Did Apple misread the warning signs about the iPhone?

Did Apple misread the warning signs about the iPhone?
According to an analyst by the name of Neal Cybart, Apple has misread the warning signs about weak sales of the Apple iPhone. Based on charts showing sales using both a 12 and 24-month moving average (which removes short term noise), growth in iPhone sales has been slipping ever since the first quarter of 2012. There was a short-lived rebound that lasted four quarters after iPhone buyers jumped to the larger screens on the Apple iPhone 6 and Apple iPhone 6 Plus. In addition, the world's largest carrier, China Mobile, started offering the phone around that time period.

But as Cybart points out, Apple misread the tea leaves when it came to the Apple iPhone 6s and Apple iPhone 6s Plus. One issue is that 60% of the installed iPhone base as of September 2014, had not upgraded to a larger iPhone by the end of 2015. That, he says, is indicative of a product with a three-year or longer sales cycle, not the two-year cycle Apple plans for.

In addition, the smartphone saturation rate in the U.S. and in other countries is now very high. This leaves fewer featurephone users available to switch to a smartphone in general, and the iPhone specifically. And while Apple has been able to snag switching high-end Android users who were waiting for a large screened iPhone, the tech titan will have to somehow attract those with lower-priced Android models.

The analyst also says that Apple didn't think through the negative effects of the Apple iPhone SE before releasing the 4-inch model in late March. The phone has hurt the iPhone's average selling price and has cannibalized higher priced models. And as we pointed out yesterday, the Apple iPhone 7 might not be the savior that Apple thinks it will be. 


Cybart says that Apple needs to scrap the two-year iPhone cycle, concentrate more on features that customers "are craving for," and make Apple more than a company that succeeds or fails depending on the unit growth of the iPhone in any random quarter.

While Apple has been through down periods for the iPhone in the past, never has the majority opinion been so pessimistic on the device. And as many investors will tell you, fading such a strong majority opinion is usually the right thing to do. In other words, with everyone expecting the worst for the iPhone over the next few months, the smart money is expecting something completely out of left field that will drive demand for Apple's smartphone. Which is exactly what Tim Cook said the other day when he said that the next iPhone models will include features that you didn't know that you need today.


source: AboveAvalon via BGR

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114 Comments

1. XperiaFanZone

Posts: 2280; Member since: Sep 21, 2012

Where's that guy who made a complete fuss about 64-bit?

2. Mxyzptlk unregistered

This isn't blackberry or htc. Apple isn't going anywhere. They still have loads of cash.

3. BobbyDigital

Posts: 2125; Member since: May 29, 2014

You just have to troll BlackBerry in every article don't you? Even in one's that have nothing to do with them. Your hard for BlackBerry is ridiculous now Michelle. And while they won't be going anywhere anytime soon, doesn't mean the iPhone won't slip into the niche device category more than it already is.

7. TerryTerius unregistered

From a sales perspective, I'm confused as to how the iPhone could be called a niche product. Granted, it isn't everyone's cup of tea but it pretty much by definition is mass market. That said, yeah. There was no point in bringing up BlackBerry or HTC. It's foolish to think that simply because any given company is doing well now, they will make wise choices in the future and will be able to deal with a changing world. Plenty of wealthy and seemingly invincible companies run by smart people have fallen for one reason or another over the years. The first step to ruin is thinking you're immune to it.

17. BobbyDigital

Posts: 2125; Member since: May 29, 2014

From a world wide market share perspective, the iPhone is small potatoes. I'm the big scheme of things, it's a niche product. It's only because of its high asp that Apple rakes in the money on the iPhone.

21. TerryTerius unregistered

From a worldwide market share perspective, the only company that outsells Apple is Samsung. They are the second largest smart phone manufacturer, so unless you're talking about a specific market they by definition have a common product. By that logic, the same is true of literally every company but Samsung since they're the only ones with marketshare over 20%. Yes they have a high ASP, but they also have high volume. http://www.idc.com/prodserv/smartphone-market-share.jsp BMW would be a good example of that. BMWs are relatively expensive, but they are a high-volume manufacturer. They're as common as belly buttons because of that.

34. cheetah2k

Posts: 2297; Member since: Jan 16, 2011

Samsung still killin it

77. marorun

Posts: 5029; Member since: Mar 30, 2015

Terry i think is he comparing Apple total market share vs android total market share..

111. BobbyDigital

Posts: 2125; Member since: May 29, 2014

I'm comparing Android to iOS. In that respect, Apple is very small potatoes in a 200 course Thanksgiving meal.

65. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

It's a niche product because its the only phone that runs iOS. Its a smartphone which isn't a niche product in category. Just like the Mac is a niche computer, because its the only one that runs OS X. Not becaus eof the type of product. Also, Apple products are sold to a specific group of people in general. Those people are not the mass populous. It just happens just like with RIM who targeted the Blackberry to a certain base, ended up getting consumers on board too. Same as Apple is doing. Then RIM lost both camps. What happens when the same happens with the iPhone. The cool thing about Windows and Android, is it was made for ALL to use equally. It's success is due to the fact the OS was used by other outfits. Imagine if iOS was like that?

78. marorun

Posts: 5029; Member since: Mar 30, 2015

If many OEM would make iOS phone i would get one tomorow!

50. Mxyzptlk unregistered

Wrong, very much wrong.

