How American Households Are Like Apple Orchards
CNBC recently conducted a survey of American homes, which included a question on how many Apple products a household owns. The results show that more than 55 million households, 51% of respondents, own at least one Apple product, which could be an iPhone, iPad, iPod, or Mac. Of those that don't currently have one, 10% are planning on buying one within the next year. Among the households that do own iStuff, they own an average of three products.
The survey also showed a positive correlation with income and Apple product ownership, which makes sense, considering Apple products fetch premium pricing. A large portion of owners are younger, college-educated males.
For me, the results represent growth opportunities in two different ways. First, almost half of households still don't have any Apple stuff, which shows a large chunk of the population that remains untapped. Second, the other half that are already within Apple's walled garden are probably there to stay and upgrade over the coming years.
Apple has set up a perimeter to keep its loyalists inside by integrating all of its products together, and they have very strong complementary effects with each other. After a user has already invested heavily in the ecosystem through content purchases, switching costs increase if one were to consider defecting to a Microsoft (NAS: MSFT) Windows PC or Google (NAS: GOOG) Android smartphone. One of the earlier instances we saw was how the iPod swayed many people into buying Macs 10 years ago, and that effect is even stronger today, with the iPhone and iPad added to the mix. Just imagine how much stronger it will be when the mythical Apple TV set is released.
The survey showed that 61% of homes with children have iDevices. Even the iPod Touch is like a gateway device as a popular multipurpose gdget among kids, which gets them used to the interface and sets the stage for iPhone, iPad, and Mac adoption later on.
Android now comprises more than half of the world's smartphone sales, compared with iOS's 24%, so there's plenty of market share to grab. Similarly on the PC front, Apple has just 11.6% of the domestic PC market, with Windows dominating with offerings from the likes of Dell and Hewlett-Packard -- even more share to steal than in mobile -- although Android and Windows users themselves will face switching costs if they want to opt for iOS or Macs.
Either way, there are still plenty of fish in the iSea.
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At the time this article was published Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Google, Microsoft, and Apple, creating a bull call spread position in Apple, and writing covered calls on Dell. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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