trend, as well as a few outlier exceptions, reveal several insights: 

Wealthier Countries Prefer iOS

Wealthy countries such as Japan and the United Kingdom have the highest iOS shares[iii], with Japan leading at 52% and the UK a bit lower at 50%. However, their share of iOS is unexpectedly high relative to their GDP per capita[iv], suggesting there’s more than just economic prosperity that could be driving high shares of iOS (e.g., marketing, investing, cultural status, etc.)

Less Wealthy Countries are Dominated by Android

Developing countries such as Brazil and Mexico have very low shares of iOS, at 3.9% and 5.3% respectively. Both countries have among the lowest GDP per capita within our sample size, validating the correlation between economic prosperity and iOS share.

No Countries have High GDP per Capita and Low iOS Shares

There are no countries that we analyzed which have a high GDP per capita and a low share of iOS adoption. France and Germany fall below the trendline, but still have considerably higher iOS shares than other developing countries with lower GDP per capita.

Low GDP per Capita, High iOS Shares: China’s Prestige Exception

There are no countries with a low GDP per capita and high iOS share in our analysis, confirming the hypothesis. That being said, China’s low GDP per capita of $8K would imply an iOS share much lower than that of its 23.9%. The Chinese market is somewhat of an exception, as Chinese consumers reportedly value luxury items like the iPhone more than consumers in other markets. Based on this idea and the nation’s emerging wealth, Apple increased the number of retail stats from less than ten to forty stores from 2012-2016[v]. Despite the strong reputation of iPhones in China as a status symbol, they may have hit a ceiling – many consumers are recently considering switching to different phones.

Legislative Pressures Drive Low iOS Shares

Argentina has a much lower iOS share than expected relative to its GDP per capita. This is mainly driven by regulatory and legislative laws. In 2009, the Argentine Congress passed a law promoting local manufacturing that prevents foreign-produced electronics from being sold. Apple elected not to build a factory, effectively rendering iPhones unavailable in Argentina except on the black market. As recently as April 2017, iPhones will be available but will be subject to a VAT as high as 25%[vi]. This will be an interesting case study to follow moving forward, as the GDP per capita of $13,467 implies that iOS could reach a 10% share.

Examples such as Australia and Brazil validates the broad trend that iOS shares are correlated with economic prosperity, with Australia having high iOS share and high GDP/capita and Brazil falling on the opposite end of that spectrum. However, beyond economics, there are many other factors that drive iOS shares such as its status as a cultural symbol and various legislative forces. It will be interesting to watch how mobile OS market shares shift in the coming years.<>   


Notes:

[i] IDC Smartphone OS Market Share

[ii] For this study, only iPhones were considered

[iii] Kantar World Panel Smartphone OS Sales Market Share

[iv] World Bank GDP per capita indicator, 2015

[v] https://www.nytimes.com/2016/04/28/technology/apple-china-iphone-earnings.html 

[vi] https://www.state.gov/e/eb/rls/othr/ics/2013/204592.htm