Categories

The Number

The first number that Tim Cook mentioned in the fourth quarter investor conference call was the number of active Apple devices. The 1.3 billion monthly active devices is the most important measure of the health of Apple’s business. It’s the primary way the company chooses to measure itself and it’s the best instrument available to understand the company’s strategy.

This is only the second time this number was revealed. The previous figure, given in January 2016, was 1 billion active devices. Thus, while Apple sold 586,744,000 devices[1] the number of active devices increased by 300,000,000. While the number of units sold is frequently updated and attracts a lot of attention, the number of units active is very infrequently updated and attracts little attention. Yet the number of active devices speaks of the future of the company and should be carefully scrutinized while the number of devices sold speaks of the past and should be cursorily glanced at.

Dr. Edward Deming once said that the numbers that best define a company are two factors that do not appear on any financial statement. These factors are the value of a satisfied customer and the value of a dissatisfied customer. These factors must be multiplied by every other number in a financial statement in order to assess the prospects of the business. A high satisfaction leads to repeat purchases and referrals, growing the business; while a low satisfaction leads to ending relationships and a repulsion of potential new customers.

These numbers determine everything about the future and nobody quite knows what they are.

It’s tempting to suppose that, by asking, you can find out if customers are satisfied. Certainly the company cites these answers to the question of satisfaction and it’s partially useful to have some data. But customers are people and people are social beings. They are flawed in that they want to be liked and will use their powers of deduction to determine whether what they say will lead to their being liked more. Thus they will say things which they judge the listener will want to hear.

This auto-suggestion is especially likely when the answer (satisfaction) is so difficult to ascertain and the feeling is so fleeting.

You can’t rely on surveys alone to know if people like your product. You have to base that number on what they do.

This is where the active device data comes in.

A liked product will be used and a well-liked product will be used more. Usage is valuable not just in its intensity but also in its duration. When you see activity of a device it’s always a good sign if that is both frequent and long-lasting.

The following graph shows the history of cumulative devices sold by Apple since mid-2007, when the iPhone was launched. That total is now 2.05 billion devices. I have added early estimates on the number of active devices (in red) based on assumptions about product life-span. I added the company’s own reported figures since then.

I then tried to paint a continuous curve for this active number using a logistic function which assumes a diffusion into a population of addressable users, shown as the grey line above. The logistic curve is a good tool because it has a solid theoretical foundation in social behaviors.

The formula for this line is S÷(1+EXP(−1×(tog)) where S is the point of saturation or maximum population size, t is the period or count of quarters (1 for Q1 2007 and 2 for Q2 2007, etc), o is the offset to 50% or the point of inflection, in quarters, and g is the growth factor.

The S-curve above corresponds to S=1.8 billion, o=35 and g=8.

I chose these parameters because they best fit the data. It does not mean the reality will be precisely this but this is the best guess so far. It implies that there will be about 1.8 billion active devices sometime close to 2022 and tells us how we get there. This can and will change but for now this is the best guess using a theory that has worked in similar circumstances.

Working backwards from this active base estimate, we have predictive power on units sold, and even on revenues. However this is not the whole story. It’s not even the main story. What matters is what it tells us of the relationship between past behavior (purchases) and future behavior (use, referral, repeat purchase). This is hinted at by the ratio between purchases and active devices. In other words, the ratio between cumulative units and active units tells us whether the products are used and for how long. Having a continuous estimate of active uses allows for a reliable measure of satisfaction.

The following graph shows this estimate.

Note that the ratio remains remarkably constant. It’s currently about 64%. It’s so constant that perhaps we can invent a rule of thumb which says that two out of every three devices ever sold by Apple is still in use. And that this rule is always true.

This begins to be interesting.

The staying power and predictability of the business[2] comes from a guarantee that activity is rigidly tied to purchase.

This speaks more than any satisfaction survey. It’s a measure of actions based on interaction rather than words based on human frailty.

There is no better number available to predict Apple’s business.

Notes:
  1. This is an estimate that includes Macs, iPhones, iPads and Apple Watch but does not include Apple TV or accessories such as AirPods. []
  2. i.e. Free cash flow []
  • senmu

    60% of all iPhones ever built still in use. That is remarkably similar to the received wisdom, backed up by some objective evidence, that 60% of all Porsches ever built are still on the road (including Horace’s Cayman). Idly wondering whether 60% might be a magical threshold for longevity in extremely well built, premium consumer products.

    • obarthelemy

      That’s overreach though. We already know that tablets have a much longer useful life; TV boxen probably too; watches I don’t know, and then laptops and desktops (mini, AIO, workstation) probably differ too.

