William Gallagher
During Apple's quarterly financial results call, CEO Tim Cook reported that iPhone sales are down in part because of existing users who were on subsidized contracts are now finding unbundled prices too expensive.
Asked by analysts about why iPhone sales were lower than expected, Cook revealed that the time between users upgrading their phones has lengthened. He said that this increased time means that some users now looking to upgrade were only now coming off previously subsidized contracts that had made the initial cost of iPhone much less.
"We do design our products to last as long as possible," Cook said. "Some people hang on to those for the life of the product and some people trade them in and then that phone is redistributed to someone else. The upgrade cycle has extended, there's no doubt about that."
Cook thinks price is a factor and that this was especially true outside the U.S. He said that comparing the pricing of this year's iPhones to last year's, at least in America, shows "actually a pretty small difference." Outside the continental U.S., though, he said that some countries were affected by currency exchange fluctuations which meant Apple needed to "essentially absorb part or all of the foreign currency moves."
However, while acknowledging the importance of the sales price, Cook stressed that he thinks "the subsidy is probably the bigger of the issues in the developed markets."
"Even though the subsidy has gone away for a period of time, if you're a customer whose last purchase was a 6S or a 6 or even in some cases a 7, you may have paid $199 for it. Now we're in the unbundled world, it's obviously much more than that," he said.
Cook revealed that Apple has "a number of actions to address that, including the trade-in and installment payments."
"So where it goes in the future, I don't know," he concluded. "But I am convinced that making a great product that is high quality, that is the best thing for the customer. We work for the user and so that's the way that we look at it."
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Charles Martin
Malcolm Owen
Christine McKee
Wesley Hilliard
59 Comments
This makes sense. I've got an SE that's almost three years old. It's still on the latest iOS and does everything I want so why SHOULD I upgrade? We replaced the battery in my wife's 6 last year and likely will do my iPhone in the next few months. Then we're likely good for another couple at least. I don't mind being one rev out on iOS. As long as Apple keeps making solid hardware I'll keep it running.
Well duh. I plunked down $1,000 for an iPhone X in November 2017 and there was really no need to upgrade to a iPhone XS -- there was simply not enough of an upgrade to warrant plunking down another $1,000.
So instead of giving my wife my old phone (like I usually) do, I got a $29 battery replacement to go in her iPhone 7 (80% health) and I had my iPhone X battery replaced as well (even at 88% for another $29). That should keep up going through 2019 and perhaps beyond. The phones work great, so really no need to upgrade unless Apple puts out something truly remarkable this year.
My 7+ still works like charm but someone gave me a XS. I would not upgrade it tho.
I’m planning to upgrade this year, but — in truth — mainly for Portrait Mode, which is one of the few new features my iPhone 6s (which, thanks to the battery replacement program, was not upgraded at the end of the two-year cycle) can’t do. Otherwise, the 6s is a fine phone. If the Android world designed and updated its phones so as to not be obsolete in about two years, they’d have a lot fewer upgraders, particularly at the premium levels.
Lower the price and see the effect. You know you can get alternative smartphone with 32-bit high quality DAC and with five cameras with AI that make better pictures than iPhones for several hundred dollars less, right? No it is not Samsung. You missed other brands. Do the research. OnePlus, LG and few other brands.