Apple Users Unlikely To Switch

One analyst, Bill Shope at Goldman Sachs, has estimated the value of loyal Apple users, which are unlikely to switch to another platform, at nearly $295 billion. In a note to investors on Friday, the analyst said that he believes the average iOS customer is worth $1,053, assuming the average selling price of an iOS device is $535 with an erosion of 5%, a gross margin of 45%, and annual defections of 5%. Sharpe wrote that, without considering content, services, peripherals or growth potential, his valuation implies a value of nearly $295 billion for the current install base. That represents roughly 55% of Apple’s current market cap, before including the $110 billion cash balance the company has, a continuously growing install base or the Mac and iPod businesses.

Goldman Sachs also conducted a survey of 1,000 iOS users, which found that 21% of respondents would never defect from Apple’s platform, regardless of discounts. More than half of those who would switch, however, said they would need a discount of greater than 30% in order to do so. 71% of respondents said they were “highly likely” to choose Apple for their next tablet or smartphone; only 1% were “unlikely” to stick with Apple.