Half of smartphone users don’t download any apps

ComScore’s recent 2016 U.S. Mobile App Report (registration required for a free report) shows that 49% of U.S. users never download a single app. While that may be disturbing the figure is down from 70% last year so users may be getting more comfortable with using smartphones or Pokémon Go and Uber have been uber successful in getting users to use their apps.

It found that fewer than 13% (of the 51% that use apps) account for more than half the download activity – that is 7.5% of all smartphone users, and these are mostly millennials.

But there is more disturbing news – fewer than 25% of those users (of the 51% that do use apps) ever return to the app more than once meaning most that there is a lot of rubbish in the app ecosystems. App developers have one shot only to win users.

{loadposition ray}

While ComScore is usually spot on some advertising distribution companies dispute this finding. Tune says the report is nonsense, and the actual global number of app installs is much higher - an average of 1.5 apps per person per month.

Tune’s July 2016 report does contain the disclaimer, “All that said, there are obvious biases inherent in its [Tune’s] methodology. Our hard data is a self-selected group: people who don’t download apps won’t ever fit into it. The big caveat here, of course, is that these numbers are global and include significantly growing mobile ecosystems, such as China, India, and Africa.”

Comment

I tend to take all reports that focus on single markets with a grain of salt. For example, the U.S. market is a total dichotomy to the app hungry Chinese market.

The message is clear to smartphone makers – they need to ship their devices with a suitable range of market-relevant, pre-loaded apps including Facebook, YouTube (or their locale-specific equivalents) and productivity apps like Office 365 or iOS/Google equivalents. And Apple and Google need to stop posturing and concentrate on culling the useless apps instead of fighting over who has the biggest ‘app’endage – its not quantity but quality!

But it also strongly suggests that at least half the U.S. use smartphones just as mobile phones not caring about the “computer in the pocket” experience. This would seem to correlate with the average selling price (ASP) results from Statistica that shows a typical user spends an average (across all tiers and brands) of US $261.30 on a device and that will continue to drop to $214.7 by 2019 – the end of the $1000 smartphone is well over!

Interestingly if you break out iOS (Apple iPhone) which had an ASP of US$652 the remainder of the market is much lower ranging between $231 (Android) to $348 (Blackberry). That gives credence to the estimate that top tier flagship devices occupy about 10% of the market - apart from iPhone that is 100% of its ecosystem.

Given teardowns all put the average cost of components and assembly of all brands of flagship devices at around US$200 you can begin to clearly see the cost of staying in Apple’s closed iOS ecosystem.

I applaud Apple’s business model and wish I were a shareholder, but it is clear that its profitability relies totally on the perception of a superior product to drive its profit. That seems a little dangerous - double-digit declines in market share in, for example, China to around 14% do not bode well for it.

Apple CEO Cook has said that it takes the huge Chinese market into consideration when designing its new devices. But he steadfastly refuses to sell a mid-range smartphone to directly compete with the likes of Huawei, OPPO, VIVO, Moto, ZTE, OnePlus, Xiaomi et al., designing and selling true flagship class Android phones at significantly lower prices – let alone try and compete in the lower end “Android cesspool.” Meanwhile, Android vendors are showing huge year-over-year growth – OPPO at 136.6%, sibling VIVO at 80.2%, and Samsung and Huawei showing respectable single-digit growth.

IDC  has warned that Apple’s cheaper SE and the ramping up of its covert “buyback programs” to encourage replacement had an impact on the iPhone’s ASP in in Q2, 2016, down 10.1% from $662 one year ago to $595.