Final Written Paper

Mobile Phone Operating System

MKT 418-Marketing Research and Analytics Team 1

Gordon, Lester, Nath, Sauer, Welhoelter

Apple Overview Our client is Apple, the world’s largest information technology company and a leader in the

smartphone industry. Apple’s phones are known for their products’ design and user-friendliness. The

newest software update for the iPhone, iOS 10, was released in September 2016 and includes many new

features and drastic changes to the interface and user experience compared to iOS 9. In such a scenario, it

is crucial that Apple puts a heavy emphasis on customer reactions and on incorporating those into feature

updates consumers actually want.

The decision problem being addressed in this research is the level of customer satisfaction on the

latest iOS update, which is iOS10. For this, we would like to understand what iOS features a consumer

appreciates on their phone and how Apple’s newest iOS update compares to those needs. iOS 10 seems to

have received mixed reviews. Apple will need to decide, based on customer feedback, whether it is to the

company’s advantage to keep features new to iOS 10 active in its next update.

We will be exploring the following research questions:

● What iOS features do smartphone users desire and value the most?

● How does this information compare with the features offered in iOS 10 update?

● How satisfied are the current Apple iOS users with the newest update?

● Are iOS features distinct enough compared to Android OS features?

The aforementioned research questions will allow us to understand how consumers interact with

the iOS 10 features and whether they like them or not. Since iOS 10 was released recently, we will be

capturing the initial responses of users. We also look at data on the mobile phone industry, to understand

consumers in the entire market space. This analysis will be later supported by primary research through

surveying on diagnosis of consumers’ reactive enthusiasm.

Phone Industry Analysis

Analysis of Apple’s position in the phone industry reveals that it has a 15% market share, trailing

behind Android, which holds 82% of the overall market. Android and Apple are, by far, the two largest

players in the smartphone industry and together comprise 74% of mobile app users (Nielsen 2011).There

are, however, additional competitors (i.e. Blackberry, Firefox, Sailfish, Tizen, and Ubuntu) which

combine to make up the remaining 3% (Gartner). This comes in contrast to the common belief that iPhone

is the leader in its market. Hence, we will conduct a more in depth analysis to include features of the

Android operating system, including their latest update Android 7.0 Nougat released August 2016.

Further research on the Nielsen website revealed that the largest market shares of operating systems is

captured by Android (68.54%), followed by iOS (25.78%), Windows (1.95%) and others, as of October

2016.

Analyzing specific demand for iOS revealed that it has declined from 32% to 23% between May and July

2016 (BGR, Tech; shown below). Since 2011, when Android surpassed the Symbian closed-source

platform, Android has managed to capture more than 50% market share of the global smartphone

operating system (OS) industry.

iOS 10 vs. iOS 9 Comparison

Features of iOS 10 Features of iOS 9

Lock Screen: new unlocking feature, faster setting control, raise to wake phone, widgets on lock screen, updated notification center, press home to unlock

Siri: an artificial intelligence and voice recognition software.

Text updates - digital touch, tap back, invisible ink, sticker animation, handwrite text message, quicktype, emoji replacement, bubble and screen effects

Search : A method to search entire phone for keywords

Photos/Camera: Advanced machine vision, memories, markup

Apple Pay Enhancements

Siri: Opens apps, understands errors, take selfies, makes whatsapp calls

Notes: A required application which creates a space for quick thoughts to be recorded

Other: Maps improvements, interface redesign, events feature

Apple Maps: Upgraded to include public transportation in route creation

Competitor Analysis

Apple has become accustomed to competing with the likes of Samsung in its search to dominate

the smartphone market. This year, the market saw a major change with the addition of Google, which

released its first smartphone on October 20th. The Pixel, Google’s newly minted creation, looks almost

identical to Apple’s iPhone 7. Inspecting the product further, however, reveals that it offers significantly

different features from its competition. For a feature comparison between the Apple iPhone 7, the Google

Pixel, and the Samsung Galaxy, please refer to the table below.