      Tablets alone are about 25% the volume of iPhones as far as I can tell, so their life expectancy has non-negligible impact. Disregarding each category’s specificity works as long as the tablet to phones ratio is stable, which is unproven, or that fluctuations in the mix average out, which is dumb luck.

      Using the past to extrapolate the future is unsound to start with unless you can prove causality, not just observe a vague correlation (which goes 54% to 65% it seems, so the link between installed base and sales varies by 10 points = 20%). Using aggregates of wildly differing devices compounds the issue.

      • Sacto_Joe

        As I show in a separate post, on the order of 69% of Apple products sold since ~2011 to January 1 this year are iPhones. I get about 22% being iPads. I think the estimate of 60% of iPhones ever sold being still in use is actually pretty close to being accurate.

        That’s an amazing statistic, and shows one of the hidden strengths of building high quality devices, as senmu says.

      • obarthelemy

        Please do explain how it is amazing and shows anything.

        You’d be in the same “OMG ! Apple rocks (love-love-love)” state for any result. With exactly as much justification.

        The number might have some value if used for comparison, say with other OEMs, other premiums lines, other ecosystems, or, outside of the tech field, other luxury-but-functional goods such as premium cars, refrigerators, TVs… On its own it’s just a number, which you tend to get when using a formula; it doesn’t mean or prove anything.

      • Sacto_Joe

        If you want to be taken seriously, obart, it would be nice if you could be just a tad more objective, and ditch the snark. But I’ll play along for now.
        A 60% iPhone installed base is amazing in part because it’s unlikely to be matched by it’s competitors any time soon, and in part because of what it implies for Apple’s future.
        https://www.statista.com/statistics/271491/worldwide-shipments-of-smartphones-since-2009/
        From this, we can calculate total calendar year smartphone shipments back to 1/2011. The Apple data I indicated above for that date range equals 14.45 B. Subtracting Apple iPhone sales since 1/2011 of 1.24 B gives us 13.21 B smartphones that aren’t Apple.
        Per Statista, there are presently 2.78 B smartphones in the non-Apple installed base. That represents a percentage of (2.78/13.21=) 21% of non-Apple smartphones still in use since 1/2011.
        This shouldn’t be surprising, as the vast majority of non-Apple smartphones are not nearly of the same build quality of iPhones.
        So yes, that’s pretty darned amazing. What’s just as amazing is what that represents for the future.
        Apple has never sacrificed quality for quantity. Even Apple’s “low end” iPhones are built to last. And Apple will probably add another 220 M high-quality iPhones to the market this year, if not more. At the same time, it will “drop off” some amount of “old” iPhones. We can estimate those by “running” the same calendar year loss assessment I did above, adding the latest year (2018) on the top and removing the oldest year (2011). That would look something like this:
        ’12 – 136x 0.1 =13.6 M
        ’13 – 154 x 0.2 =30.8 M
        ’14 – 193 x 0.45 = 86.85 M
        ’15 – 232 x 0.6 = 139.2 M
        ’16 – 215 x 0.75 = 161.25 M
        ’17 – 216 x 0.9 = 194.4 M
        ’18 (est) – 220 x 0.97 = 213.4 M
        Total = ~839 M
        That’s an increase over the calculated installed base of iPhones since 1/2011 of 789 M of 50 M iPhones, or a little over 6% growth in installed base this year.
        Now, I seriously doubt that this has escaped the attention of Apple’s competition, who are now in a mad scramble to build high-end smartphones of their own. And that, btw, fits very neatly with the “topping out” of the smartphone market as the overall percentage of quality iPhones increases over time, which means customers will hang on to those smartphones longer.
        But it will be quite a while, if ever, before the Android market can begin to match Apple’s production capacity, let alone sales, of high end smartphones. Years. In the meantime, Apple’s share of installed base will increase each year.
        And yes, that’s also amazing, especially as it doesn’t appear very many people have figured all this out yet.

      • obarthelemy

        – It’s not 60% of all-time iPhones still in use, it’s 60% of all Apple devices incl tablets, desktops, laptops and TV boxes. Of those, we could assume phones have the lower useful life. Or not.

        – If the Apple installed base is half iPhone and half others, it could mean others are at 80% and iPhones at 40%. That throws off the rest of your reasoning, let alone calculations.

        – Maybe you’re only comparing premium/luxury phones versus low and mid range. To sensibly ascribe any difference to Apple magic, it needs to work differently for Apple than for other premium phones or other individual brands (cheap Xiaomi has an outstanding OS update policy and nice build quality). We don’t have any info on that.

