THE BLOG
12/02/2015 08:10 GMT | Updated 07/04/2015 06:59 BST

Why the iPhone Results are Good News for the Apple Watch

Apple's most recent set of results make one thing very clear: the iPhone remains as profitable as ever. Despite GlobalWebIndex's 32-country research showing that the iPhone now trails Samsung by 15 points in terms of mobile brand ownership, its (very) healthy margins and affluent audience mean the positive headlines will keep on coming in future quarters.

To date, the iPhone's expense has hampered its growth in most emerging markets. Yet while Apple's iOS is now leagues behind Android in the vast majority of fast-growth countries, there's one - extremely important - place that has long bucked this trend: China. Already, 22% of internet users aged 16-64 in the country own an iPhone - twice the number who had one in 2012. What's more, a further 40% say they would seriously consider getting one in the future, giving it a 10-point lead over Samsung and a 20-point lead over Huawei. With China's internet population growing rapidly and its middle classes continuing to swell in number, it's little wonder that Tim Cook is looking east. As elsewhere, China is displacing the US as the market to watch.

The good news for Apple doesn't stop there. Not only are its current users the most brand-loyal, the iPhone is the handset that people are most likely to recommend even if they don't own one. Samsung might have a clear lead over Apple when it comes to ownership, but it's level pegging when it comes to recommendations.

Apple will hope that this brand loyalty will kick-start the sales of the Apple Watch. The omens are certainly good; globally, iPhone owners are about 50% more likely than Samsung owners to own a wearable, just as the affluent demographics who tend to favour Apple also over-index for using wearable devices. .

But there's more to it than this. Whenever a new iPhone handset is released, it's pretty telling that existing iPhone owners with earlier models are typically at the very front of the line; such are the levels of fandom among some Apple owners that the upgrade-syndrome kicks in regardless of what the new model is like or what features it can boast. In short, people want the new iPhone just because it is available, not because they particularly need it or are dissatisfied with their existing handset. It's somewhat inevitable that we'll see the same phenomenon with the Apple Watch: many iPhone and iPad users will want it simply because it's an Apple product, rather than because they were in the market for a smartwatch per se.

That said, one particularly large elephant does remain - the iPad. 1 in 8 internet users may now be using one but this number has flat-lined for the past 4 quarters - with Apple now controlling 35% of the tablet market (down from over 40% in 2012). Having been overtaken by Android back in 2012, it's never managed to regain control. And with tablet turnover/upgrading proving slow and sales being cannibalised by 'phablets' - an area where the company's own iPhone 6+ is playing a role - we can expect future plans for the iPad to be scrutinized particularly closely.

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