Apple iPhone 7 Google Pixel Samsung Galaxy S7 Edge

Weight 188 Grams 168 Grams 157 Grams

Water Resistance Moderate No Yes

Headphone Jack No Yes Yes

Resolution 401 ppi 534 ppi 534 ppi

Camera Megapixels 12MP, 7MP front 12MP, 8MP front 12MP, 5MP front

Battery Life (3G talk time)

21 hours 32 hours 36 hours

Price $769 $769 $790

Operating System iOS 10 Android 7.1 Nougat Android 6.0 Marshmallow

Consumer Statements and Reviews

Expert reviews revealed the following (Engadget, Trusted Reviews, Macworld, Mashable):

Apple iOS 10 Reviews:

Pros Cons

● Deeper 3D touch integration

● Home app is great

● No major redesign

● iOS 10 does not reinvent the wheel.

Apple already did that with the iOS 7

when it moved away from

skeuomorphism to a flatter and more

modern-looking User Interface

● Notifications still beaten by Android

Android 7.1 Nougat Reviews:

Pros Cons

● Battery gets boost thanks to Doze

● Reorganized app structure

● Improved notifications

● Split-screening of apps is clunky

Android 6.0 Marshmallow Reviews:

Pros Cons

● Now on Tap is is handy, has great

potential

● Improved search and voice commands

● New permissions give users more control

● Flex Storage combines internal, external

storage

● Steep learning curve

● Now on Tap sometimes swings and

misses

● Permissions can seem intrusive

● Removal of dark mode

There are some common themes amongst critics that generally relate to the changes to the

messaging system. While the new messaging features are unique to iMessage and iPhone, there are some

major changes that will take a while for users to get used to. Whether this is a reaction to the product

being new, or a true problem with the change remains to be seen. Difficulties operating the software are

often present when it is introduced, and users may grow accustomed to the new features. It often takes

some time for Apple to work out the bugs in a new software version. There are some typical criticisms

from reviewers such as sluggish performance, weaker battery life, glitches, and incompatibility with

third-party accessories, and these have been common among Apple updates (Mashable iOS 10 Ruining

Phones). We expect that we might have some similar sentiments among the people that we survey, but we

are also hoping to have varying opinions so we can make a well-supported suggestion to Apple.

Data Analysis

Appendix A provides you with the questionnaire we used to conduct a survey among students in a

marketing research class at the Ross School of Business. A total of 40 responses were recorded during the

10 day period allocated for online completion. Of the 40 responses, 38 were valid and used for analysis.

The 2 other responses were excessively incomplete and, as a result, were excluded from data analysis.

The final sample size of 38 was made up of 17 (44.74%) males and 21 (55.26%) females (Appendix B).

The data revealed that majority of participants (57.89%) have been using their current phone for only 1-2

years, while the rest have been using their current phone for more than 2 years (42.11%) (Appendix C).

With regard to the use of phone for business or personal reasons, the majority of participants (78.95%)

claimed to have used their phone more often for personal reasons in the last week. The remaining

participants claimed to use their phone about an equal amount for work and personal reasons (10.53%)

and only for personal reasons (10.53%) (Appendix C). We were curious if the use differed based on

current operating system, however, a chi-square test revealed that the differences in use across groups was

not statistically significant (p-value < α =.05) (Appendix D). With regard to phone use for specific

activities, the most common activities included use of social network sites (100% ), emailing (100%), and

sending or receiving texts (100%); the least common activities included recording videos (51.82%),

purchasing products or services (38.46%), and playing games (28.21%) (Appendix E).

Apple rated highest in overall brand perception across all four categories. Google was rated

second highest, and Samsung lowest, in brand prestige and quality. For design, Samsung was rated

second highest and Google lowest. We found significant differences in means between groups across all

four categories, with one exception. We found the difference in mean rating between Samsung and

Google for design to be insignificant (prob < t = .819), leading us to believe that the deviation in ranking

pattern for Google and Samsung in the design category is insignificant. Therefore, overall, Apple has the

highest brand perception, Google the second highest, and Samsung the lowest (Appendix F).

Overall satisfaction is relatively high (mean= 3.95, std dev= .96) (Appendix G). There are also no

significant differences in overall satisfaction ratings across the different user groups (a one-way ANOVA

test of the relationship between overall satisfaction and user group was not statistically significant at

p-value= .23 > α= .05). Given that the ANOVA test is not significant, the subsequent samples t-test also

showed that there is no significant difference in overall satisfaction between any pairs of groups

(Appendix E).