93. krystian

Posts: 423; Member since: Mar 16, 2016

Apple has a pretty hardcore following. It would take YEARS for them to slip and it won't happen. Apple is like a statement to a lot of people. They put stickers on their cars. Geee. Apple will continue to have large market share even for those that don't upgrade their devices often. Chances are if they are ready to upgrade it will be to an Apple device. It's like the PC market. Once you have a working PC, there's really not much reason to upgrade. It does what it needs to do. Paying over $1k every year for the same thing makes no sense. They need to target the groups that don't have smartphones.

19. NoToFanboys

Posts: 3231; Member since: Oct 03, 2015

Yup, how much did they give you?

57. submar

Posts: 713; Member since: Sep 19, 2014

They don't give him a sht, really.

28. meanestgenius

Posts: 22487; Member since: May 28, 2014

Just couldn't pass up the opportunity to troll BlackBerry, could you? Pathetic. Apple may have "loads of cash", but cash can be burned through quickly. Seems to me that Apple (and you), have forgotten what happened to them 30 years ago. Looks like they are about to repeat that cycle, if they don't get off their high horse, stow their arrogance, and diversify. They can't rely on just the iPhone forever. It's not a sustainable business plan.

51. Mxyzptlk unregistered

Wasn't trolling blackberry. I was making a point. You're living in the distant past, which is unsurprising. Everything you just said can be applied to blackberry. You don't have a lick of understanding for how business work.

58. meanestgenius

Posts: 22487; Member since: May 28, 2014

BlackBerry and HTC have nothing to do with the article. You were trolling. And I'm not the only one here that believes you had no reason to mention them. Read comment #7. Your point could have been made without trolling them. And you're living in a sea of denial of you think Apple is immune to falling, or repeating their mistakes of the past, which they are clearly doing. YOU are the one that "doesn't have a lick of how business works" if you think relying on one product to bring in the majority of your profits is a sustainable business plan. Apple NEEDS to diversify. And I'm not the only one here saying so. But of course, you only say something to me because I said it. Anything for you to be against meanestgenius. Even when what meanestgenius is saying makes absolute sense. Like I said, you're pathetic.

68. Mxyzptlk unregistered

Don't be so defensive. They are two OEMs who have been struggling the hardest in the smartphone market. That's why I used them. Comment #7 is as irrelevant as the comment I'm responding to. I never said they were immune to failing. Stop putting words in my mouth. I think meanest is full of himself "IF" he thinks I'm saying anything just to be against meanest.

97. meanestgenius

Posts: 22487; Member since: May 28, 2014

Don't be such a liar. And stop backtracking. You trolled, end of story. And of course you would say a comment that speaks the truth concerning you is irrelevant. That's expected of a troll like you. But if mine is irrelevant, then why are you responding? Oh, that's right. That's BS like the rest of your comment. I never said you said it. Read my comment again and stop it with your BS assumptions. And you can add coward to you being a liar. Everyone here knows that you go against anything I say just because it's me.

100. Mxyzptlk unregistered

Your entire comment can be summed up in one way - Waah waah. That's all you do, complain and accuse others of being a troll. Ever stop to think about yourself first? Or are you too busy self-aggrandizing to bother doing so? So why did you say it? Lol, now you're the one who's backtracking. Well, maybe you should try saying something that isn't full of bs.

109. meanestgenius

Posts: 22487; Member since: May 28, 2014

I always find it amazing how trolls will defend themselves, tooth and nail, from being called what they actually are. I don't need to "self-aggrandize". I have you to do that for me, remember? And how is calling you out for what you are complaining? If anything, you're complaining, and pretty salty, because I called you out on your continued BS. I said it to prove a point, which I did. You'd be a complete idiot (you are, anyway) if you think Apple can't suffer the same fate they did 30 years ago. Now how about YOU try saying something that isn't trolling, lying, and full of BS?

110. seret6

Posts: 279; Member since: Aug 14, 2013

Hey meanestguy any idea when samsung or apple launching 4k display phones?

112. BobbyDigital

Posts: 2125; Member since: May 29, 2014

You were trolling Michelle. It's all you do.

91. janis

Posts: 397; Member since: Mar 10, 2014

funny that blackberry and htc brings more innovations and progress in their models than iphone, iphone soon will be experts on recycling old models.

4. Drsarcastic

Posts: 136; Member since: Jul 23, 2014

Honestly I used to be an apple fan like 5 years ago and still like them now, but they need to get it together and start pushing the envelope, otherwise it will be too late to recover. Yes, I am aware of their cash reserves, but if they want to maintain a position of dominance they can't keep slacking off and screwing their customers with partial effort in developing their best phone. We will see in September which path they choose...

8. TerryTerius unregistered

It isn't just that, they seriously need to diversify. I understand they are a conservative company, but having nearly the entirety of your company's fortunes riding on one product line seems highly unwise. That is one area they should take a page out of Samsung's book.

27. submar

Posts: 713; Member since: Sep 19, 2014

Apple will take great hit if iphone sales fall.

31. AlikMalix unregistered

Isn't apple working on a car? There's also subscription based services that apple even extended to android that are gaining major ground lately. Macs are also eating into PC marketshare... I'm not entirely convinced by the following statement, but there's a possibility that if Apple outsources iOS even in a limited factor - it will take away Humongous chunk of Android quickly and maybe even surpass it as it gets really close to 30-40% in some countries all by itself (without the help from other manufacturers). But like I said, I'm just speculating at this point... But if Apple wanted to diversify they're in great position to do so....

47. meanestgenius

Posts: 22487; Member since: May 28, 2014

PC's have about 90% market share. Mac's have under 10% market share. Microsoft definitely has nothing to worry about form Apple on this front. http://netmarketshare.com/operating-system-market-share.aspx?qprid=10&qpcustomd=0

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