Apple has sold 700 million iOS devices. Google claims one billion Android device activations. Microsoft has about 1.5 billion Windows users and Facebook about 1.19 billion. LinkedIn has 259 million users and Twitter has 232 million. Amazon has 215 active account holders and PayPal 137 million.
Markets place a value on these users implicitly when company shares are priced. For example, Twitter whose users are worth about $110 or FaceBook’s $98 and LinkedIn at $93.
This consistency suggests a universally accepted value per social media user but what is the value of an ecosystem user? Apple, Google, Microsoft and even Amazon aspire to enable ecosystems which should be seen are more valuable than mere communities. Ecosystems enable a higher level of economic activity because they are unbounded by the medium itself. Any number of media can be created. Or so the theory goes.
If we could determine a value for an ecosystem user we could test it against the going value of a social media user. Fortunately we have enough data to do so.
The total number of iOS devices sold per quarter allows us to measure the install base of device users. With some assumptions regarding the retirement and attrition rate we can get the following history:
Since the total number of iTunes accounts is updated with some regularity I’ve added it to the graph. I’ve also shown on the same graph the total number of iCloud accounts. For calibration, I included survey data showing the number of iPhone users in two regions (US and EU5).
These combined graphs give us an upper bound of active users (iTunes accounts) and a lower bound (iCloud) calibrating our device-based estimate. The regional iPhone data offers some additional test on growth.
The result is “about 500 million”1 with a growth of about 11 million per month.
So if we know with some confidence that there are about 500 million active users as part of the iOS ecosystem, how do we know how much value they generate? The answer is in the consolidated iTunes revenues as reported by Apple: $4.26 billion/quarter. With some attention to the reported media retail and purchases, the following picture of the average iOS user’s quarterly spending emerges:
The bottom line is that in the last 12 months the average iOS user contributed about $48/yr to the ecosystem via Apple’s own properties. They also bought the device and paid for cellular service in most cases. They may also have engaged in quite a bit of browsing and online purchases which fed other ecosystems. But as far as Apple is concerned, it transacted about $48 per user.
As Twitter revenues last year were $317 million, the Twitter user today generates about $1.36 of revenue per year or one thirty-fifth of what an iOS user generates through iTunes and iCloud alone. And note that the number of iOS users is about twice that of Twitter.
Of course one could argue that the iOS user’s participation is not profitable for Apple. It does obtain massive cash flow from iTunes which finances its fashionable data centers and bandwidth but it does not presume to value itself primarily through this revenue.
Or at least the market doesn’t think so. We don’t hear much about how Apple is worth so many dollars per user.2
The paradox is that while the device which enables this commerce is where Apple guides the consumer’s perception of value, markets discount devices and bid up services. In other words, users continue to pay for the devices which delight them enough to participate in services (especially the monthly billable kind) but markets walk right by these shiny baubles and and shower money on services which have negligible sales and even fewer profits. There must be some serious misdirection going on here. The question is who’s being fooled.