It seems the upgrade cycle for smartphones will slow because the hardware and software is maturing. An older phone is good enough for a lot of people for a longer period of time. Just like with PC's and tablets.
As the hardware and software gets better and better, the time between upgrades gets longer and longer.
Not yet though.
If you own a 4s, 5, or 5s there is a huge incentive to get a larger screen 6.
If you own Android there is a huge incentive to switch to iOS.
Next year I think the iPhone7 will probably have close to zero bezel and no home button. Thus it will have a large screen but be as pocketable as the 5s. That would be a huge incentive to upgrade from the 6. I would.
Think about it this way. Specific form factors of computing devices will always become a commodity. Desktops, Laptops, Tablets, Smartphones. Eventually they all get commoditized. But computing devices WILL NEVER BE A COMMODITY. There will always be new form factors for the next 100 years at least. That is why it was so important that Apple released the Watch. Wearables is the next form factor after the smartphone.
IMO we will never get to a point in the next 100 years that there won't be a premium computing device on the market. There will always be new technologies to make things smaller and faster and more personal. So talk of Apple get commodized is silly.
But what about Mac? Why are people willing to pay extra $ for the Mac?
Big picture is this: What Apple really sells is not PC's or Tablets or Phones. What they really sell is the Apple ecosystem - Apps, AppleMusic, Maps, iOS, ApplePay, iTunes, AppleTV subs, ect. Devices such as the iPhone are just tools to access that ecosystem. If you look at it that way you can see that Apple's devices will never get commoditized for a very long time.
I respectfully disagree with a few of your opinions and assumptions.
In my opinion Apple sells best in class hardware. They have pretty good in-house software but it is often bested by the competition. The ecosystem is pretty good but there is a reason why people choose to use third party apps that do the same thing as what Apple offers. I bet you will find plenty of people here who have a folder on their iOS device where they keep the Apple apps they can't delete that have been replaced by third party offerings.
There are a lot of people like myself who both want and need cross platform functionality for example. Google and Microsoft both have great cross platform applications and cloud services. Being locked in to any one ecosystem is not where I live personally.
And that brings up another point about maturation. As more and more software and services become cloud based the hardware needed to run them becomes less and less relevant no matter what you are using. As long as it works well it could come from anybody.
I think you make some decent points but I don't think we will agree with each other on this.
I just checked out Verizon's site. LG G4 is $23/mo. Galaxy S6 is $24/mo. Nexus 6 is $27/mo. iPhone 6 is $27/mo. AT&T prices are similar. I think this is actually beneficial to Apple. People will look at prices and see that iPhone is only a couple dollars more each month or in some cases the exact same monthly price. I think it will put to bed this notion that iPhones are so much more expensive than the competition.
I couldn't agree more.
With the average cell phone plan running about $85 a month.. nobody is concerned about paying $3 more per month for iPhone. If anything people will be surprised that the "cheap" Android phones they were used to getting for **free, for Buy1Get1Free or for $99 with a new two year contract** are only $3 cheaper a month than a iPhone. That being such.. they will gladly pay the couple bucks more for the iPhone.
The vast majority of Android users I know (Moms, Dads, family members) only chose the Samsung S5's & S6's because they basically free with a new 2 year contract. I still have an email where Verizon was actually offering PRE-ORDER Buy1Get1Free deals on the S5 when it first announced. Think about that for a minute.. the S5 wasn't even on store shelves yet and it was already being given away. Its pretty easy to "sell" millions of phones, when you are pratically giving them away.
Weird article! First they classify me as a member of the greatest generation (I'm 76) -- that was my parents generation. They don't give the average debt for baby boomers.
Western world[edit]
For the purposes of this list "Western world" can be taken to mean North America, Europe, South America, and Oceania. However, it should also be noted that many variations may exist within the regions, both geographically and culturally which mean that the list is broadly indicative, but necessarily very general. For details see the individual articles.
The Lost Generation, also known as the Generation of 1914 in Europe,[20] is a term originating with Gertrude Stein to describe those who fought in World War I. The members of the lost generation were typically born between 1883 and 1900.
