If People Keep Their iPhone For a Tenth of a Year Longer, an Analyst Claims it Can Result in 8 Million Fewer iPhones Shipped
Lots of iPhone users are satisfied with their devices to the extent that they do not believe in upgrading to a brand new one. While customer satisfaction is thoroughly important for goodwill, it can also be thought of as a double-edged sword for Apple. This is because lots of people are foregoing the upgrade to a newer smartphone, resulting in fewer iPhone sales.
iPhone Lifespan Is Standing at an Average of 2.5 Years – iPhone Replacement Cycle Is Still Better Than Android Devices
According to a note Daniel Ives, a GBH Insights analyst, wrote to his clients, the tension is rising on Wall Street in the run-up to the second-quarter earnings release by Apple, which will be released today. He foresees slower demand and the hefty $999 iPhone X price tag to engulf Apple this week. The California-based giant and a lot of other major smartphone countries are in a paradox; their overwhelming success is now spelling trouble for them.
According to BMO, consumers are now keeping their smartphones for longer. Longer smartphone lifespan has negatively affected sales, with the average lifespan being around 2.5 years. Even though the iPhone replacement cycle is better than that of its Android phone competitors, it continues to worsen.
Oppenheimer has seconded BMO and Goldman Sachs wonders if Apple can do something about customers becoming ‘more fatigued with smartphone upgrades’. If customers keep their iPhones even for a tenth of a year longer, it can result in 8 million fewer iPhone sales. Here is where the problem arises; if a customer is satisfied with their iPhone, it will result in fewer smartphone sales for Apple.
However, looking at the price Apple sells it mobile phones at, the average consumer will expect such devices to last them for a certain period of time. Reportedly, around 50 to 53 million iPhones were sold in the first three months of 2018 and is just a modest improvement over the 50.76 million figure for the same period last year.
Apple Has a Crucial Decision to Make for Its 2018 iPhone Family
iPhone X was expected to be an unprecedented upgrade to the iPhone family and the bezel-less flagship couldn’t muster enough sales to spur a supercycle. However, it did bring high revenue for the company, with a recent report detailing that the 5.8-inch handset accounted for 35 percent of global smartphone profits. Goldman Sachs thinks that this should get Apple CEO Tim Cook thinking.
“Apple faces a critical strategic decision. Move down market with the iPhone more aggressively and take lower margins or remain at the high end of the market with higher margins and lower unit volume.”
However, not all products sold by Apple are high-end. The company sells the cheaper iPhone SE models and older variants, not to mention that the tech giant is also succeeding in the refurbished smartphone market with a comprehensive lead. These models might not cost as much as the iPhone X but it is the newer ones that keep the company running and afloat.
It is for this reason Goldman Sachs came up with the statement that Apple needs to rethink its strategy.
What sort of strategy do you Apple should adopt as it gears to release its iPhone 2018 lineup during the month of September? Tell us your thoughts down in the comments.
Source: Business Insider