When Apple misplaced greater than $75 billion in market worth this previous week after a shock announcement that it’s anticipating decrease iPhone gross sales than initially projected, the corporate put a lot of the blame for its troubles on China, the place a slowing financial system and the commerce warfare with the United States have damage gross sales.
But an even bigger challenge for Apple would possibly exist a lot nearer to house, in a small, leafy city in Ohio.
That’s the place my mother lives. She’s a comparatively tech-savvy retiree and a longtime Apple fan who has used most of the firm’s merchandise through the years. I realized to kind on an Apple IIGS at her workplace, and she or he was an early adopter of the unique turquoise iMac. These days, she makes use of her iPhone to examine Facebook and Instagram, discuss together with her associates and kinfolk, and play solitaire and Words With Friends.
Her telephone isn’t the newest mannequin — it’s a three-year-old iPhone 6S — and it’s lacking a few of the newest options. She can’t take portrait mode photographs utilizing a dual-lens digicam, a function launched within the iPhone 7 Plus, and she will’t unlock her telephone utilizing Face ID, which was launched within the iPhone X in 2017. Her telephone’s battery life may very well be higher, and the machine generally runs out of cupboard space.
But she’s proud of it, and doesn’t really feel the necessity to improve. She additionally has a first-generation Apple Watch and a several-versions-ago MacBook Air, neither of which she’s planning to interchange anytime quickly.
“The phone I have does just about everything I need,” she mentioned after I referred to as her to ask why she hadn’t upgraded to one of many newer fashions. “Why pay $800 for a new one just to be up to date? My needs aren’t that complicated.”
Most of the journalists who write about tech for a residing (together with me) are early adopters — energy customers who like having the newest devices, and who’re keen to fork over cash for a barely higher expertise. For a few of these folks, Apple’s announcement has come as a shock that portends potential catastrophe for the corporate.
But for my mother, and the various people who find themselves most likely in her state of affairs, the corporate’s slowing iPhone gross sales aren’t in any respect a catastrophe. In truth, they make complete sense, and so they don’t have a lot to do with China.
In a letter to investors explaining the lower forecast, Timothy D. Cook, Apple’s chief executive, nodded to smaller-than-expected demand for iPhone upgrades, saying that consumers were “adapting to a world with fewer carrier subsidies” and “taking advantage of significantly reduced pricing for iPhone battery replacements.” The company declined to comment for this column.
Apple is also facing competition from rivals like Samsung and Huawei, which have flooded international markets with lower-cost Androids that are, in many cases, just as functional as iPhones. And, yes, there are issues related to President Trump’s trade war with China, and an overall economic slowdown in the country.
But the most consequential hit to Apple’s bottom line may be from people who are holding on to their phones for longer. Back in 2015, iPhones were being replaced after roughly two years, on average, according to BayStreet Research, a firm that tracks smartphone sales. That period has jumped to roughly three years, and is expected to grow even more.
“We’re going to move to longer replacement cycles, principally because the cost is higher,” said Chris Caso, a tech analyst with Raymond James.
Many of Apple’s issues are common to smartphone makers. The components inside newer phones, such as added memory and improved screen technology, are more expensive than older components. Refurbished and used phones are also more easily available, and carriers like Verizon and AT&T aren’t subsidizing new phone purchases as heavily as they once did, meaning that the up-front cost to the customer is higher.
“It used to be that for $650, you got all new features, a better screen, everything,” Mr. Caso said. “Now, to put more features in the phone, it costs money.”
There are Apple-specific variables, too. The newest version of Apple’s mobile operating systems, iOS 12, was designed to improve the performance of older devices. (This was a refreshing change from previous iOS updates, which tended to grind older models to a halt.) With better water resistance and sturdier screens, iPhones are more physically resilient than they used to be. And the list of must-have new features has shrunk. With a few exceptions — like Face ID and animated emojis — there is nothing you can do on a new iPhone that you can’t do on one from several years ago.
Apple has also taken a hit from its battery replacement program, which offered steep discounts to many customers after the company was accused of slowing down older iPhones. That led some users to replace their batteries rather than their entire iPhone.
All of this is worrying short-term investors, who want people to buy as many new iPhones as possible. But it’s great for people like my mom, who get to keep phones they’re happy with and replace them less frequently. It’s great for the environment — according to Apple’s latest sustainability report, each new Apple device produced generates an average of 90 kilograms of carbon emissions.
A more durable iPhone could even be great for Apple’s long-term profitability. As Brian Barrett points out at Wired, “An iPhone that lasts longer keeps customers in the iOS ecosystem longer,” and more willing to keep their paid subscriptions to Apple Music, iCloud and other Apple services.
Apple’s longer replacement cycle may be a temporary phenomenon, if newer technologies — such as compatibility with 5G mobile networks, which is expected to arrive in iPhones in 2020 — lead to popular apps that don’t run on older phones.
“If there’s an app — maybe it’s Fortnite 2 — that I can’t run on my existing iPhone, a new iPhone will be on every teenage boy’s shopping list,” Mr. Caso said.
But for now, while investors might be unhappy with the company’s short-term sales, the rest of us should cheer it as a sign of progress in giving customers what they want: sturdy, reliable phones that don’t become obsolete as soon as a new model arrives.
When I asked my mom what would get her to upgrade to a newer iPhone, she said she might do it if a new, killer feature came along, or if her favorite apps no longer worked. But in the end, she admitted that wasn’t likely.
“Until I drop it and break it, I’ll probably keep it,” she said.