The Greatest Generation, also known as the G.I. Generation, is the generation that includes the veterans who fought in World War II. They were born from around 1901 through 1924, coming of age during the Great Depression. Journalist Tom Brokaw dubbed this the Greatest Generation in a book of the same name.[21]
The Silent Generation, also known as the Lucky Few, were born from 1925 until 1942.[22] It includes some who fought in World War II, most of those who fought the Korean War and many during the Vietnam War.
The Baby Boomers are the generation that was born following World War II, generally from the early 1940s up to the early 1960s, a time that was marked by an increase in birth rates.[23] The term "baby boomer" is sometimes used in a cultural context. Therefore, it is impossible to achieve broad consensus on a defined start and end date.[24] The baby boom has been described variously as a "shockwave"[25] and as "the pig in the python".[26] In general, baby boomers are associated with a rejection or redefinition of traditional values; however, many commentators have disputed the extent of that rejection, noting the widespread continuity of values with older and younger generations. In Europe and North America boomers are widely associated with privilege, as many grew up in a time of affluence.[25] One of the features of Boomers was that they tended to think of themselves as a special generation, very different from those that had come before them. In the 1960s, as the relatively large numbers of young people became teenagers and young adults, they, and those around them, created a very specific rhetoric around their cohort, and the change they were bringing about.[27]
Generation X, commonly abbreviated to Gen X, is the generation born after the Western Post–World War II baby boom. Demographers, historians and commentators use birth dates ranging from the early 1960s to the early 1980s.[28][29][30] The term has also been used in different times and places for a number of different subcultures or countercultures since the 1950s.[31]
Millennials, also known as the Millennial Generation,[32] or Generation Y, is the demographic cohort following Generation X. Commentators use birth dates ranging from the early 1980s to the early 2000s.[33][34][35]
Generation Z refers to the cohort of people born after the Millennial Generation. There is no agreement on the exact name or birth dates of the generation with some sources starting it at the mid or late 1990s[32] or the more widely used period from the mid 2000s[36] to the present day.
I think it the new plans will have a negative effect on iPhone sales. People just might keep their phones longer because there is no penalty to do so. Before, the major carriers charged you the same whether you owned your phone or not so people tended to upgraded exactly every two years.
Bingo! The 2-year subsidized cycle was certainly better for the average user.
I mean seriously. Who could foresee TouchID, large screens, force touch, ApplePay, siri, ect? Technology is constantly changing. The world won't go in a technology rut.
I would argue that we're in one right now! Has today's smart phone really evolved that much from the original iPhone introduced in 2007?
Everybody always paid full price for the phone. Those two year contracts were higher priced
to make up for the difference. Does anyone really think they got a $650 phone for $199?
Exactly. Which is why I think this subsidy meme is stupid. The telco wasn't giving you $450. You just paid that amount off over time.
Nah. If you have a 4s, 5, or 5s those phones look really old and outdated now.
Smartphones are the most important product people own. Not cars. Not homes. Not TV's. Not laptops. People's lives are in their smartphones. I doubt most people will be willing to hold on to an old phone for much longer than 2 years.
Getting an new iPhone would cost about $350-$450 after trade in. If you hold on to that phone for 2 years that's only about 99 cents a day. Compare that to a car which costs 10x more than that.
Speak for yourself. My home, car and TV are all more important to me than my phone. Should anything happen to it, it is also the most easily and cheaply replaced.
For a huge chunk of the population the phone is the most important. Car breaks down? Fine. Rent a car. Hell hundreds of millions of people in the richest cities around the world don't even own cars but use subways. Look at NYC. Billions don't own homes but own phones.
Then lets look at the milenia generation. Phone is #1. Not cars, not homes. They don't mind driving a POS car or living in a 300 sq ft apartment as long as they have their phone.
Millennials in 2014 already said a smartphone is more important than a car:
And this gap will continue to widen as taxi services like Uber continue to grow in big cities.
The truth is smartphones are very cheap for what they do. Compare it to the cost of owning a car. Or owning a large McMasion. Or cost of a cable subscription.
Just because you use the phone every day, does not make it more important. By that logic, toilet paper would be more important than all of those. And yes, I do use my car and TV every single day.
Not necessarily. Look at the psychology of it. Even though, in the long run, you might be paying the same, many people would rather have the lower monthly payment and pay $199 up front for the subsidized phone. People will spend for the one-time purchase, but may balk at an extra $25/month on their cell plan. Spending beliefs are compartmentalized in the brain. It's the same reason, you don't give a second thought about spending a buck for a can of soda from a vending machine, but would never pay $12 for a case in the supermarket.