Factor analysis was done for the ten features based on satisfaction using principal component

analysis with Varimax (orthogonal) rotation. The analysis yielded three factor groups. We labeled Factor

1 “Basic”, Factor 2 “Add-ons”, and factor 3 “Ease of use” (Appendix I). Using these factors, we ran a 1

multiple linear regression with overall satisfaction as the dependent variable. The regression results

suggest that factor 3 contributed the most to overall satisfaction (Appendix J).

Among feature satisfaction, everyone, across all groups, seemed to be fairly satisfied with their

experiences. Android OS had a satisfaction rating of 4.33 (std dev= .5) and Apple iOS 10 a rating of 3.78

(std dev= 1.1). This suggests that Android is doing better than Apple when it comes to our selected

features (Appendix K). By conducting multiple Independent Samples T Tests for each feature with regard

to satisfaction, we found the only significant difference to be in GPS Maps (p-value= .0068) (Appendix

M). Android OS had a satisfaction rating of 4.67, while Apple iOS had a rating of 3.41, suggesting Apple

has some room for improvement. Among feature importance, battery life was most important (mean=

4.67, std dev= .85), followed by easy to use interface (mean= 4.53, std dev= .6) and GPS Maps (mean=

4.3, std dev= 1.1) (Appendix L). Across the board, there were no significant differences among the ratings

of feature importance by Apple iOS users and Android OS users.

Our question that asked if the respondent had considered switching phones in the last 6 months

was meant to see how high the switch rate might be among the different phones owned in class. Out of 38

responses, 14 (38%) had considered switching their phone. Of those, 4 said they were considering an

1 Factor 1(Basic) : A system which searches entire phone for keywords, Voice recognition, Ability to use applications while phone remains locked, Battery life, Integrated Electronic Payment System, Easy to Use Interface Factor 2 (Add ons ) : Voice recognition, GPS maps, Integrated Electronic Payment System

Factor 3 (Ease of Use) : Voice recognitions, Notes app, Easy to Use Interface

upgrade of their current phone. 2 said they were interested in the new Google phone, which is something

Apple needs to keep in mind. None said they were considering switching based on the operating system

of their current phone.

Recommendations

After analyzing the data from our survey, we have drafted a list of recommendations for Apple to

consider regarding their smartphone strategy in the immediate future. Firstly, we suggest that, as quickly

as possible, Apple begins preparing iOS 11 with a focus on user interface, battery life, and GPS guidance.

The reasoning behind our group’s selection of these three specific areas of focus is two-fold. These three

categories not only represented areas of high importance for the respondents of our survey, but also

features for which Apple was outscored by Android in terms of feature satisfaction. As such, we feel that

spending adequate resources on making drastic improvements in these areas will be of utmost importance

for Apple.

Given that we have recommended that Apple increases resources on the areas mentioned above,

we also must account for areas from which they can draw the money and time previously being focused

elsewhere. Consequently, we have identified features that, based on our data, can be deprioritized.

Employing the same selection strategy as we used previously, we simply selected areas of low importance

rather than high importance, and high satisfaction rather than low satisfaction. Keyword search, lock

screen app usage, and the mobile payment system, according to the data, comprise the lowest values for

overall importance. Additionally, Apple outscored Android regarding satisfaction in two of the three

features, trailing Android in lock screen app usage by a nearly negligible .04. We feel that because these

areas are relatively unimportant to consumers and Apple already has a lead on Android, Apple will not be

hurt by spending minimal resources on immediate improvement.

Brand prestige is an area of massive importance for Apple. Our data reveals that, in terms of pure

feature differentiation, Apple and Android are extremely similar. In fact, the only area that illustrated a

significant difference following an independent sample T-test is the GPS map app. As a result, we credit

much of Apple’s industry success to a huge advantage in brand prestige. Our prediction regarding this

hypothesis was backed up by our data, which revealed a perceived brand prestige score of 4.86/5 for

Apple, much higher than Android’s 3.32/5. Our group believes that because of this advantage, a large

degree of consumers who perceive little differentiation in specific features end up choosing Apple

products simply because they are of the Apple brand. If our assumption resembles the truth, it is crucial

that Apple continues to carry out the actions (commercials, physical store appearances, etc.) that

distinguish the brand from competitors. Without continuation of perceived value, Apple will surely begin

to relinquish market share.

