Cook confirms iPhone upgrades are on the decline as users 'hang on' to hardware for longer...

Posted:
in General Discussion edited January 29
During Apple's quarterly financial results call, CEO Tim Cook reported that iPhone sales are down in part because of existing users who were on subsidized contracts are now finding unbundled prices too expensive.




Asked by analysts about why iPhone sales were lower than expected, Cook revealed that the time between users upgrading their phones has lengthened. He said that this increased time means that some users now looking to upgrade were only now coming off previously subsidized contracts that had made the initial cost of iPhone much less.

"We do design our products to last as long as possible," Cook said. "Some people hang on to those for the life of the product and some people trade them in and then that phone is redistributed to someone else. The upgrade cycle has extended, there's no doubt about that."

Cook thinks price is a factor and that this was especially true outside the U.S. He said that comparing the pricing of this year's iPhones to last year's, at least in America, shows "actually a pretty small difference." Outside the continental U.S., though, he said that some countries were affected by currency exchange fluctuations which meant Apple needed to "essentially absorb part or all of the foreign currency moves."

(credit: Malcolm Owen)


However, while acknowledging the importance of the sales price, Cook stressed that he thinks "the subsidy is probably the bigger of the issues in the developed markets."

"Even though the subsidy has gone away for a period of time, if you're a customer whose last purchase was a 6S or a 6 or even in some cases a 7, you may have paid $199 for it. Now we're in the unbundled world, it's obviously much more than that," he said.

Cook revealed that Apple has "a number of actions to address that, including the trade-in and installment payments."

"So where it goes in the future, I don't know," he concluded. "But I am convinced that making a great product that is high quality, that is the best thing for the customer. We work for the user and so that's the way that we look at it."
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Comments

  • Reply 1 of 59
    This makes sense. I've got an SE that's almost three years old. It's still on the latest iOS and does everything I want so why SHOULD I upgrade? We replaced the battery in my wife's 6 last year and likely will do my iPhone in the next few months. Then we're likely good for another couple at least. I don't mind being one rev out on iOS. As long as Apple keeps making solid hardware I'll keep it running.
    edited January 29 lolliverspunkmeyerracerhomie3albegarcdesignrrepressthiscaladanian
  • Reply 2 of 59
    mazda 3smazda 3s Posts: 1,566member
    Well duh. I plunked down $1,000 for an iPhone X in November 2017 and there was really no need to upgrade to a iPhone XS -- there was simply not enough of an upgrade to warrant plunking down another $1,000.

    So instead of giving my wife my old phone (like I usually) do, I got a $29 battery replacement to go in her iPhone 7 (80% health) and I had my iPhone X battery replaced as well (even at 88% for another $29). That should keep up going through 2019 and perhaps beyond. The phones work great, so really no need to upgrade unless Apple puts out something truly remarkable this year.

    I did, however, upgrade my Apple Watch Series 2 SS to an Apple Watch Series 4 SS LTE -- now that was like a night and day difference -- WOW!
    edited January 29 olslolliverracerhomie3n2itivguyStrangeDayscaladanianwatto_cobra
  • Reply 3 of 59
    fallenjtfallenjt Posts: 3,976member
    My 7+ still works like charm but someone gave me a XS. I would not upgrade it tho.
    allmypeoplewatto_cobra
  • Reply 4 of 59
    chasmchasm Posts: 1,278member
    I’m planning to upgrade this year, but — in truth — mainly for Portrait Mode, which is one of the few new features my iPhone 6s (which, thanks to the battery replacement program, was not upgraded at the end of the two-year cycle) can’t do. Otherwise, the 6s is a fine phone. If the Android world designed and updated its phones so as to not be obsolete in about two years, they’d have a lot fewer upgraders, particularly at the premium levels.
    MisterKitlolliverradarthekatwatto_cobra
  • Reply 5 of 59
    Lower the price and see the effect. You know you can get alternative smartphone with 32-bit high quality DAC and with five cameras with AI that make better pictures than iPhones for several hundred dollars less, right? No it is not Samsung. You missed other brands. Do the research. OnePlus, LG and few other brands.
  • Reply 6 of 59
    djsherlydjsherly Posts: 1,016member
    chasm said:
    I’m planning to upgrade this year, but — in truth — mainly for Portrait Mode, which is one of the few new features my iPhone 6s (which, thanks to the battery replacement program, was not upgraded at the end of the two-year cycle) can’t do. Otherwise, the 6s is a fine phone. If the Android world designed and updated its phones so as to not be obsolete in about two years, they’d have a lot fewer upgraders, particularly at the premium levels.
    It looks good in the product demos, but in reality the results are, um, mixed.


  • Reply 7 of 59
    Lower the price and see the effect. You know you can get alternative smartphone with 32-bit high quality DAC and with five cameras with AI that make better pictures than iPhones for several hundred dollars less, right? No it is not Samsung. You missed other brands. Do the research. OnePlus, LG and few other brands.
    And how many they sold or money they made?? Just curious so not to missed other brands, pls enlighten us with your research..
    watto_cobra
  • Reply 8 of 59
    Yeah well, I finally replaced my 6 Plus last year because it got a bit too slow for some apps. It otherwise still worked fine. Now that I have splurged for the top model Xs Max, I hope to use this very expensive phone for even longer than the last one.
    repressthiswatto_cobra
  • Reply 9 of 59
    This is a somewhat surprising admission. One would think that a company that has the size and sophistication of Apple would have had the market intelligence/marketing research to see something like this coming a mile away, especially given the size of the foot-traffic in Apple stores. Stuff like this doesn't happen overnight. 

