People Aren't Buying Expensive iPhone Anymore, Is This Beginning Of The End For Apple?
When Apple first debuted the iPhone in 2007, it was a phenomenal success. No one had ever seen anything like it. Now, the pioneering smartphone has lost some of its luster. That happens a lot in tech but the question is can Apple survive the fallout?
When Apple first debuted the iPhone in 2007, it was a phenomenal success. No one had ever seen anything like it.
Now, the pioneering smartphone has lost some of its luster. That happens a lot in tech but the question is, can Apple survive the fallout from that?
Images courtesy: Reuters
At the start of this roller coaster journey 12 years ago, Apple was pretty much the first to capitalize on the smartphone craze that would become the next decade. We still haven't gotten over our obsession with them, but those days they were also a novelty. Everyone wanted to buy one, and Apple's slick iPhone sold big numbers.
But now, those numbers are petering out, and major market share holders like Apple and Samsung need to contend with the part that comes next; the apathy.
From status symbol to capitalism meme
In first world countries like the US, everyone has a smartphone, and not everyone wants to trade in for the newer model even every couple of years. So Apple's new devices aren't looking so attractive anymore, especially since the cheapest available 2018 model costs $749 (approximately Rs 53,500).
The situation isn't any better in India. Here, the iPhone XR is priced at Rs 74,900, and that's the base model for 2018. The only person looking to buy that is likely someone switching from either Android or a years-old outdated iPhone.
The thing is, Apple hasn't magically begun to appeal to customers less in 2018. According to market analysis firm Risk Hedge, the decline has been a steady curve that began somewhere around 2015.
The truth behind the numbers
According to a report for Forbes, penned by Risk Hedge Report Editor Stephen McBride, iPhone sales actually peaked that year. But you wouldn't be able to tell looking at this chart of Apple's sales over the past 20-odd years.
You see, Apple has been smart, never revealing how many iPhones it sells. It's only ever talked about iPhone earnings. In 2010, that was $199 earned per iPhone 4. In 2014, it was the iPhone 6 for 299. Today, it's at least three times that number, more if you'd rather have the iPhone XS.
Also Read: Indians Aren't Buying iPhones Because Of OnePlus, Apart From Being Just Too Expensive
So while Apple has been deflecting reports of diminishing popularity with earnings compensated by higher prices, it's been losing its grip on the smartphone market.
The company finally announced this earlier this year, admitting the issue for the very first time. It wasn't a change of heart, they just had no choice.
Apple was, for the first time in six years, failing to meet its annual earnings forecast. The move saw a further dip in the company's already lowering stock, finally hitting 35 percent lower than its value in November.
As a result, they lost about Rs 31 lakh crore, their biggest loss ever.
At the time, CEO Tim Cook blamed people for not a dip in consumer appreciation. The hard truth is however, Apple couldn't expect to keep raising prices to compensate for lower sales numbers. Not forever anyway.
I mean, you can pay over a lakh for an iPhone right now. But most of you wouldn't. It just doesn't fit into a reasonable budget.
Without the iPhone, what is Apple?
Which brings us to the future. Samsung, another company with over-the-top phone prices, isn't solely about its Galaxy lineup. For one thing, the company sells a number of cheaper devices too. Then, on top of that, they also have other electronics that sell a decent amount.
Also Read: Instead Of Buying This Year's iPhones, For Same Amount You Can Get A Bike Or Foreign Vacation
Apple, on the other hand, relies largely on iPhone sales for product earnings. Based on it's 2018 fourth quarter report, about 59 percent of its revenue comes from iPhone sales. Macs account for about 20 percent. The rest is other devices like, iPads, Apple Watches, and its subscription services.
Without the iPhone, Apple is looking very weak. And even if its services revenue has been rising, how long before the people abandoning its phones also abandon those in favour of other alternatives?
It's like what happened with Blackberry and Nokia. Without their devices not generating a spark among consumers anymore, both sunk into oblivion. Is that going to be the future of Apple?