Analyst agrees with Tim Cook, tells clients that longer upgrade cycle is impacting iPhone sales

Analyst agrees with Tim Cook, tells clients that longer upgrade cycle is impacting iPhone sales
Most of you out there don't need to be told that Apple is really struggling with iPhone sales this year. Some of this problem is due to pricing, lack of innovation, trade wars, nationalism in China, strong competition from Android manufacturers, and one other reason touched upon by a Wall Street analyst who appeared a few days ago on CNBC.

Bernstein's Toni Sacconaghi wrote in a note to clients that the upgrade cycle for the iPhone has lengthened to four years for fiscal 2019, up from three years in fiscal 2018. The analyst blames this on Apple's discounted battery replacement program, which breathed new (battery) life into older models. He also cited the lack of carrier subsidies and higher prices. The battery replacement program came to an end at the end of last year.

The longer upgrade cycle was even mentioned by Tim Cook as a reason for the 15% year-over-year drop in iPhone revenue that Apple reported for its fiscal first quarter. "Our customers are holding on to their older iPhones a bit longer than in the past," said the executive. "When you paired this with the macroeconomic factors particularly in emerging markets, it resulted in iPhone revenue that was down 15 percent from last year."

Sacconaghi predicts that the installed iPhone base, up 9% last fiscal year, will be down 19% in fiscal 2019. He expects to see 16% of iPhone owners upgrade to one of the new 2019 models to be released later this year, although he cautioned that "modeling iPhone's installed base is as much art as science, with myriad assumptions." The current count shows approximately 900 million iPhone units active right now.


If the analyst is correct, this year we should see those still using an iPhone 6s or iPhone 6s Plus upgrade to one of the upcoming 2019 models.

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37 Comments

1. Phonehex

Posts: 752; Member since: Feb 16, 2016

Simple fact is the that most people don't need a new phone every year. Also no real compelling features to make someone upgrade faster. 5G will be a life saver for the manufacturers as in a 3 years literally the whole world will be on 5G networks and most people will want a 5G phone.

12. slashas

Posts: 125; Member since: Jul 17, 2017

What’s the point for 5G when LTE is sufficient for the phones I barely download something big and for streaming services it is enough. It might be good for house internet connection as speed is going to be as good as fiber.

13. dimas

Posts: 3296; Member since: Jul 22, 2014

Agree to this. I don't see 5g as just to make internet faster, it's also having bigger bandwidth for more populated area. I think most areas in the world will not adapt 5g quickly if their place have slow increase of internet subscribers.

24. sgodsell

Posts: 6895; Member since: Mar 16, 2013

5G is also where carriers are going to have to change their data plan packages. Carriers are gonna have to increase your existing data plans. Not at first, but when data rates move up to higher speeds like 5 gigabit or more, then plans have to raise in order to match those speeds.

14. Leo_MC

Posts: 6710; Member since: Dec 02, 2011

Cloud computing. 5G can make a simple watch provide a few times more powerful tasks and tools than the most advanced smartphone of today.

2. geordie8t1

Posts: 278; Member since: Nov 16, 2015

When phones cost $500/£500 it was more palatable to upgrade on a yearly basis, but with modern flagships costing closer to $1000/£1000 and their upgrades are minimal its not worth spending that extra cash for something like a new paint job and faster processor and camera tweaks, also with the rise of chinese devices that outperform and price crunch the big companies, its no surprise numbers are down, same for samsung, huawei on the other hand are massively on the rise even with their current US restrictions and if the likes of oppo can crack europe then the phone industry looks set to change a bit

3. NarutoKage14

Posts: 1306; Member since: Aug 31, 2016

What's good for the consumer is a "problem" for Apple or any company with stockholders.

4. John-Knotts

Posts: 380; Member since: Feb 28, 2015

Welp... Looks like Apple will start slowing down and bricking phones again come September...

9. dimas

Posts: 3296; Member since: Jul 22, 2014

I won't let samsung do that to me. I will record all benchmark and hardwares test the first month I buy s10+. Gonna have my lawyer calling them if they got shady.

5. CDexterWard

Posts: 48; Member since: Feb 05, 2018

Small upgrades over higher costs to the consumer. That’s a recipe for a bubble / burst and decline in sales. I say this as a generalization over all OEMs and not just Apple. LG, Samsung, etc are smoking from the same hookah. Hope common sense and market prevails and some kind of happy equilibrium follows suit.

