U.S. consumers spent $5 billion in 2013 to upgrade their Apple iPhones
Every year, Americans dig deep into their pockets and shell out $11 billion to upgrade their smartphone. The percentage that upgrade each year is 23%, which explains why the top four U.S. carriers felt compelled to finally offer quicker upgrades with new plans that came to market this year. With some plans, you can even upgrade twice in a year.
Part of the reason why there is such a rush to upgrade to the next iPhone has to do with the ability of iPhone owners to dump their current phone in what has become a strong secondary market. Sites like Gazelle.com are paying pretty good prices, rewarding those who kept their phone in great condition. A 16GB Apple iPhone 4s in flawless condition, will fetch $110 on Gazelle, An Apple iPhone 5 in the same condition will bring you $280. Gazelle says that iPhone trade-ins are up 74% this year, while trades for Samsung branded models are up 114%.
Of course, none of this means anything if Apple didn't add a few things here and there to make you desire the new model. This year, the Apple iPhone 5s added a faster, more powerful A7 processor, improved the rear-facing camera and increased the capacity of the battery to name a few things. But the most important change was the addition of the TouchID fingerprint scanner, embedded in the home button. Apple's marketing makes iPhone users feel like that "must have" the latest model with the latest features. The same tricks were used by Apple when the Apple iPhone 4s launched with Siri.
According to a recent study by Asymco's Horace Dediu, the growth in Apple iPhone penetration in the U.S. matches the growth of the overall smartphone market. Dediu sees the iPhone peaking in the states during February 2017 when he predicts that the phone will have a 68% market share and 90% penetration which means that by then, 180 million Americans will own Apple's iconic smartphone. At that point, just about everyone who wants an iPhone will own the device. And that will mean that Apple will need to rely on those iPhone owners upgrading to the next model to keep sales growing.
As long as Apple continues to make new iterations of the Apple iPhone just a little better, with some new features, Americans will continue to spend to buy the new model. And this is why Apple's board was on CEO Tim Cook's back earlier this year about innovation. Once Apple stops offering something new, even something minor, these upgrades go away and more iPhone users will decide to give this Android thing that they've been hearing about, a try. And once the Apple iPhone penetration reaches 90%, the whole process starts working in reverse, at a speed faster than when sales were growing. This is exactly what has happened to BlackBerry from 2008 to present. There was no reason to upgrade to new BlackBerry models, and in fact, Apple was giving Berry users a good reason to switch.
The scary news for Apple is that similar to what was seen with BlackBerry, when such a seismic shift does takes place, those former customers usually never return.
1. JakeLee (banned) (Posts: 1021; Member since: 02 Nov 2013)
Apple has still many cards to play : bigger screen, more RAM, bigger battery, better chip etc. Primarily things Apple has been bashed for so far.
On the other hand, Android has pretty much depleted all those above and is stuck with 32-bit SoCs that can hardly be enhanced beyond the current Cortex-A15 class.
The first bunch of the 64-bit Android flagships late next year will suffer from the initial lack of 64-bit apps, thus hardly distinguishing themselves from their own 32-bit predecessors.
Granted, the less-demanding Java apps will run in 64-bit mode out of the box, but it will take quite some time until the JIT compiler matures and actually takes advantage of 64-bit computing even partially due to the 32-bit nature of Dalvik.
The fragmentation Google has been ignoring so far will hurt badly during the transition that is strongly prolonged by the fragmentation as well.
2. darkskoliro (Posts: 1054; Member since: 07 May 2012)
I totally agree with you. I believe that it is Apple's intention to release one major update at a time, and not everything at once because then there will be no more "cards to play".
2014 is going to be a hectic year for developers if 64 bit android does come out, but I say give it half a year and the most important apps will have already been updated. They have no choice but to do it anyway if a major player like Samsung sells millions of 64 bit devices.
3. JakeLee (banned) (Posts: 1021; Member since: 02 Nov 2013)
Android will be vulnerable the most next year while Apple goes rampage with the long-awaited bigger screen and a more mature 64-bit chip breaking all the records.
I also don't think ARM64 for Android will fail so miserably like Intel's Itanium - since there is no alternative -, but its Itanium-like natures (new ISA, switching overheads) will turn 64-bit computing more harming than enhancing for quite a long time on Android.
It's a huge problem.
4. Victor.H (Posts: 525; Member since: 27 May 2011)
Hey Jake, would you please check your PM, or just let me know here how can I contact you? Email would be perfect, you can reach me at victor.h a7 phonearena dottt com
5. JakeLee (banned) (Posts: 1021; Member since: 02 Nov 2013)
OK, I'm sending you an email right now.
7. Lycan155 (Posts: 114; Member since: 24 Nov 2013)
Haha yup i believe he deserve it he seems well known on these things
8. darkkjedii (Posts: 14721; Member since: 05 Feb 2011)
I can't wait to see what the new design looks like for 2014. Congrats Jake, if you made the team.