But it would want you to believe that the signs were not misread.
A report by analyst Neal Cybart of research firm Above Avalon shows the steady decline in iPhone sales across successive quarters, since 2012. According to the tables computed using 12-month and 24-month moving averages of sales figures without taking into account short-term spikes and falls, actual growth in the number of iPhones sold each quarter has stalled since 2012, the year Apple decided to unveil the iPhone 5.
Sales figures for the iPhone spiked with each new release, buoyed by the added fingerprint sensor on the iPhone 5s. But, the subsequent slowdown over the next quarters led to an overall stagnation of growth. When Apple shifted to the larger screen sizes with the iPhone 6 and iPhone 6 Plus, it saw a temporary spike in growth with users of flagship Android devices having shifted to the large-screen iPhones. The final peg that led to the drastic drop in revenue was led by the iPhone 6s and iPhone 6s Plus not having enough new factors to appeal to consumers.
There have also been a number of other factors that have been attributed to Apple’s slowdown. While the question of Apple not packing enough innovation has been hovering around, the factor of Apple devices having longer life spans have also affected the growth of the mobile device. While Apple typically wants you to consider your iPhone with a two-year life cycle, many of Apple’s users consider the iPhone to have a three-year life cycle. As a result, many iPhone users have not made the upgrade that Apple would have hoped they would.
"Android is closer to iOS than ever before"
Cybart says, “Much of the iPhone's current success has been a result of iPhone users regularly upgrading their devices every two years. However, there are signs that this upgrade rate is actually much longer than two years. Over the course of the past year, Cook has provided updates as to the percent of the iPhone installed base as of September 2014 that had upgraded to a larger iPhone (6, 6 Plus, 6s, or 6s Plus). At the end of 2015, 60% of the iPhone installed base as of September 2014 had not upgraded to a larger iPhone. That data point is not representative of an iPhone business on a two-year upgrade cycle. Instead, the iPhone installed base is, at a minimum, on a three-year cycle. Much more concerning for Apple is that the longer the remaining 60% of the installed base delays an iPhone upgrade, the longer the upgrade cycle is extending. It is not unreasonable for the iPhone installed base to extend out to four or even five years. Not surprisingly, these trends were never accurately captured in consumer survey research reports. This is unchartered territory for Apple.”
In addition, Android’s latest improvements have led to it being closer to iOS than ever before. As a result, Android devices have capitalised on the factor of value, giving users well-built, premium devices fused together with sublime performance and much-improved end-user experience. This has stalled the number of users shifting to iOS devices. The iPhone SE, on this note, has had a negative impact on the long term for Apple, instead of ballooning its sales. The mid-range pricing has brought down the median, which may impact the future pricing of iPhones and force Apple to decrease profit margins.
"The iPhone 7 will need to present major innovations, and adding three levels of touch is not enough"
Amid analysts being bearish on the iPhone 7, Apple CEO Tim Cook has called out to Apple’s users and the media alike to state that the iPhone 7 will have features that we did not know we needed. This resonates the working philosophy of Apple’s mercurial founder, the late Steve Jobs, who would introduce a feature (read: iPod, Macintosh, iPhone) and that would subsequently become a seamless part of lifestyles. However, it may not be that easy this time round.
For one, the iPhone 7 will need to present major innovations for Apple to actually urge customers to buy it, and adding three levels of touch sensitivity on a display is not one. Apple will also need to become a technology giant that is not swayed by the sales figure of one of its devices. While the iPhone accounts for the majority of its sales now, the figures will inevitably drop with major smartphone markets approaching saturation point.
Apple would want you to believe that it did not misread the signs, but maybe it did. While Cook would assure that Apple has grander plans in store, we cannot help but be a tad negative about what the future holds for us and Apple.
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