6. Vogue1985

Posts: 386; Member since: Jan 24, 2017

Apple, consumers work hard for there many so don't act like they (we) are also greedy with $$$$$$, when you have been doing the trump on everyone.

7. dimas

Posts: 3296; Member since: Jul 22, 2014

But still, it is about the price for the casual users. "I bought a $1000 phone last year, I expect it to last for the next 4-5 years. Why should I spend another $1000 this year?" $1000 iphones are affordable if you are going to use it for a very long time. Tim Cook should stop the self-denial and think more now of the long term income for apple. I am going to buy an s10+ and note 10 this year. I will do all the test: benchmarks, hardware speed, everything. I will jot all of them and after 2 to 6 months, I will compare them to the new tests, gonna make sure no throttling shenanigans will be made. I will sue samsung should they pull a new planned obsolescence in the future.

18. midan

Posts: 2585; Member since: Oct 09, 2017

"But still, it is about the price for the casual users. "I bought a $1000 phone last year, I expect it to last for the next 4-5 years. Why should I spend another $1000 this year?" If you buy iPhone the amount you have to spend next year is maybe $300. thanks to the high resell price with iPhone.

8. almostdone

Posts: 426; Member since: Sep 25, 2012

Many people own more than one iPhone or any smartphone for that matter. That 900m active users being thrown around in the media is useless info. How many are actually unique owners? My partner has 3 iPhones accumulated in the last few years and they're all active. She only spends money on her iPhone 8. The rest are just backup/secondary phones.

10. dimas

Posts: 3296; Member since: Jul 22, 2014

Tim cook and peachboy don't like that, they want your partner to buy 3 $1000 iphones every year.

21. darkkjedii

Posts: 30836; Member since: Feb 05, 2011

LMAOOOO! Good one.

22. Greenmule

Posts: 128; Member since: Apr 24, 2017

I agree with you and you are on to something. 900M +/- best guess estimate represents the total installed base. But the handsets eligible for continuing iOS updates is less than that. The telltale information to see would be the actual number of installed units per CPU: how many A9s there are, how many A10s there are, A10Xs, A11, etc. That is where the issue is. This is a general list of the devices which qualify for iOS 12: iPhone 5s and later, iPad Air and later, and iPod touch 6th generation. That’s a multitude of devices and a bunch of CPUs. Too many, in fact. The problem is manifesting itself in falling sales. Dual sim wasn’t “not-boring” enough to create the false queues of 2 and 3 years ago; no videos and news flashes of people waiting in line to get an Xr. Meh…boring. Not really though, meh…boring is a euphemism from the Apple faithful that means: too expensive for what I’m getting. iOS doesn’t fully optimize an XsMax, not even close. Too many places have I read, “Well, after I did a full reset, it finally connected. And it’s no worse than my old iPhone __,” This coming from a person who just spent $1,100.00 to $1,500.00 on a new iPhone. No worse that my old iPhone 8, really. YOU CAN”T BE SERIOUS. But they are. The analysts have to find out why the upgrade cycle got protracted.

11. kanagadeepan

Posts: 1222; Member since: Jan 24, 2012

So apple and the investors want to bring back THE PLANNED OBSOLESCENCE in coming updates...

15. Leo_MC

Posts: 6710; Member since: Dec 02, 2011

Has any of you listened Cook’s interviews? He has said that people keep their phones longer, that affected the financial figures but Apple will keep on working for people to have devices that last longer and function better. That has always been Apple’s credo.

16. mootu

Posts: 1421; Member since: Mar 16, 2017

He also said that "Apple would never knowingly slow a customers phone" and Bam! 2 weeks later batterygate broke wide open proving him to be a bare faced liar. What Tim Cook says and means are 2 different things, if you believe he doesn't want you to buy a new device every year then you are dreaming.

17. Leo_MC

Posts: 6710; Member since: Dec 02, 2011

Of course he wants customers to buy new devices, but that doesn't automatically mean it's breaking the old ones in order for people to do that. It would have been very simple for Apple to make iOS 12 available for 6s-> iPhones and it would have fixed this problem, but not only that it didn't, it made the 5s as snappy as its hardware could make it.

