That is one way to define "value''. That is not the way I used it, nor the way I see it. A product's "value" is whatever a purchaser deems it to be. In this sense, the term refers to what the person buy deems the device "worth it" or "not worth it". It is independent of quality, market value, popular opinion, etc. The individual makes that determination at the point of sale.
I flatly disagree with this, from the perspective I am speaking from. From the business perspective, sure. But I don't buy individual devices based on the "business" opinion, or company-profits. I buy based on anecdotal, and first-hand, personal experience. That is where the truth of quality vs popularity lies. For example, the single greatest tool in a shopper's arsenal is Amazon's review system. I do not purchase anything without seeing what people say regarding a product, both good and bad. I don't go looking into a company's profit spreadsheet or accounting audits.
And your implication is that people who buy Apple products don't? What makes you think that the consumer who shops for an iPhone or iPad or MacBook Pro doesn't exercise the same degree of care in making his purchase, considering that they tend to cost more than the next best alternative?
I too do my fair share of research by watching early YouTube reviews and reading online coverage.
Saying that there are things that the iPhone can't do that I want to is the ONLY question to ask, from a customer standpoint. It's MY money, I'm going to put it where I feel it'll better serve ME. What Apple has done is find the best marketing team to sell their "good-enough" products. But I'm looking for the best.
And it's well within your right not to get an iPhone. That the iPhone has 12% market share shows that 88% of the world agreed with your sentiment in one way or another.
What that also means is that 12% of the world evidently felt that the iPhone represented the "best" smartphone for them, whatever that may mean to them. And 12% of the world's population is still a very large number in an absolute sense. Well enough to make Apple one of the biggest companies in the entire world, not forgetting that each iPhone sold this way is very expensive (and profitable).
None of this answers my question. How does Apple make such profits, given that they neither sell the most phones, nor make the best ones?
I think it's simply because it is a monopoly. Only Apple makes iPhones. So they can charge whatever they want for a device that is not (really) superior to their competitors. When you compare them against individual competitors, they look great. But the competitors are splitting the profits of the much, much larger pie.
In other words, it's all smoke and mirrors. The only way to tell if Apple is losing ground is to measure it against itself.
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The answer has always been right in front of you. The question is whether you have the heart for the truth and the will to see it.
First, Apple undeniably sells the greatest number of high-end smartphones, which is pretty much the only segment that is bringing in any sort of meaningful profit. Don't blame Apple for this. Blame the rest of the competition for not being to earn a single cent off the products they sell.
Second, there is no one absolute "best" smartphone, only a smartphone which best meets the individual user's needs. Refer to my earlier comment above about 12% iPhone market share being a huge enough number to make Apple immensely profitable and you have your answer.
Third, you are right that iOS is a monopoly, and that's besides the point. Blackberry ran proprietary software; that didn't stop the company from tanking because their products simply sucked. If the iPhone sucked, nobody would buy it, proprietary or not.
Last, I agree with you that the iPhone's biggest competitor is always the iPhone that came out before it, because they are just so good. Android is nowhere close to even becoming a viable competitor as far as I am concerned.
The issue here is that the iPhone market share is shrinking. So at some point it'll start to matter. It's just hard to determine when that is.
But I figure the math like this:
100% of Apple's 10% of the market spends $10
30% of Android's 90% of the market spending $10 ( a third of the Android market spending the same as Apple)
Market:100 people
Apple: 10
Android: 90
Apple 10 * $10 = $100
Android: 27 * $10 = $270
So, you better develop for both platforms, and Android has the most opportunity for growth.
Your numbers paint an oversimplified picture which fails to take many factors into account.
1) Piracy - the developer of Monument Valley estimated that over 90% of Android users who played his game downloaded it illegally. The iOS store is not free of piracy, but the incidence is much lower. What use is a huge install base if nobody is willing to pay for your app?
2) Not all Android phones are made equal. Lower end phones may not be capable of running more taxing software. That dramatically reduces your potential install base right there.
3) Effort - optimising for a few iOS devices with known specs vs having to optimise for the myriad of android devices out in the wild. Developers are making more money on Android with less effort.
4) Shrinking iPhone market share conveniently ignores the fact that the number of iPhone users is still increasing in an absolute sense. More than enough to sustain and support a thriving ecosystem of apps and accessories.
5) Market share doesn't necessarily mean install base. A recent article by stratechery pegs the number of Android devices in active use at 1 billion, and iOS at 600k. This means the active market share of iOS is closer to 40%, not the dismal 12% painted by analysts. So you will definitely have to rework all your numbers.
In short, developers will still release apps for Android. But unless the narrative changes dramatically overnight, they will continue to flock to where the money is by releasing apps for iOS first or exclusively, and ensuring that those apps remain the most optimised and the best in class.
As a happy iOS user, I cannot ask for anything more.
