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AAPL Stock: 99.02 ( + 1.35 )

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Analyst: App Store driving iPhone customer loyalty

updated 06:55 pm EST, Tue February 10, 2009

App Store customer loyalty

Barclays' analyst Ben Reitzes has suggested that Apple can rely on the success of the App Store to add "stickiness" to the iPhone and iPod touch. He uses the term in reference to the lock-in effect that is likely to prevent the majority of current owners from switching to products offered by competitors, a concept he believes is a "key differentiating factor."

"This software strategy enables a distinctive "stickiness" for the iPhone, which should enhance customer loyalty over the long-term," Reitzes explains. "We believe 'apps' personalize iPhones to levels that competitors cannot match." The App Store is also credited with expanding sales of the iPod touch.

AAPL stock surpassed $100 this week, following a number of analyst reports that provided a brighter outlook for the company. Apple last month released its quarterly financial disclosure, posting record revenues exceeding $10 billion while other tech industry giants have reported losses and thousands of layoffs. [via Fortune




by MacNN Staff

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  1. testudo

    Joined: Dec 1969

    -3

    definition

    You could define that as 'loyalty' or just the 'I've already paid for these apps, if I want to switch I have to buy them again? Forget it" factor. You know, the one that keeps many people on windows.

  1. Mixotic

    Joined: Dec 1969

    0

    testudo misstep...

    I'm usualy (unlike other here) a fan of the grains of salt you inject in the comments on this site. But you're just wrong here.

    Customer loyalty is measured in a variety of ways, and the incentives behind it are myriad. Some people like the style, other people like build quality, some dig pricing, others like ease of use. A lot of times people just 'trust' a brand.

    In this case, the analyst mentions 'stickiness', but it is not loyalty. It's better described as a psychological tether or barrier, one that must be overcome by competitors looking to steal market share.

    'Loyalty' as you refer to it is different. A typical example of this is: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.

    A better analogy might be to say that the customers have a vested interest, or stake, in the additional software they have purchased for their devices.

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