        – I haven’t noticed more competition from Android OEMs in the high vs mid and low end. 2017’s most successful OEM was Xiaomi, which does have 2 high-end models, but is most energetic at the low-end; Samsung has tweaked the midrange J line more than the high-end S/Note; Huawei is relying a lot on cheaper brand Honor…

        – Longer device life does not make it “better” for the seller (they sell fewer ^^), nor automatically for the buyer. It’s the useful features/TCO ratio that counts. A iP6S has a similar Antutu (130k to 110k) to a fresh Xiaomi Redmi Note 5 Pro. The Xiaomi is $200, a 6S+ costs $650 and at that price you probably want AppleCare at $75/yr, at least the first 2 years. The iPhone would have to last 4x as long to make fiscal sense, and it doesn’t. Unless you need Apple’s extra features (camera is probably better) and not Xiaomi’s (longer battery life, audio jack, FM, IR remote, SD card, modern design, bigger screen). The same holds true up and down the range.Apple managing to sell their stuff is indeed fascinating though. I pity the kid alluded to in another comment, who got a 4S when any $100 phone is vastly better ^^

      • neglect

        Deliberately neglecting resale value makes this post useless to everyone.

      • obarthelemy

        Included then. It doesn’t change the outcome, just lowers Android’s advantage a bit. Not baking up your assertion w/ data is useless to everyone.

        Edit plus the part about value is 1/4 of my points. Wooosh ?

      • neglect

        There’s no assertion there, just a fact. If you’re pretending to be doing a value based comparison on the dollar amount then not including resale value makes it deliberately misleading and useless to everyone.

      • obarthelemy

        Do you have numbers to back that up ? I’ve ran them so many times it’s tiring.

        A 128GB iP6S was 850 at launch, Gazelle buys it back for 155 if it’s in good condition (some scratches on the casing not screen). It doesn’t even cover the cost of AppleCare.

        So assuming you keep it for 4 yrs, w/ 2 yrs on aCare, cost is 850+150-155 = 850. You still need it to last 4x longer than a Xiaomi, for which 2-3 years(to Apple’s 4) is reasonable. We’re far from breaking even on the Apple.

        One could get real fancy and factor in a 10% chance of damage per year. That’s a statistical cost of 200*.1 + 200*.09 + 200*.08 for Xiaomi (I’ll round that up to 60), and (75 + 6.5) (aCare + average of screen and non-screen damage x 10% x 2 years) + 22.5 (10% x average of repair of screen or other) = 163 + 22.5 = 185.5; taking accidents into account makes Apple’s value disadvantage bigger bigger in the absolute by 185.5 – 60 = 125.5; but a bit lower relatively speaking since insurance + incident costs are only 3x more expensive as opposed to the hardware’s 4x multiplier.

        So, you were saying ? Find it useful now ? Which fact was that ?

      • neglect

        I can do primary school math, don’t worry. Thanks for confirming that an iPhone must be 4x better than whatever a Xiaomi is, though, to a rational consumer. Wild fact, and good analysis.

      • obarthelemy

        I do worry because you haven’t proven it. You can troll rather well though.
        And Apple devices are, the same way Kardashian shows and Gucci bags are 4x better than other similar shows/bags.

      • neglect

        What’s the market share/unit sales of whatever a Gucci bag is? How many people do you have to presume are acting irrationally in each case?

      • obarthelemy

        All of them.
        And I don’t presume, I know, there’s overwhelming research on that, google it. One of the first hits is: https://www.theatlantic.com/business/archive/2013/01/the-irrational-consumer-why-economics-is-dead-wrong-about-how-we-make-choices/267255/

      • Kizedek

        You want to come across as some objective technologist, and then you make simplistic comparisons like this.

        Your point could only begin to make sense if the iPhone was, I don’t know, a phone. A “bag” vs a Gucci bag, a “phone” vs an iPhone. One dimension, one use case, etc. Yeah, yeah, “a bag’s a bag”. By the same token, “a phone’s a phone”. Why pay 800 bucks when you can pay 400, or for that matter, 40?

        In that imaginary world, sporting an iPhone in place of a “phone” could be just about as “irrational” as sporting a Gucci bag.

        But, as everyone well knows, people increasingly use smartphones for all sorts of things, for increasing amounts of time per day. It’s not for phone calls. If it was, you might have a point.

        The more actively, intensely, pervasively, comprehensively, productively, profitably, trustfully, comfortably, confidently, etc, etc, etc. that a person uses the product for more and more tasks that have nothing to do with the single, fleeting dimension that the word “phone” suggests, the more it makes it likely it is a considered, rational choice.