Exactly. Which is why I think this subsidy meme is stupid. The telco wasn't giving you $450. You just paid that amount off over time.
Not necessarily. Look at the psychology of it. Even though, in the long run, you might be paying the same, many people would rather have the lower monthly payment and pay $199 up front for the subsidized phone. People will spend for the one-time purchase, but may balk at an extra $25/month on their cell plan. Spending beliefs are compartmentalized in the brain. It's the same reason, you don't give a second thought about spending a buck for a can of soda from a vending machine, but would never pay $12 for a case in the supermarket.
For a huge chunk of the population the phone is the most important. Car breaks down? Fine. Rent a car. Hell hundreds of millions of people in the richest cities around the world don't even own cars but use subways. Look at NYC. Billions don't own homes but own phones.
Then lets look at the milenia generation. Phone is #1. Not cars, not homes. They don't mind driving a POS car or living in a 300 sq ft apartment as long as they have their phone.
Millennials in 2014 already said a smartphone is more important than a car:
And this gap will continue to widen as taxi services like Uber continue to grow in big cities.
The truth is smartphones are very cheap for what they do. Compare it to the cost of owning a car. Or owning a large McMasion. Or cost of a cable subscription.
Just because you use the phone every day, does not make it more important. By that logic, toilet paper would be more important than all of those. And yes, I do use my car and TV every single day.
It would appear we need to update Maslow's hierarchy of needs.
I would slip owning the latest shiny new iPhone between "esteem" and "love/belonging" on the pyramid.
<span style="line-height:1.4em;">I mean seriously. Who could foresee TouchID, large screens, force touch, ApplePay, siri, ect? Technology is constantly changing. The world won't go in a technology rut.</span>
I would argue that we're in one right now! Has today's smart phone really evolved that much from the original iPhone introduced in 2007?
Sure, it can take better photos, has a faster processor, better display, more RAM, etc. That is the nature of technology. But overall it is pretty much the same animal it was in 2007. The original iPhone was capable of doing most of the revolutionary things that we do with our iPhone today. My point is that each successive model is not so radically different that you are left in the stone age if you don't upgrade.
I have no idea what no subsidies would do to Apple sales. If it was financed, I could see people holding onto them for more than 2 years. I could also see early upgraders every year. It's hard to predict.
For a huge chunk of the population the phone is the most important. Car breaks down? Fine. Rent a car. Hell hundreds of millions of people in the richest cities around the world don't even own cars but use subways. Look at NYC. Billions don't own homes but own phones.
Then lets look at the milenia generation. Phone is #1. Not cars, not homes. They don't mind driving a POS car or living in a 300 sq ft apartment as long as they have their phone.
Millennials in 2014 already said a smartphone is more important than a car:
And this gap will continue to widen as taxi services like Uber continue to grow in big cities.
The truth is smartphones are very cheap for what they do. Compare it to the cost of owning a car. Or owning a large McMasion. Or cost of a cable subscription.
Rubbish,
I spend more time in my car/on my tv than using my phone EVERY day!
I enjoy every minute driving in my car and I only watch one show/day that I care about and enjoy every minute of that.
My iPhone is a tool, I read/respond to emails, text a few times and that's about it. It's not something I fawn over, it's merely a tool that facilitates my work but gives me little enjoyment.
Yet most in Wall street is saying these installment plans are a negative to Apple because customers will opt for cheaper Android phones once they find out iPhones don't cost $199 but rather $650.
I say hogwash. Most customers don't care. All they care about is their monthly payment.
True, most people only care about monthly payment. (Amusing to go buy a car and have the guy try and pull "monthly payment" nonsense -- I tell him the final price is the deal maker/breaker and we'll worry about payment later -- he does not know how to react)
Anyway, this is actually a negative for Android as the big name Android (G S6/6edge etc and the other high end phones) are all priced about the same (some even higher) than the iPhone. So people will be able to see that the iPhone is really not overpriced in comparison. The people that buy the crap $250 MSRP Android phones wouldn't buy the iPhone anyway as the crap $250 MSRP Android phone was $1/$0 under contract compared to $199 anyway.