    I truly hope -- and expect -- that some heads will roll in marketing.
    edited January 29 muthuk_vanalingamdesignrrepressthis
  • Reply 10 of 59
    ciacia Posts: 70member
    In other news, water is wet.
    jbdragonlolliverdesignrrepressthis
  • Reply 11 of 59
    I have said this before. Apple should update their hardware every 2-3 years and concentrate on their software/cloud services in between. 
    christopher126designrn2itivguyrepressthis
  • Reply 12 of 59
    jbdragonjbdragon Posts: 2,041member
    My buying habits hasn't changed at all. I buy a new phone every 4 years!!! So it's been a iPhone 4, to a iphone 6, to my current iPhone XS. It gives me 2 years to pay off the phone and 2 years of zero phone payments.

    That iPhone 4 in it's 4th year was really dog slow. At times I wanted to throw it againt the wall and break it and then I'd be forced to buy I newer iPhone. In the end, I had it over 4 years and then sold it for $202!!! Yep!!! Then I got the iPhone 6 and had that for 4 years. That phone was actually still pretty usable. I could have gone another year no problem if I wanted. My Dad still has his and now in his 5th year. I ended up selling my iPhone 6 for $180.

    You have people saying why do you need all that speed. It's overkill!!!! This is why, as the phone ages, the apps get larger and more complex as does iOS which gets makes your phone slower and slower every year normally. That iPhone 4 had Apple's first custom CPU, the A4, which really wasn't that much changed over stock version of the ARM CPU. Since then Apple's gone way past that as the A* processors have gotten faster and faster. That helped with that 4 year old iPhone 6 to still be a usable phone. If you buy a phone every year or every other year, it may not seem to matter to you so much. I expect my iPhone XS, 4 years from now to run a little faster than the iPhone 6 did after 4 years. I'll then sell it and buy my new iPhone in 2022 whatever Apple ends up calling it.

    Just like Windows 95, 98, XP, 7, 8, 10, all really needing faster and faster computers as Windows grew and needing a faster CPU, more ram, and faster storage and so on and so on. It holds true with any OS. The hardware demands continue to grow with the OS.
    edited January 29 lolliverjeffythequick
  • Reply 13 of 59
    geekmeegeekmee Posts: 305member
    So users will be spending their money on Apple next year or maybe the year after that. Which means, Apple users are ‘Doomed’ to spend their money on Apple 🤣
  • Reply 14 of 59
    Apple has a lot of nerve designing and building long lasting iPhones!!! /s
    michaelahlerslolliverStrangeDaysrepressthis
  • Reply 15 of 59
    geekmee said:
    So users will be spending their money on Apple next year or maybe the year after that. Which means, Apple users are ‘Doomed’ to spend their money on Apple 🤣
    Other options? 😰😱🤔🤫
  • Reply 16 of 59
    With no explanation, Apple abruptly stopped making phones to focus exclusively on tablets. It’s no wonder they’re selling less—they abandoned a whole market segment!
    edited January 29
  • Reply 17 of 59
    Cook basically said "ditto" to what I posted here a few days ago...despite all the offers and glowing comparisons, the XR/XS do not provide enough added value over my current iPhone 8 Plus for me to spend $400+ at this time.
  • Reply 18 of 59
    Hence the steepening prices of iPhones. Apple isn’t stupid. So we upgrade every 3-4 years now...Apple is positioning itself to make the same, or more, in the long run. IMHO. 
    lolliver
  • Reply 19 of 59
    k2kwk2kw Posts: 1,699member
    I have said this before. Apple should update their hardware every 2-3 years and concentrate on their software/cloud services in between. 
    Isn't that what they already do with Computers anyway.    How many years was it since the last MacMini model was released and the MBA and this update.    Its going on 6 years since the immortal "Can't innovate my Ass" from Schiller for the last MBP model release.   Of course maybe a 21% increase in Computer Revenue isn't  that impressive is it isn't sustained through the rest of the year.   They better get updates for the iMac and/or MB for the next two quarters.   
    radarthekat
  • Reply 20 of 59
    DAalseth said:
    This makes sense. I've got an SE that's almost three years old. It's still on the latest iOS and does everything I want so why SHOULD I upgrade? We replaced the battery in my wife's 6 last year and likely will do my iPhone in the next few months. Then we're likely good for another couple at least. I don't mind being one rev out on iOS. As long as Apple keeps making solid hardware I'll keep it running.
    Same w/ me. Still with a refurbished SE I paid $239 for a few years back.

    The new iPhones are too big, too heavy and way too expensive!

    My GF has a 6 and we went to have the battery changed. It was denied and she then told me she had spilt a bottle of water on it. Oh well!  :)
    designr
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