23. ssallen

Posts: 158; Member since: Oct 06, 2017

Do you even follow the news? They literally slowed down iPhones on purpose. Then when the news broke and they got a whole lot of bad coverage only then did they release a turn off switch and put out a release focused on speed increases. Had "Batterygate" never broke chances are 5s wouldn't have been included, maybe not even 6. Its OK to like Apple but learn to think for yourself. They are a company with shareholders like everyone else. They just want your money.

25. Leo_MC

Posts: 6710; Member since: Dec 02, 2011

Do you even understand the news? Old iPhones with heathy batteries were unaffected, only the ones with really bad batteries (so bad that they needed replacement) have been made to still be viable.

19. mlbyanks19

Posts: 12; Member since: Nov 15, 2018

They want to blame the cost which is indeed one of the factors. However, their lack of innovation and features that are years old they are calling "new" is ridiculous. People aren't stupid. Android devices are far more superior and yet Apple users are too blind to see that Android can do a hell of a lot more. I hate when people say they like simple but yet you can make the interface on android as simple or as complicated as you want. Yeah sure lets get rid of the head phone jack and piss everyone off. BETTER YET lets get rid of the stupid tiny dongle that people lose so we can charge them more money! EVEN BETTER! Lets charge users over 1000 and not allow them to do what they want on their devices! Lets lock them down! Screw Apple!

26. midan

Posts: 2585; Member since: Oct 09, 2017

Real question here is, why you care so much what others use? Are you doing this same thing for example with cars? You like some car and your friend buy different because he LIKES it! Are you going to say him that he should have bought the one you like? You know we all have our own taste and like different things. We know Android can do lot more, but if i don't feel to do that why should i care? For me it's lot more important that those things i want from my device works very well. "Android devices are far more superior " you can't say that, that's not a fact, it's just superior to you, also you aren't even talking about one phone you are talking about many devices which is even more pointless. For me iPhone is superior and there's no point to arque about that because clearly we value different things. You don't need to worry about us iPhone users, we are very happy with our devices ;)

27. Vancetastic

Posts: 845; Member since: May 17, 2017

Good comment. Why does anyone care what devices others use, and why get so upset about it?

29. mlbyanks19

Posts: 12; Member since: Nov 15, 2018

I can honestly care less what phone anyone has. I was just expressing my point of view on this article above. I am also expressing that Apple at this point is over hyped. They come out with pretty much the same phone nearly every year with a few minor tweaks, bells and whistles. What i meant was by the "doing a lot more" aspect is I am sure there are things apple users do not like on there phones that they wish they can change. But Apple restricts its users from doing such actions. From the superior stand point, as far as user friendly you can use your android device as much as you want with endless amounts of functionality. The user can make it as simple or complicated as they want. In comparison to Apple where they want you to do it their way. But yet they charge 1000 bucks? Many devices being pointless? In what way? Samsung IMO is the best line of android devices out their. LG fell off and HTC has been who knows where. Companies like Huawei along with similar manufacturers do indeed in comparison to the iphone do make A WAY MORE SUPERIOR DEVICE. Thats a near fact if you compare SPECS and what not. You want to use iPhone doesn't bother me really. Never saw a big deal in it and nothing has changed. If you enjoy carrying around some expensive dongle to use wired headphones have at it. Getting rid of the head phone jack was idiotic. Glad I don't have to run to the Apple store where all the sheep flock every time I have an issue. Have at it and enjoy.

30. midan

Posts: 2585; Member since: Oct 09, 2017

You say it doesn't bother you what others use and yet tone of your comment sound like that you are very insecure or angry about something and you try so much to prove how superior your Android device is, you even CAPS it which looks very funny. "They come out with pretty much the same phone nearly every year with a few minor tweaks, bells and whistles." How this is different than what everyone else is doing? Sadly for us tech people tech isn't improving that fast anymore. We can't see big improvements every year. That's why you know we use our devices longer, because yearly upgrades are very small these days and this means whole industry. When you get older you understand that there's more important things than specs ;)

31. midan

Posts: 2585; Member since: Oct 09, 2017

"Samsung IMO is the best line of android devices out their." So why they are going down fast? And why lot of people leaving them and buying different choices?

32. Vancetastic

Posts: 845; Member since: May 17, 2017

“Best” doesn’t always mean “best selling.”

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