This is the most interesting thing that CEO Tim Cook said on Apple’s Q3 2015 earnings call last night, during his conversation with Wall Street analysts:

In terms of the percentage of customers that have upgraded to a 6 and 6 Plus versus that have not upgraded, it’s 73%, or meaning that 27% of the installed base of customers prior to the launch of 6 and 6 Plus have now upgraded.

Apple sold 47.5 million iPhones in the last quarter, another record. But 73% of those sales came from people who did not previously own an iPhone, Cook said:

The strong iPhone results were broad-based in both developed and emerging markets and we experienced the highest switcher rate from Android that we’ve ever measured.

“The highest switcher rate” ever is significant – three months ago he said the same thing. Taking him at his word, the big switch from Android to iPhone is gaining pace, not decelerating.

Business Insider has pointed this out before: Apple’s new strategy is to take share from Android rather than to continue to serve only the high-price end of markets in Western countries like the US and Europe. It is a myth that Apple is not interested in market share – it is clearly stealing sales from other brands, most notably Samsung.

And now, according to Cook, we know that Apple’s strategy in gaining this share is to persuade people on lower incomes that paying more for an iPhone is worth it. Here’s a section of the conversation from last night:

Analyst: So is the strength and the dramatically above market growth because you’re taking share in that high-end category and how far along are you there? Or can you point to proof points that you’ve actually expanded the size of the market for products of your price point?

Cook: Oh, I think there’s no doubt if you look at it we are expanding the market size in those areas. It’s also true that there’s some people that are switching from comparable price points to the iPhone, and that’s great too. But I think the answer is that both of those things are happening and it’s key that we do both, not just one.

So there you have it. Apple’s sales growth is coming from non-Apple users, not current users upgrading, and from sales below the high-end income bracket that Apple formerly dominated.

iPhone and its operating system are an existential threat to Android, in other words.


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