        Indeed, as it replaces other things (cameras, paper and pen, gps devices, watches, etc.) the price difference of 400 bucks quickly begins to pale into insignificance. Especially if the quality and durability as you already admitted above allows its use to be extended a couple of years.

        You calculated like, “hey, I could buy a two or three Android devices to last me the life of 1 iPhone.” No, the extra couple of years on the iPhone (along with more useful updates for longer) is icing on the cake and makes the iPhone a no brainer for many people — because they feel they already very quickly receive value that justifies the extra up front cost due to their active use of the product for a variety of purposes.

      • neglect

        If every price and sales figure in the world is drastically wrong, then why did you waste your time doing the calculation? I guess the use of money is entirely futile because its value is random and incomparable.

        Or perhaps there’s some evidence of irrationality-in-the-small in psychological experiments performed under some conditions (which often fail to reproduce anyway, see the reproducibility crisis) but all of which adds up to relatively small effects or fails to account for forms of value which are not easily calculated.

      • obarthelemy

        “If every price and sales figure in the world is drastically wrong” where did you dream up anyone, me in particular, said that anywhere ? And maybe I did the calculation to prove that arguments about “value” miss the point.

        There’s evidence of irrationality as the core of our decisions. Not maybe, not in the small. Hey, you learned something to day ! Or you could have !

      • neglect

        If there’s irrationality in all purchasing decisions, in the large, then all prices must be wrong. That is essentially the definition of irrationality here…

        Did you read the article you linked?

      • obarthelemy

        Frankly, I skimmed it. I had my share of its kind 30 years ago when I was studying. Details change, the gist stays the same.

      • Space Gorilla

        Pro tip if you haven’t dealt with Obart the Troll before, he (or she) often links to articles they don’t read carefully, and said articles often actually prove the opposite of whatever narrative they’re trying to put forth.

      • Kizedek

        You want to come across as some objective technologist, and then you make simplistic comparisons like this.

        Your point could only begin to make sense if the iPhone was, I don’t know, a phone. A “bag” vs a Gucci bag, a “phone” vs an iPhone. One dimension, one use case, etc. Yeah, yeah, “a bag’s a bag”. By the same token, “a phone’s a phone”. Why pay 800 bucks when you can pay 400, or for that matter, 40?

        In that imaginary world, sporting an iPhone in place of a “phone” could be just about as “irrational” as sporting a Gucci bag.

        But, as everyone well knows, people increasingly use smartphones for all sorts of things, for increasing amounts of time per day. It’s not for phone calls. If it was, you might have a point.

        The more actively, intensely, pervasively, comprehensively, productively, profitably, trustfully, comfortably, confidently, etc, etc, etc. that a person uses the product for more and more tasks that have nothing to do with the single, fleeting dimension that the word “phone” suggests, the more it makes it likely it is a considered, rational choice.

        Indeed, as it replaces other things (cameras, paper and pen, gps devices, watches, etc.) the price difference of 400 bucks quickly begins to pale into insignificance. Especially if the quality and durability as you already admitted above allows its use to be extended a couple of years.

        You calculated like, “hey, I could buy a two or three Android devices to last me the life of 1 iPhone.” No, the extra couple of years on the iPhone (along with more useful updates for longer) is icing on the cake and makes the iPhone a no brainer for many people — because they feel they already very quickly receive value that justifies the extra up front cost due to their active use of the product for a variety of purposes.

      • obarthelemy

        Thanks for telling me what I want to come across. That’s always classy.

        You’re assuming how people choose, and your assumptions are utterly contrary to accepted research I linked in another post. Good for you ?

      • Kizedek

        No, I’m just assuming people use them for more than one thing (ie, not to just make phone calls), unlike using a bag.

        At the least, for photos and social media, etc. but that would be a gross over-complication, too.

        I know people don’t use them to the “max”. When they do, however, begin to use them more intensively and productively, and become more “dependent” on them for a variety of tasks, the numerous differences and relative nuances that justify a price difference for complex products become very clear (one could say undeniable, unless one were to be ever the cynic like you and assume that only decisions regarding Apple products are irrational just because the up front price is higher).

        Gucci and the like don’t want their products to become mass market products. Apple is making the quality of their product of value to as many people as possible in different ways.

        The economics (such as in this article) bear that out. You can explain that away as “irrationality” on the part of purchasers all you want, but as others here have pointed out, good analysis of Apple and its competitors doesn’t bear that out.

