Is The iPhone Finally Losing Its Mojo? - InformationWeek
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1/27/2016
02:06 PM
Eric Zeman
Eric Zeman
Commentary
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Is The iPhone Finally Losing Its Mojo?

Sales of iPhones have flattened and are expected to begin receding. Can Apple do anything to change course?

iPhone 7 Rumors: 7 That Have People Talking
iPhone 7 Rumors: 7 That Have People Talking
(Click image for larger view and slideshow.)

It finally happened. The long upward arc of iPhone sales has reached its zenith. Apple's fourth quarter 2015 report shows flat sales year-over-year, and the company predicts a first-ever drop in shipments for the first quarter of 2016. The numbers paint an interesting story, but not the whole story.

Apple shipped 74.8 million iPhones during the last three months of 2015. That's up just 300,000 units from the 74.5 million it shipped during the same period in 2014, when the larger iPhone 6 and iPhone 6 Plus made their debut. Consumers were all too happy to lap up the more powerful phones, which were a huge upgrade from the 2012 iPhone 5 and 2013 iPhone 5s.

Interest in the 2015 follow-up smartphones, the iPhone 6s and iPhones 6s Plus, however, has waned, despite the bonkers first-weekend sales of 13 million. Apple doesn't break out sales of individual iPhone models, so we don't have a clear picture of exactly what handsets are selling.

(Image: Mutlu Kurtbas/iStockphoto)

(Image: Mutlu Kurtbas/iStockphoto)

Most other phone makers would kill to have Apple's numbers. Look at LG as an example. Its fourth quarter results show it shipped 15.3 million phones during the last three months of the year, and 59.7 million for the entirety of 2015. Apple shipped five times as many phones in the same period. Apart from Samsung, which is still the world leader in terms of volume, most other handset makers shipped far fewer devices than LG. Moreover, Apple owns the lion's share of profits from smartphone sales.

The iPhone accounted for $51 billion of Apple's $75 billion in revenue for the fourth quarter, or about two-thirds of the total. The company posted a record profit of $18.4 billion -- more than any other company ever. LG netted a profit of $301 million for the fourth quarter. Apple's profits were 61 times higher than LG's.

Looking ahead, Apple predicts first-quarter revenues of between $50 and $53 billion. Piper Jaffray analyst Gene Munster said that he believes this equates to iPhone shipments between 50 million and 52 million. Wall Street expected Apple to predict first-quarter iPhone shipments of 55 million, so the disparity has investors reeling.

[Read iOS 9.2.1 Gives Older iPhones a Performance Boost.]

Apple CEO Tim Cook would only admit that iPhone shipments for the first quarter would be flat at best. He blamed the company's performance on weird market behavior and currency fluctuations. "We are seeing extreme conditions unlike anything we have ever experienced before," he said on a call with investors.

There is a silver lining. Cook noted that only half of all current iPhone users are on the iPhone 6, 6 Plus, 6s, or 6s Plus. The rest are still using the iPhone 5s or earlier. "This indicates to me there's still a tremendous number of people in the world who will buy smartphones, and we ought to be able to win over our fair share of those," said Cook.

In the end, Apple is not immune to larger market conditions. IDC recently said 2015 marked the first-ever single-digit growth period for phone sales. The analyst organization says it doesn't expect 2016 to be much better.

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Eric is a freelance writer for InformationWeek specializing in mobile technologies. View Full Bio
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impactnow
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impactnow,
User Rank: Ninja
1/30/2016 | 4:22:59 PM
Re: iTrouble
Thats exactly it there is no compelling reason to upgrade and without the subsidy most consumers have to really hard to find a reason to spend $600 on a phone every few years.
moarsauce123
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moarsauce123,
User Rank: Ninja
1/30/2016 | 8:09:17 AM
Cost of operation
The problem with the iPhone or any other smartphone is not the device, but the cost of operations. Those who need or want to spend quite a lot of money per month on a smartphone already do so. Many others like myself are interested in a smartphone, but are unwilling the insane monthly charges for a decent data plan (as in no caps).

If Apple wants to sell more gear they have to do these three things:

- cut the price of the iPhone because it is grossly overprice compared to the competition

- deliver product when it is demanded

- start its own very low cost cell service, 30$/month for four lines with unlimited data/voice/text is where I would jump
impactnow
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impactnow,
User Rank: Ninja
1/29/2016 | 12:23:26 PM
Re: iTrouble

With every new modal comes the obligatory price increase and with mobile carriers not providing the "free phone" any longer consumers are getting savvier about their purchasing cycle. If Apple want to drive more adoption of their new models it will be time to start subsidizing their purchase through the carriers.

PedroGonzales
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PedroGonzales,
User Rank: Ninja
1/29/2016 | 10:03:56 AM
Re: iTrouble
May be that is why iphones are made fragile so they are easy to break and people have to get a new replacement.  I had an iphone, I had to replace it because i was running out of memory.  As of now I'm pretty happy, I don't plan to replace it until it breaks.  I can see that only very few hard core Apple fans are willing to upgrade their phone on a regular basis. 
Whoopty
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Whoopty,
User Rank: Ninja
1/29/2016 | 7:32:42 AM
Re: iTrouble
I'm the same. I have an Xperia Z2 that is ticking along just nicely. It's even more pronounced in more remote countries however, where second hand phones like old S2s and similar are all over the place. These handsets are lasting a long, long time if cared for and like you say, they're more than capable.

I'm a gamer too though and even my desktop PC is only being upgraded once every few years now. It's just not necessary like it once was.
Gary_EL
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Gary_EL,
User Rank: Ninja
1/28/2016 | 10:20:43 PM
Re: iTrouble
I guess this is finally IT for Apple. Can they do it again - without Steve Jobs
SachinEE
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SachinEE,
User Rank: Ninja
1/28/2016 | 9:56:25 PM
Re: iTrouble
@Gary: They do. Although the 3D touch in just "meh" in my opinion and I don't know if people would warm upto it in the iPhone 7, I believe that most smartphone manufacturers have already hit a point from where they can just do hardware upgrades. I know the Galaxy S7 looks the same as the S6, or maybe similar, so I wouldn't buy the S7 just yet.
SachinEE
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SachinEE,
User Rank: Ninja
1/28/2016 | 9:52:51 PM
Re: iTrouble
@Whoopty: Yes indeed. I still have my Galaxy S4 in my home and that is still usable and works without lag and plays most games in HD. To me that phone still hasn't worn out. Moreover if you root the phone and flash the rom of your choice, you get to squeeze more juice out of the phone.
SachinEE
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SachinEE,
User Rank: Ninja
1/28/2016 | 9:50:27 PM
Re: iTrouble
@Pablo: Makes no sense. That wasn't the only factor for PC sales to slow down. Yes, my 5 year old PC still has enough power to run because it was made "future proof" for a couple of years by using the most extreme hardware. But smartphone are a different domain than the pc. Most smartphones are only made future proof of upto 2-3 years and that is the reason alone why you would see phone sales slowing down, however they would see a spike when this "future proofing" wears out.
SachinEE
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50%
SachinEE,
User Rank: Ninja
1/28/2016 | 9:45:26 PM
Re: iTrouble
@SunitaT0: I don't know about the rest of the world, but if the iPhone 7 doesn't create enough buzz, people in India are going to stay at peace with the 6s. Seriously they want a luxurious looking big screen phone over anything else.
Page 1 / 2   >   >>
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