Comments
It seems the upgrade cycle for smartphones will slow because the hardware and software is maturing. An older phone is good enough for a lot of people for a longer period of time. Just like with PC's and tablets.
As the hardware and software gets better and better, the time between upgrades gets longer and longer.
Not yet though.
If you own a 4s, 5, or 5s there is a huge incentive to get a larger screen 6.
If you own Android there is a huge incentive to switch to iOS.
Next year I think the iPhone7 will probably have close to zero bezel and no home button. Thus it will have a large screen but be as pocketable as the 5s. That would be a huge incentive to upgrade from the 6. I would.
Think about it this way. Specific form factors of computing devices will always become a commodity. Desktops, Laptops, Tablets, Smartphones. Eventually they all get commoditized. But computing devices WILL NEVER BE A COMMODITY. There will always be new form factors for the next 100 years at least. That is why it was so important that Apple released the Watch. Wearables is the next form factor after the smartphone.
IMO we will never get to a point in the next 100 years that there won't be a premium computing device on the market. There will always be new technologies to make things smaller and faster and more personal. So talk of Apple get commodized is silly.
But what about Mac? Why are people willing to pay extra $ for the Mac?
Big picture is this: What Apple really sells is not PC's or Tablets or Phones. What they really sell is the Apple ecosystem - Apps, AppleMusic, Maps, iOS, ApplePay, iTunes, AppleTV subs, ect. Devices such as the iPhone are just tools to access that ecosystem. If you look at it that way you can see that Apple's devices will never get commoditized for a very long time.
I respectfully disagree with a few of your opinions and assumptions.
In my opinion Apple sells best in class hardware. They have pretty good in-house software but it is often bested by the competition. The ecosystem is pretty good but there is a reason why people choose to use third party apps that do the same thing as what Apple offers. I bet you will find plenty of people here who have a folder on their iOS device where they keep the Apple apps they can't delete that have been replaced by third party offerings.
There are a lot of people like myself who both want and need cross platform functionality for example. Google and Microsoft both have great cross platform applications and cloud services. Being locked in to any one ecosystem is not where I live personally.
And that brings up another point about maturation. As more and more software and services become cloud based the hardware needed to run them becomes less and less relevant no matter what you are using. As long as it works well it could come from anybody.
I think you make some decent points but I don't think we will agree with each other on this.
many millennials seem to act as they're self-entitled to instant gratification.
Millennials carry lower balances on their credit cards than Baby Boomers and GenXers.
http://www.dailyfinance.com/2014/01/29/credit-score-generation-gap-debt-boomers-genx-millennials/
That's like saying the brain is the most important part of your body. It's a pointless statement.
I just checked out Verizon's site. LG G4 is $23/mo. Galaxy S6 is $24/mo. Nexus 6 is $27/mo. iPhone 6 is $27/mo. AT&T prices are similar. I think this is actually beneficial to Apple. People will look at prices and see that iPhone is only a couple dollars more each month or in some cases the exact same monthly price. I think it will put to bed this notion that iPhones are so much more expensive than the competition.
I couldn't agree more.
With the average cell phone plan running about $85 a month.. nobody is concerned about paying $3 more per month for iPhone. If anything people will be surprised that the "cheap" Android phones they were used to getting for **free, for Buy1Get1Free or for $99 with a new two year contract** are only $3 cheaper a month than a iPhone. That being such.. they will gladly pay the couple bucks more for the iPhone.
The vast majority of Android users I know (Moms, Dads, family members) only chose the Samsung S5's & S6's because they basically free with a new 2 year contract. I still have an email where Verizon was actually offering PRE-ORDER Buy1Get1Free deals on the S5 when it first announced. Think about that for a minute.. the S5 wasn't even on store shelves yet and it was already being given away. Its pretty easy to "sell" millions of phones, when you are pratically giving them away.
Weird article! First they classify me as a member of the greatest generation (I'm 76) -- that was my parents generation. They don't give the average debt for baby boomers.
https://en.wikipedia.org/wiki/Generation#List_of_generations
You think people will be satisfied with a 2 year old phone? Hell no.
You? No.
Most of the world's population? Hell yes.
I think it the new plans will have a negative effect on iPhone sales. People just might keep their phones longer because there is no penalty to do so. Before, the major carriers charged you the same whether you owned your phone or not so people tended to upgraded exactly every two years.