      • obarthelemy

        Everything we know about how the brain works in general and how buying decisions are made in particular is wrong then.

      • Kizedek

        No, only your idea that iPhones are like Gucci bags is wrong.

      • klahanas

        As recent facts have revealed, resale value should be discounted by the cost of a replacement battery after about 1.5 years of use.

      • Sacto_Joe

        “It’s not 60% of all-time iPhones still in use, it’s 60% of all Apple devices incl tablets, desktops, laptops and TV boxes.”

        …which completely ignores the math that says, since 1/1/11, on the order of 69% of all Apple devices sold were iPhones, on the order of 22% were iPads, on the order of 7% were Macs, with all the rest making up on the order of 2%.

        Now, maybe Macs had twice the longevity of iPhones, but iPads? Don’t be ridiculous. There’s no inherent difference between an iPad and in iPhone in terms of longevity. And there simply haven’t been enough Macs sold to “drag” that installed base number for iPhones and iPads down below 60%.

        “If the Apple installed base is half iPhone and half others, it could mean others are at 80% and iPhones at 40%.”

        Except the math proves you’re wrong. There is literally no mathematical possibility that non-iOS devices, which together constitute less than 10% of all devices made by Apple since 1/1/11, could move the needle to any great degree. This attempt by you to wiggle out of the facts doesn’t make the facts go away.

        “Maybe you’re only comparing premium/luxury phones versus low and mid range.”

        Nope. We’ve already established that, out of 14.45 B non-iPhones since 1/1/2011, only 2.78 B were still in use as of last November. That is the only “comparison” that we need. I’m sorry that doesn’t fit your world-view of the dominance of Android, but take it up with reality, not me.

        “Longer device life does not make it “better” for the seller (they sell fewer ^^)…”

        Of course it does! Just not on the immediate gratification scale that typical manufacturers are locked into. Did you even read what Horace wrote? Or maybe you’re arguing against Dr. Deming’s thesis; you know, that little treatise that many feel was responsible for turning Japan into the economic powerhouse it’s become?

        https://en.wikipedia.org/wiki/W._Edwards_Deming

        I have no problem if you want to keep your head buried in the sand and ignore reality. Just don’t expect the rest of us to do the same.

      • Space Gorilla

        Doooooooooooooooooooooooooooooooooomed! 🙂

    • Sacto_Joe

      Be careful here: This is a measure of all Apple devices, which includes iPhones.

  • Luis Alejandro Masanti

    Thanks for the wonderful analysis.
    Apple products also has a ‘end of life’ support period, around 8-10 years.
    By example, the the first generation (2007) Apple TV is going out of support in iTunes. In this case is not the ‘death’ but close to it.
    I think that there is —I have no idea how it affects numbers— a decrease on the number of decade-old devices.
    Maybe, with iPhone —the ‘main’ device— just turning 10, we can’t see it by now.

  • Space Gorilla

    “perhaps we can invent a rule of thumb which says that two out of every three devices ever sold by Apple is still in use. And that this rule is always true.

    This begins to be interesting.”

    Heh, bit of an understatement I think. I’ve said this before, but Services, Services, Services, coupled with an ever-expanding Apple Network of Things. I appreciate that you apply math to your analysis when so many others don’t seem to and can’t see Apple’s success when it is right in front of them.

  • Glaurung-Quena

    Another key question is, what of the fate of the 1 in 3 devices that is no longer in use? Are they mostly devices that accidentally broke, devices recycled rather than resold after being taken as trade ins by carriers/etc, or are they devices that languish in desk drawers instead of being sold/passed on? To what extent is the size of the resale market being artificially depressed by trade ins being diverted to recycling instead of resale? To what extent are people just dropping their devices in drawers and forgetting about them (which would be another vector for approaching the mystery of satisfaction)?

    • David V.

      Presumably, devices becomes too old at some point to be effectively used.
      I buy a new iPhone every year and have a chain of hand-me-downs (first my kids, then nephews). My iPhone 4S is apparently still in use, but I imagine it’s getting long in the tooth now. I suspect that accounts for most of the 1/3.

      • Glaurung-Quena

        “devices becomes too old at some point to be effectively used.”

        Apple didn’t sell their 700 millionth Iphone until halfway through 2015, so if the retired phones were “too old,” that means all phones before the 6s are too old to use.

        Which is clearly not the case as I’ve happily been using a 4s for the past two years. And I continue to see occasional 4s phones (small with a glass back) on my day to day travels through Toronto.

      • David V.