In line with the consideration of competitors, our group stresses the importance of monitoring

future strategies and decisions relevant to Google’s new smartphone, the Pixel. Google is a relatively new

player in the smartphone industry, having released its premier product just under two months ago. With

that in mind, it is important to take its small market share with a grain of salt. Above, we described the

role that brand prestige plays in the technology industry. If there is a brand in the technology industry that

can compete with Apple on brand prestige alone, it’s Google. Accordingly, Apple needs to make sure that

it continues to innovate in an attempt to stand apart from Google on a product vs. product basis. The boost

that Apple receives over Android based on brand prestige is significantly reduced in the case of Google.

In summation, Apple’s focus to keep up with Android in terms of product features should be met by its

efforts to positively differentiate its products from those of Google.

Finally, the lack of differentiation in product offerings illustrates a highly competitive

marketplace. In this situation, any chance to poach wavering consumers from opposing brands should be

capitalized on as often as possible. Our data reveals that 22% of Android users have recently considered

switching phones. Although our data may not be fully representative of the complete smartphone market,

this figure hints that there is a readily available market of current Android users for Apple to focus on. To

appeal to this consumers, we once again stress the importance of improving iOS’ interface in its next

update. Android consumers value this feature highly, and our group believes that even a slight

improvement may be just enough to convince soft Android users to switch over to Apple.

Limitations

There are some issues which could hinder the data we collected from accurately reflecting the

general population. The data which has been accumulated may not be representative of an individual’s

actual values and beliefs. The respondents filling the questionnaire may be hesitant to reveal the actual

preferences and usage of their phones, due to social judgements. There may also be a possibility that

people’s opinion of their phones is influenced by their mood while they fill the questionnaire. Further, it

may also be the possibility that the respondents face distractions and don’t answer the questions with

complete sincerity. Everyone had to complete 7 other surveys. This very well may have limited the

attention each person put into the survey, leading to a lack of statistically significant data. Hence the data

accumulated may be limited by it’s accuracy.

Another limitation to our data was the incredibly small sample size we surveyed. There were only

38 eligible responses, which potentially limits how strongly the data represents the population. In

addition, a majority of the respondents were iPhone users, which is not indicative of the population, where

iPhones are a minority. Also, all of our respondents were of college age, and did not use their phones for

work nearly as much as the general population does. This led to us only approaching a small portion of

the smartphone market, as well as one which has characteristics most of the smartphone using population

may not.

To improve our research, it is necessary to survey a much larger and more diverse group. Getting

different types of phone users to respond will increase the accuracy of our data, and allow for stronger

recommendations to be delivered. Moving forward, we would also benefit from incorporating our

enhanced understanding of the respondents psychology, by rephrasing certain questions to get more

targeted responses. This would help improve both the accuracy and the usability of the data.

Conclusion

Each member of our group, to a degree, is a tech consumer in their own right. As college students

who use smartphones and laptops on a daily basis, we are all fairly tuned into consumer trends in the

technology industry. As a result, certain pieces of our data (strong brand presence for Apple, for example)

came as no surprise. That said, our data definitely brought to light some hidden details that are crucial to

success in the smartphone industry. For example, while we know that competition is intense between

major competitors, we severely overestimated the difference between Apple and Android smartphones on

a feature by feature basis. If we were given the opportunity to conduct further research for Apple directly,

we would be inclined to expand our research to a more diverse demographic to see if our results hold true

for a fully representative population. If the results indeed remained the same, we would feel an even

greater boost of validation to the recommendations listed above, and we would confidently move forward

with the strategies we devised using the results of our initial survey.

Appendix A

Phone Operating System Survey: GP2

The purpose of this research is to understand how consumers evaluate different features of a smartphone. In this questionnaire, you will find a variety of questions related to your smartphone experience. The survey will take approximately 5 minutes to complete and your answers will be kept anonymous. Please indicate your thoughts as closely and as thoroughly as possible. We appreciate your time and thank you for your valuable inputs. Consumer Thoughts 1. How long have you been using your Smartphone?

❏ Never ❏ 1-2 Years ❏ 3-4 Years ❏ >6 Years

2. In the last week, what have you used your phone most often for? Work, personal reasons, or equally both?

❏ Only for work ❏ More often for work ❏ About an equal amount for work and personal reasons ❏ More often for personal reasons ❏ Only for personal reasons

3. For which of the following activities do you presently use your phone? (Please check all that apply)

❏ Send or receive photos ❏ Play videos/movies ❏ Send or receive texts ❏ Play games ❏ Purchase products or services ❏ Record videos ❏ Play music ❏ Phone calls ❏ Emails ❏ General internet use (other than using social network sites)

❏ Use social networking websites ❏ Other (please specify)

________________________________________________________________ 4. How would you rate your overall satisfaction with your most often used phone’s operating system?

