As iPhone unit sales have slowed, Apple was partially relying on higher prices to make up the difference. Consumers are now less tolerant of the premium prices phone makers want for their newest devices.
Every day we are witnessing more and more doubts surrounding upcoming Apple’s new iPhone models. On September 10, Apple is should reveal their three new phones, including some upgrades to the premium iPhone XS and iPhone XS Max models as well as a second edition of the cheaper iPhone XR. The new phones are predicted to be launched just in time for the holiday season.
However, there are some psychological barriers that the eventual user could have. Some of them might be really fond of their old phone for example. We already wrote of how in the U.S., the average time to upgrade a smartphone now is prolonged to 33 months that is 5,5 years longer than in a year before. Strategy Analytics report shows that the average Apple smartphone has been active for 18 months and Samsung around 16.5 months.
However, as we could see from the latest company’s result, iPhone unit sales have slowed down. Apple has partially been leaning on higher prices to be different from other brands. However, with the recession right around the corner, consumers are less tolerant of the luxurious prices company wants for their newest devices.
So, if Apple in anytime did enjoy a one-year upgrade cycle – now it’s officially over.
Both Apple’s and Samsung’s forerunners are priced at $1,000 or more. By Gartner reports, global smartphone sales declined 1.7% in the second quarter.
Gartner senior research director Anshul Gupta says that demand for high-end smartphones has slowed at a greater rate than the demand for mid-range and low-end smartphones.
According to Strategy Analytics, smartphone buyers are also not satisfied with the quality offered for the price. In Apple’s case, their premium iPhones, updates to the XS and XS Max, are said to have better camera system, and Face ID sensor that enables more augmented reality tricks. However, one question users are asking is – is that all, because their older phone has almost exactly the same.
Still, the September 10 launch event invites says “By innovation only,” so Apple might have some secrets in their sleeves.
One thing is sure – 5G is not among them – until the next year. It makes some sense since 5G networks is still not developed through a lot of venues but then, why not to wait until the next year when 5G should have good coverage after all?
Or, maybe a better question – why not to buy Samsung’s new 5G phone, the Galaxy Note 10+ 5G, new Galaxy Note 10 and Galaxy Note 10+, or Huawei’s flagship Mate 30?
This year’s iPhones are being launched in a time of increased economic crisis part of which can be seen in Donald Trump’s trade war with China. The iPhone should become a subject to a tariff starting December 15. What a nice Christmas gift.
Together with more expensive phones, Apple is forcing hard on its services business in order to soften iPhone’s declining contribution to its bottom line and it seems that is a good strategy for now because services rose 12% year-over-year in the June quarter to $11.46 billion. Even though iPhone business fell down almost 12% over the same period to $26 billion the company will not suffer because it still relies on iPhone for the majority of its revenue.
Also, let’s not forget that users nowadays respond much more cautiously than it was the case before. There is no more screaming Steve Jobs caught up in the Apple magic and being able to sell snow to the Eskimos. New users are now being more skeptical and are asking for reasons not to upgrade just yet.
This puts even more pressure on the marketing ability to create a persuasive story and give good enough reasons for users to buy. At the time of writing, Apple (AAPL) stock was down by 0.13% to $208.74.
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