        I still some pre-iPhone 6 iPhones, but they’re relatively rare. In particular, such phone likely need a fairly costly battery replacement (the battery replacement cost is comparable to the resale value of the device). Note that I’m not saying all of the “retired 1/3” fall in this category, just “most”. (I suspect a fair number just get damaged and lost. In particular, I hear a lot of parents complain that their kids broke their iPhones through negligence.)

  • tmay

    An interesting side note would be the effect on active devices if Apple continues its low cost battery replacement program indefinitely. Update cycles would lengthen, but customer value would continue in the form of greater trade in value when they do decide to upgrade.

    I myself pass down iPhones to friend’s kids in lieu of an iPod Touch, and these kids grow up and tend to want a current iPhone; a virtuous cycle.

  • Mieswall

    Very interesting, thank you! Do you have an estimate about the usage ratio of androids? I assume it is much lower than 2/3, but perhaps it’s also correlated with device prices. Even expensive androids may have a lower than 2/3 ratio, though.

    • Sacto_Joe

      As I say in another post, Statista says that, as of November of 2017, there were 2.66 B Androids still in use worldwide. I’m estimating there are ~800-900 M iPhones still in use, which is 23-34% of the smartphone market. Note that “market share” for iPhones is hovering around 14-15%. Which explains why nobody ever talks about installed base of iPhones….

      • tmay

        It wouldn’t be too difficult, I suppose, to figure out how much of the original sales revenue has been retired out of the set of all iPhone sales revenue to date.

        That would be, interesting.

      • melci

        Google only reports 2 billion active Android devices which includes tablets as well as phones. AOSP Android devices only add another 30% to that figure.

        You need to compare all iOS devices, not just iPhones to get the installed base iOS which after all is the important figure.

    • obarthelemy

      It’s an interesting question, and would give meaning to that number. It could go both ways:

      On the one hand, Apple devices are well-built and should withstand time better. On the other hand, Android devices are sold to poorer people who have a bigger incentive to care for them and care less about ugly protective cases.

      On the one hand, most Android devices get OS updates for a shorter time. On the other hand, OS updates mean a lot less in Android than in iOS (security updates, core apps even features are independent of the OS).

      And finally, around me it seems a wash as to whether buyers of luxury phones buy them yearly because they couldn’t be seen with last year’s model, or because they’re trying to make it fiscally better (hint: it isn’t, it costs more over time). Quasi nobody actually needs/uses the premium features.

    • Sacto_Joe

      In my rather lengthy reply to obart below, referencing my other rather lengthy post above, I come up with a percentage of non-Apple smartphones since 1/1/2011 still in use as in the range of 22%, versus 60%+ for iPhones.

      Pretty much says it all, doesn’t it?

    • melci

      Google themselves state that only 2 Billion Android devices are still currently active despite the billion+ that are sold every year. AOSP device sales only add an extra 30% to that figure.

      As such, with iOS devices making up between 1.1 and 1.2 billion of those 1.3 Billion active Apple devices, Apple’s iOS platform is close to 60% the size of Google’s Android platform at somewhere around 50% the size of Google Android+AOSP.

  • Sacto_Joe

    Very interesting! I did my own calcs a while back. Here’s what I came up with:
    Actual #’s sold of iPhones, iPads, and Macs:
    fy ’11 – 72 M+32 M+17 M = 121 M total
    fy ’12 – 125 M+58 M+18 M = 201 M total
    fy ’13 – 150 M+71 M+16 M = 237 M total
    fy ’14 – 169 M+68 M+19 M = 256 M total
    fy ’15 – 231 M+55 M+21 M = 307 M total
    fy ’16 – 212 M+46 M+18 M = 276 M total
    fy ’17 – 217 M+44 M+19 M = 280 M total
    fy ’18 Q1 – 77 M+13 M+5 M = 95 M total
    If we figure 20 M Apple Watches, 10 M AirPods, and 10 M Apple TV’s, and throw in another 10 M for incidentals like Time Capsules, that gives us another 50 M:
    Grand total: ~1.8 B devices. And of those, 68.7% were iPhones.
    Going on, 64% of Apple devices still in service comes out to 1.152 devices from 2011 thru 2017 still in service, 791 M of which are iPhones.
    We need to look at losses per year if we want to get a “feel” for device longevity. Here’s one calendar year loss assumption (Note that this is a pure guesstimate):
    ’11 – 93 x 0.1 = 9.3 M
    ’12 – 136x 0.2 = 27.2 M
    ’13 – 154 x 0.45 = 69.3 M
    ’14 – 193 x 0.6 = 115.8 M
    ’15 – 232 x 0.75 = 164 M
    ’16 – 215 x 0.9 = 193.5 M
    ’17 – 216 x 0.97 = 209.5 M
    Total = 789 M iPhones
    Close enough.
    According to Statista, at the end of November there were 2.66 B Android smartphones in use worldwide. It also said there were only 589 M iPhones in use.
    https://www.statista.com/statistics/385001/smartphone-worldwide-installed-base-operating-systems/
    I don’t trust Statista’s iPhone numbers (for the above reasons), but if their Android numbers are correct, Apple iPhones constitute around (0.789/(2.66+0.789)=) ~23% of all smartphones in existence.

