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Unity's Oren Tversky on Android's challenge to Apple's iPhone market strategy

How market share can drive overall success

Unity's Oren Tversky on Android's challenge to Apple's iPhone market strategy
In the second of a two columns, Oren Tversky, Unity's vice president of business development discusses the smartphone market in terms of whether it's a luxury market or a mass market.

Yesterday, I argued Apple has demonstrated different strategies in when it comes to its iPod and Macbook ranges. 

The question we now consider is, is the smartphone market a winner-take-all market like the MP3 player market or a luxury high-end goods market like the personal computer market? 

The answer is a bit of both. 

Best of both worlds

In terms of a winner-take-all market, a good portion of the appeal of the iPhone is the value of ecosystems and third party applications.

Through capturing developer mindshare, the iPhone has become the premier publishing platform for everything from mobile video games to enterprise applications. Moreover, developers prioritise platforms with large volumes and monetisation opportunities.

According to IDC, Apple’s current market share of the world wide converged device (aka smartphone) market is 14.7 percent, with Android at 16.3 percent.

The same industry projections see Android’s share climbing to 24.6 percent by 2014, with Apple’s iOS share falling to 10.9 percent. And this is in a market that is still growing at double digits growth rates.

What's interesting to consider is, is that 11 percent share enough to retain the mindshare of developers or does Android’s impending rise dictate a reprioritisation? Will the coolest games, and best applications start flowing Android’s way first? And what if Apple's share falls to say 5 percent?

Operators' cut

Secondly, wireless products, because they are sold through network operators, rely on the operators to subsidise the product. So, your £200 iPhone is actually a £500+ product that is subsidised by network operators through signing up for a two year subscription plan with data.

On this front, Apple faces some competition. Operators always seek lower priced products. If a network operator can get a customer to sign up for the same data plan on a £200 product, which it can retail for £100, that is a better value for the network operator.

True, Apple does have its version of the Mercedes C class - its £99 older models. But, with a plethora of Android handsets at various price points and form factors, operators can negotiate with vendors over price and still sign up plenty of data contracts.

Similarly, operators have been locked out of the after market for iPhone as the App Store and iTunes revenues are not shared with operators.

Google, by contrast, has been much more willing to share the profits of its Android market. China Mobile, Verizon and Amazon have or are opening their own Android applications stores, which can generate incremental revenue and fortify brand. At what point would network operators and others in the value chain start prioritising Android over Apple’s iPhone?

The lure of luxuryOn the other hand, there are ways the smartphone market is a luxury goods market. It starts with the clientele.

Apple’s projected 11 percent share represents the richest, highest spending (on voice and data and applications and content) segment in the world. This 11 percent audience constitutes an incredibly valuable clientele coveted by network operators, developers and everybody else in the wireless value chain.

Similarly, Apple recently announced that it has 200 million iTunes accounts, all linked to credit cards. If you are a third party developer, selling on the iPhone is like selling on Nordstrom; you are selling to a wealthy clientele that is willing to pay. And if you are a network operator (AT&T, Vodafone, China Mobile), it is akin to retailing a BMW. It’s not just the volumes - it’s also the end users.

Second, brand and sex appeal play a huge role in phone purchases.

Apple has done a remarkable job of creating a mystique around the iPhone, both for consumers and developers. While this sheen persists, the wireless value chain will continue to service the iPhone market.

Finally, Apple can justify a much higher R&D spend than most businesses, as it amortises much of it across its MacBook, iPhone, iPod and now iPad product lines and eventually perhaps Apple TV. And, this too, has ramifications for developers as they know they can quickly re-purpose their products across Apple’s product lines.

So, as with all good market analysis, we're left with more questions than answers.


  • Will Apple bring its iPhone product to the mass market?

  • How much is Apple’s Verizon-based iPhone a harbinger of future deals to come?

  • Will Apple bring the CDMA version to India?

  • How many multi-carrier non-exclusive deals will Apple do?

  • Is the end of exclusivity with operators part of a larger land grab?

  • How will the proliferation of the iPhone affect Apple’s profit margins?

  • Will it risk compromising the allure of iPhone brand by going down market?

  • Will it make an iPhone Nano?

  • Or, will it be content to skim the cream of profits at the top?


It is an intriguing question set, which has implications for the business strategies, stock prices and product lines of Apple, Google, Samsung, LG, HTC and others. It’s important we find the answers first.



With a 20-year background in both the mobile and gaming industries, Oren Tversky is Unity's vice president of business development.

As head of business development at Symbian, he launched Symbian's Korean business. Prior to receiving his MBA from UC Berkeley, he worked in the video games industry for The 3DO Company. He has also worked in senior management roles for a number of technology start-ups.

You can see what Unity's up to via its website.

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