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Submission + - Why Apple is So Sticky 5

Submitted by
Hugh Pickens
Hugh Pickens writes: "Sticky, in the social sciences and particularly economics, describes a situation in which a variable is resistant to change and for web sites or products usually means that visitors or customers keep coming back for more. Now Fortune Magazine reports on an analysis by Deutsche Bank's Chris Whitmore on what makes the iPhone-iPod-iPad platform so sticky and why it's going to get harder, not easier, for Apple users to switch, no matter what Google and the rest of Apple's competitors have up their sleeve. Whitmore says the investment Apple's customers have made in content for those devices in terms of apps, videos and music purchased at the iTunes Store creates Apple's "stickyness." Apple has an installed base today of about 150 million iTunes-dependent devices (iPhones, iPods, iPads) that could grow to more than 200 million by the end of 2011. Using Apple's "Other music related products and services" revenue line to estimate sales of music, apps and videos, Whitmore comes up with a cumulative investment in those devices that stands at about $15 billion today and which Whitmore sees growing to $25 billion by the end of next year. "This averages to ~$100 of content for each installed device," Whitmore writes, "suggesting switching costs are relatively high (not to mention the time required to port). When Apple's best in class user experience is combined with these growing switching costs, the resulting customer loyalty is unparalleled.""

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