    • Mieswall

      The funny thing about all these speculations is that Apple should have these statistics up the unit and minute, with probably no other company in that position. How much would hurt them to publish them in detail, specially having in mind that these numbers are perhaps way better than usual estimates by market analysts?

      • Sacto_Joe

        It’s just not Apple’s MO. Besides, why remove all doubt from the minds of their competitors about how well their strategy is doing? Why encourage them to double down on trying to emulate it? And what would be the gain? A bit of a bump in stock price? I’m a long time stockholder, and I don’t think that would be close to worth it.

        And lastly, it’s substantially more than speculation. This is a solid estimate on Horace’s part. We have a definite figure of 1.3 B for the installed base, and we can calculate that Apple has sold about 2 B devices over it’s history. The rest is simple math.

      • Sacto_Joe

        BTW, there is one Apple product line that I didn’t adequately account for, and that is iPods. They were no longer accounted for as a separate quantity after 2014, but were definitely on the decline by then, selling only about 15 M that year. And in mid-2009, Philip Elmer-Dewitt of ped30.com fame figured out that the installed base of iPods equalled 18.6 M.

        http://fortune.com/2009/07/23/where-in-the-world-are-those-18-6-million-ipod-touches/

        Finally, we know that about 170 M iPods were sold from 2009 to 2015

        https://www.lifewire.com/number-of-ipods-sold-all-time-1999515

        I think it’s a fair estimate that not much more than 30 M iPods were sold from the beginning of 2015 thru the end of 2017, bringing the total to (18.6+170+30=) ~219 M iPods.

        Using Horace’s 64% number, that would suggest no more than 140 M iPods are still in use.

      • melci

        Bear in mind that Apple only counts the iPod touch (which runs iOS) in their active device total. All the older iPods, the Nano, the Mini, the Classic etc are not included.

        Also note that Apple did not include Time capsules, Air Pods, Airports etc in their original figure of 1 Billion active devices.

        Tim Cook specifically mentioned that 1 Billion active devices figure only included: “iPhone, iPad, iPod touch, Apple TV and Apple Watch devices that have been engaged with our services within the past 90 days”.

  • Adam Bryant

    Some of the best and most interesting analysis you’ve done. Thank you. Keep the articles coming!

  • Peter

    As for devices “falling off” there’s another factor to consider besides damage, etc.

    And that is software support. Hand-me-down iDevices are often retired when support ends. So you won’t see many iPhone 4 or 4S still in use (except maybe as an iPod) and 5 and 5s are going that way. With the 64-bit switch now complete the fall-off might slow a bit (i.e. longer retention).

  • P.

    PSMacintosh #1
    “Using” (having it active) a device and being 100% happy with it’s hardware, operating system, and software programs are two different things altogether.

    I might use a device, but not be happy/satisfied with it, or certain aspects of it.

    Because I already own it, and paid for it, I might continue to use it for a very long time.

    I might have it turned on, but use another device more frequently.

    So I don’t consider devices in “use” (active) to be that much of a significant measurement at all.

    It’s interesting. It does mean something, especially in comparison with other products and brands. But it is not necessarily a good gauge of satisfaction at all.

    PSMacintosh #2
    Also, I may have a lot of issues (problems and unhappiness), not with the hardware itself, but with its OS or its Apple sw programs.

    I “use” the device, but chaff at how it operates.

    PSMacintosh #3
    A. What is the bottom axis measuring? Quantity?
    What is the time frame?

    B. “ever sold”
    So 2/3s of the original Macintosh are still in use?
    I find that hard to believe.

    C. And how does the “use” (or dis-use) of significantly older machines relate to “satisfaction” in the present.

    (I still own, but don’t use, my 512K Mac.
    Although I did use it into the 2000s…..and had it plugged in for several years after I stopped using it.)

    (Was I satisfied by that product? Yes. But does my non-use of it now does reflect dis-satisfaction with it? It’s a seriously obsoleted machine.)

