Taiwan's economic planning agency blames lack of innovation for poor Apple iPhone sales

Taiwan's economic planning agency blames lack of innovation for poor Apple iPhone sales
It is no secret that Apple is experiencing weaker than expected sales of its most important product, the iPhone. It already initiated a trade-in deal that cuts the price of the iPhone XR and iPhone XS in a number of markets, and has cut the wholesale price of the 2018 models to third party resellers in China. Earlier this month, Apple cited weak sales in China as a reason why it had to cut its revenue guidance for the fiscal first quarter, which ended in December.

According to Digitimes, Taiwan's top economic planning agency, the National Development Council (NDC), said that the new iPhone models are selling poorly due to a lack of innovation. The comment was made last Thursday during a cabinet meeting.

Apple has reportedly informed its supply chain that it plans to cut production of the 2018 iPhone models by 10% for the calendar first quarter. That three month period runs from the beginning of January through the end of March. Taiwan is the home to several important iPhone suppliers including TSMC (chips), Largan Precision (camera components) and Foxconn (product assembly), which means that several big businesses there have a stake in how well the handsets sell.

Wall Street analysts now expect iPhone sales for the calendar first quarter (Apple's fiscal second quarter) to plunge by as much as 20%. If that turns out to be true, only 41.8 million iPhone units will be purchased during the period, down from the 52.21 million rung up during the same period last year. However, since Apple is no longer reporting this information during its quarterly reports, this data will have to be estimated by analysts using anecdotal evidence.

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58 Comments

1. Subie

Posts: 2355; Member since: Aug 01, 2015

They're wrong IMO. the iPhone 6s was a small improvement over the 6 and it sold well. The 7 was the same with one innovation being REMOVAL of the headphone jack, and it sold well. The 8 was also just a rehash of the same design with incremental improvements again and it sold well and continues to sell. I know several people who just purchase new iPhones last month and the model they chose was the 8. In short, Apple's innovation model has been the same for the last 5 years so why is their model starting to hurt them now... Price! I prefer the term "bang for your buck"

3. TheOracle1

Posts: 2215; Member since: May 04, 2015

You're actually saying the same thing. What everyone is saying is the lack of innovation doesn't justify the price increase. They sold well before with incremental increases but an approximately 30% increase to the $1,000 - 1,500 range for nothing new is madness.

4. slashas

Posts: 127; Member since: Jul 17, 2017

Exactly, charge for incremental upgrade so huge money is unfair and now they are being punished for that. I am iPhone user trim first release, but still with my i7plus and still not going for upgrade until new design will come or something interesting as this soap design is already outdated :)

5. Subie

Posts: 2355; Member since: Aug 01, 2015

No, Taiwan's economic agency is blaming(according to this article and the source) innovation. They said nothing about price, or perceived value for dollar. I've given my own logical opinion on why price is the bigger factor. The price ceiling for these devices was hit in 2017 IMO, and it is being reflected in sales of other OEM's as well. Just look at Samsung's 2018 flagship sales as well. Samsung innovates but the market is showing that there is a maximum of what consumers are willing to pay for a phone.

46. TheOracle1

Posts: 2215; Member since: May 04, 2015

We're saying the same thing. It's just semantics.

2. OneLove123

Posts: 972; Member since: Aug 28, 2018

No way, they reinvented the essential notch.

6. Leo_MC

Posts: 7214; Member since: Dec 02, 2011

There has not been any innovation in mobile phones since... Touch ID; after that, absolutely nothing happened (3D touch - even if great - was a iPhone exclusivity and Face ID - even if better than tid overall - can’t be called “innovative”). If 6 and (some) 6s users found a reason to switch to 8 and x, this year - given the fact that people found that by simply changing the battery the iPhone gets a new life - there was absolutely no reason to change the 6s, 7 or 8/x, so people hardly did it. It’s up to Apple to give people a reason to pay 1-2k for a phone and the users will do it (or not).

7. midan

Posts: 2722; Member since: Oct 09, 2017

Same thing is hurting the whole industry. Smartphone companies need to start making some must have features, i have no idea what those could be. Masses are very happy with what they have and they don't see reason to upgrade their phones anymore that often. Even for us tech people it's getting harder and harder because current ones are so good already. We have reached the situation where tablet markets have been few years. Current tablets do it all already and phones are very close to that too.