Very Dissatisfied

Dissatisfied Neutral Satisfied Very Satisfied

1 2 3 4 5 5. Please specify the current Operating System on your phone (For reference: iOS 10- Sept 2016 iPhone update, iOS 9- Sept 2015 iPhone update, Android- August 2016 update)

❏ iOS 9 ❏ iOS 10 ❏ Android OS ❏ Other (Please specify) _________

6. How would you rate these phone brands on the following dimensions based on your perception? (Please rate all the following 3 brands on the below mentioned attributes). a. Apple

Very Poor Poor Neutral Good Very Good

Brand Prestige 1 2 3 4 5

Quality 1 2 3 4 5

Design 1 2 3 4 5

Consumer-Friendliness

1 2 3 4 5

b. Google

Very Poor Poor Neutral Good Very Good

Brand Prestige 1 2 3 4 5

Quality 1 2 3 4 5

Design 1 2 3 4 5

Consumer-Friendliness 1 2 3 4 5 c. Samsung

Very Poor Poor Neutral Good Very Good

Brand Prestige 1 2 3 4 5

Quality 1 2 3 4 5

Design 1 2 3 4 5

Consumer-Friendliness 1 2 3 4 5 Feature Satisfaction 7. For each question, please rate your level of satisfaction regarding the features in your current operating system, with 1 representing very dissatisfied and 5 representing very satisfied.

Very Dissatisfied

Dissatisfied

Neutral Satisfied Very Satisfied

Integrated Electronic Payment System

1 2 3 4 5

Camera Quality 1 2 3 4 5

Voice Recognition

1 2 3 4 5

Notes App 1 2 3 4 5

GPS Maps 1 2 3 4 5

A system which searches entire phone for keywords

1 2 3 4 5

Ability to use applications while phone remains locked

1 2 3 4 5

Battery Life 1 2 3 4 5

Easy to Use Interface

1 2 3 4 5

Customizable User Interface

1 2 3 4 5

Feature Importance 8. For each of the following features, please rate the features for your purchasing choice on a scale from 1 to 5, with 1 representing not important, and 5 representing very important.

Not Important

Very Important

Integrated Electronic Payment System

1 2 3 4 5

Camera Quality 1 2 3 4 5

Voice Recognition

1 2 3 4 5

Notes App 1 2 3 4 5

GPS Maps 1 2 3 4 5

A system which 1 2 3 4 5

searches entire phone for keywords

Ability to use applications while phone remains locked

1 2 3 4 5

Battery Life 1 2 3 4 5

Easy to Use Interface

1 2 3 4 5

Customizable User Interface

1 2 3 4 5

9. Have you considered switching your phone in the last 6 months? Please explain briefly. __________________________________________________________________________________________________________________________________________________________________________________________________________________ Demographics 10. Gender (Please circle the best option)

❏ Male ❏ Female

Appendix B

Appendix C

Appendix D

Appendix E

Appendix F

Appendix G

Appendix H

Appendix I

Appendix J

Appendix K

Appendix L

Appendix M

Research Links

● http://newatlas.com/iphone-7-plus-vs-pixel-xl-comparison/45885/

● http://newatlas.com/iphone-7-plus-galaxy-s7-edge-comparison/45433/?li_source

=LI&li_medium=default-widget

● https://www.engadget.com/2016/09/16/ios-10-review/

● https://www.engadget.com/2016/08/29/android-7-0-nougat-review/

● https://www.engadget.com/2015/10/23/android-6-0-marshmallow-review-all-abou

t-polish-and-power/

● http://mashable.com/2016/09/13/apple-ios-10-review/#Ub959Kxu8Pqb

● http://www.trustedreviews.com/ios-10-review

● http://bgr.com/2016/06/02/apples-mobile-market-share-sees-big-drop-in-may-as-

android-skyrockets/

● http://www.forbes.com/sites/chuckjones/2016/02/21/apples-iphone-market-share-

vs-profits/#703af44f46f8

● http://mashable.com/2016/09/13/ios10-ruining-phones/#KFIKq1vdhiqP