    D. There is a lot of “hue-eee” in this article. This statistic is not all that probative.

    E. And then there is the sentence “A liked product will be used and a well-liked product will be used more.”

    At first glance, that seems like acceptable common sense. But it does really work that way. That sentence doesn’t translate into any valid scientific measurement.

    Maybe I like my iPhone 6 Plus better than my iPhone 5. But when I owned the iPhone 5 I used it 100% of the time. And when I own the iPhone 6 Plus I used it 100% of the time. I wasn’t able to use one phone MORE than the other.

  • Adam V

    This is only true because the number of sales is growing exponentially, so recent sales (which are likely to still be active) account for a big part of total sales. Around 70% of total sales as of Q4 2017 happened within the last 5 years.

    > It’s so constant that perhaps we can invent a rule of thumb which says that two out of every three devices ever sold by Apple is still in use. And that this rule is always true.

    This rule may continue to be true as long as Apple’s sales keep growing exponentially. Do you think it will continue forever?

    • Sacto_Joe

      He said “perhaps”. Perhaps you are right and the constancy shown in the chart will go away when growth slows. Perhaps when it does, we’ll see increasing average lifetime.

      But remember: This is all devices. And the growth in all devices has been literally linear for years now. Why? Because Apple is continually developing new devices.

      For all we know, it could be a very long time indeed before device growth slows.

  • Gopal

    The “percent active” graph is all wrong.
    In fact it should start at 100 at the begining and slowly taper down to 64 which is the present estimate.
    ie in Q207 all devices sold are in use. So usage is 100%. As each quarter goes by the active devices % will start dropping from 100.

  • your numbers are both misleading and flat out inaccurate.

    • Elliot Z

      How so FireFish? Can you please help me understand? E

  • Kartik

    I bought iPad on 04-Jan-2018, I tried to use it, may be 8 – 10 times. I am disappointed with the product, learnt it by mistake . .. avoiding Apple products till 2018, i should not have purchased it at all, and should have gone for unbranded Android tablet. Apple is hyped products, i know many many apple product owners unhappy and living with it, grudging the sunk cost they bore brunt already, especially iphone users.

    • melci

      And yet Apple sells a quarter of a billion devices per year and still leads the industry in customer satisfaction. Apple has been number 1 on the ACSI customer satisfaction rankings for more than a decade now.

      Looks like your experience is an exception, not the norm Kartik.

      • Kartik

        Melci
        Greetings, I have removed all apple specific application they call it Page-Number etc and loaded MS Office, that way i am able to use it to some extent, once i tried doing a calculation but after searching around found there is no calculator on iPad, did it on mobile phone, searched help pages, discussion forum proudly says Apple do not have Calculator on iPad, if need one use 3rd party app, some guys are so arrogant on the forun to the extent says better return the box if its in 14 days return window.
        More half of my friends owning Apple are not happy with it, most don’t accept it openly, almost all of them are using it as a status symbol, few crib that they will have to upgrade everytime Apple comes out with the next version , just to be in the game, most of they say, there is nothing great after upgrade to higher version in terms of utility.
        Best thing happened to the world is Google
        Apple is just a non-event, even without Apple, world could have been a better place.
        FANG is better than FAANG.

      • melci

        Hi Kartik, I’m afraid your personal anecdotes while interesting, are unfortunately not empirically valid. If you have any studies or research that back up your claims and counter the evidence I’ve presented, that might give your argument some legs. Otherwise I’m afraid it’s not terribly useful.

      • Kartik

        Agree with you. Don’t have any serious stuff on Apple except opinions of mine and some friends who use Apple phone / tablet. Yes, one rediculous case may be of interest to read . . . I have Ipod touch 32GB model A1213, serial number 9C8202ZB0JW purchased for $485 during October-2009. I never opened the box as I was happily using my Sony Ericsson phone for music, This month my wife forced me and we opened the box, just to learn that it is dead ! I put it on charge overnight, next day it is not powering on, i continued charging for another 12 hours, no life. I took it to Apple service center to hear from them they can’t do anything, buy another piece. I visited Apple support website, I got a call-back , to know, contact 3rd party as their service center can’t do anything in this case, he also had opinion that this could happen to any electronic device whose battery is not used for a year. That’s actually not true, I do have antique phone of Nokia, E90 communicator, and I use it once in a year or two, it works still fine. Anyway, regards and have a nice day.

      • melci

        Um, let me get this straight KIartik – You expect a battery that has been un-used since 2009 to still work now almost a decade later? Are you truly not aware that lithium ion batteries start to seriously degrade after only 3 months of dis-use let alone a decade!