47. TheOracle1

Posts: 2215; Member since: May 04, 2015

Doesn't seem to be hurting the Chinese too much. It's hurting the high-end more than any other segment. Just about any mid-range phone is adequate for most peoples needs and the Chinese excel in that area. Samsung are awful there and Apple are completely absent. Their mid-range attempt, the Xr, is an insult to consumers at their price point.

49. midan

Posts: 2722; Member since: Oct 09, 2017

"Doesn't seem to be hurting the Chinese too much" https://www.phonearena.com/news/Xiaomi-shares-collapse-just-like-Apple-shares-did-last-week_id112639 Well, it seems that Xiaomi, once known as China's Apple, is also going through a downward adjustment of its valuation. Over the last three days, shares of the company have dropped 17%, removing $6.2 billion of Xiaomi's market capitalization. The stock trades on the Hong Kong Stock Exchange and closed today at HK$9.97 ($1.27 USD), its first close under HK$10. The decline took root as brokerage house analysts following Xiaomi have cut the smartphone manufacturer's earnings estimates. Most cite the weaker economy in China and tougher competition from other Chinese firms such as Huawei.

54. TheOracle1

Posts: 2215; Member since: May 04, 2015

Without going into it with your pea-brain. Xiaomi is not a one-trick pony like Apple. They make dozens of diverse products and software and that's where their bread and butter and real profits are. Don't forget BBK (Oppo, Vivo and OnePlus) and Huawei are also diversified companies as is Samsung. I never said there was no impact, just that it's not as ominous as the iPhone decline due to Apple's over reliance on one product.

55. midan

Posts: 2722; Member since: Oct 09, 2017

Apple have many products and services which makes so much money that it's hard to understand because everyone is talking about iPhone.

57. Marcwand3l

Posts: 426; Member since: May 08, 2017

Most of apple's products that makes money are tied to iphones. For example the apple watch.

58. TheOracle1

Posts: 2215; Member since: May 04, 2015

Everyone (including Tim Cook and the stock market) is talking about the iPhone because it accounts for almost 60% of their revenue. I guess Tim Cook needs to "understand" and take lessons from you.

56. Marcwand3l

Posts: 426; Member since: May 08, 2017

Xioami is fine, their stocks were just overvalued, thta's the main reason why they dropped. Xioami will execute 2019 the same way they executed 2018 and their overall unit sales and profits will go up anyway. Thy have a very strong presence in India and they are growing rapidly in Europe.

8. rouyal

Posts: 1573; Member since: Jan 05, 2018

Its all speculation unless there is a survey out there showing why people didnt buy them. My speculation is phones are too big (not just Apple’s).

14. mixedfish

Posts: 1551; Member since: Nov 17, 2013

It's the price, no one is going to pay 3-4 times the amount for what is essentially the same product as Chinese competitors. And the 'cheaper' XR is simply a big finger to consumers.

15. JRPG_Guy

Posts: 140; Member since: Jan 13, 2019

So I'm not the only one who thinks this

16. cmdacos

Posts: 4110; Member since: Nov 01, 2016

No kidding... and water is wet...

21. Vancetastic

Posts: 1105; Member since: May 17, 2017

Less value for the price. It seems to me that more than ever, you’re paying for the name. I use Apple stuff almost exclusively, too.

26. darkkjedii

Posts: 30971; Member since: Feb 05, 2011

As do I. I'm an Apple product user, and I wanna see more from Apple.

31. Vancetastic

Posts: 1105; Member since: May 17, 2017

I hate to see them coasting on reputation.

36. darkkjedii

Posts: 30971; Member since: Feb 05, 2011

Same here. They have too many resources to rest on their laurels like this.

37. darkkjedii

Posts: 30971; Member since: Feb 05, 2011

WWDC had better be awesome this year. I hear March could bring a revamped iPad Mini, and the AirPods 2.

48. SIGPRO

Posts: 2815; Member since: Oct 03, 2012

Very true! No innovation, same phone year in year out with minimal upgrades with a higher price!

53. Valdomero

Posts: 666; Member since: Nov 13, 2012

Their only innovation was the higher price and that backfired.

* Some comments have been hidden, because they don't meet the discussions rules.

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