Bingo! The 2-year subsidized cycle was certainly better for the average user.
I mean seriously. Who could foresee TouchID, large screens, force touch, ApplePay, siri, ect? Technology is constantly changing. The world won't go in a technology rut.
I would argue that we're in one right now! Has today's smart phone really evolved that much from the original iPhone introduced in 2007?
Exactly. Which is why I think this subsidy meme is stupid. The telco wasn't giving you $450. You just paid that amount off over time.
Nah. If you have a 4s, 5, or 5s those phones look really old and outdated now.
Smartphones are the most important product people own. Not cars. Not homes. Not TV's. Not laptops. People's lives are in their smartphones. I doubt most people will be willing to hold on to an old phone for much longer than 2 years.
Getting an new iPhone would cost about $350-$450 after trade in. If you hold on to that phone for 2 years that's only about 99 cents a day. Compare that to a car which costs 10x more than that.
Speak for yourself. My home, car and TV are all more important to me than my phone. Should anything happen to it, it is also the most easily and cheaply replaced.
Do you use your TV everyday? Your car?
For a huge chunk of the population the phone is the most important. Car breaks down? Fine. Rent a car. Hell hundreds of millions of people in the richest cities around the world don't even own cars but use subways. Look at NYC. Billions don't own homes but own phones.
Then lets look at the milenia generation. Phone is #1. Not cars, not homes. They don't mind driving a POS car or living in a 300 sq ft apartment as long as they have their phone.
Millennials in 2014 already said a smartphone is more important than a car:
http://www.forbes.com/sites/michelinemaynard/2014/01/24/millenials-in-2014-take-my-car-not-my-phone/
And this gap will continue to widen as taxi services like Uber continue to grow in big cities.
The truth is smartphones are very cheap for what they do. Compare it to the cost of owning a car. Or owning a large McMasion. Or cost of a cable subscription.
Just because you use the phone every day, does not make it more important. By that logic, toilet paper would be more important than all of those. And yes, I do use my car and TV every single day.
Not necessarily. Look at the psychology of it. Even though, in the long run, you might be paying the same, many people would rather have the lower monthly payment and pay $199 up front for the subsidized phone. People will spend for the one-time purchase, but may balk at an extra $25/month on their cell plan. Spending beliefs are compartmentalized in the brain. It's the same reason, you don't give a second thought about spending a buck for a can of soda from a vending machine, but would never pay $12 for a case in the supermarket.
Exactly. Which is why I think this subsidy meme is stupid. The telco wasn't giving you $450. You just paid that amount off over time.
Not necessarily. Look at the psychology of it. Even though, in the long run, you might be paying the same, many people would rather have the lower monthly payment and pay $199 up front for the subsidized phone. People will spend for the one-time purchase, but may balk at an extra $25/month on their cell plan. Spending beliefs are compartmentalized in the brain. It's the same reason, you don't give a second thought about spending a buck for a can of soda from a vending machine, but would never pay $12 for a case in the supermarket.
Do you use your TV everyday? Your car?
For a huge chunk of the population the phone is the most important. Car breaks down? Fine. Rent a car. Hell hundreds of millions of people in the richest cities around the world don't even own cars but use subways. Look at NYC. Billions don't own homes but own phones.
Then lets look at the milenia generation. Phone is #1. Not cars, not homes. They don't mind driving a POS car or living in a 300 sq ft apartment as long as they have their phone.
Millennials in 2014 already said a smartphone is more important than a car:
http://www.forbes.com/sites/michelinemaynard/2014/01/24/millenials-in-2014-take-my-car-not-my-phone/
And this gap will continue to widen as taxi services like Uber continue to grow in big cities.
The truth is smartphones are very cheap for what they do. Compare it to the cost of owning a car. Or owning a large McMasion. Or cost of a cable subscription.
Just because you use the phone every day, does not make it more important. By that logic, toilet paper would be more important than all of those. And yes, I do use my car and TV every single day.
It would appear we need to update Maslow's hierarchy of needs.
I would slip owning the latest shiny new iPhone between "esteem" and "love/belonging" on the pyramid.
The camera alone has!
The camera alone has!
Sure, it can take better photos, has a faster processor, better display, more RAM, etc. That is the nature of technology. But overall it is pretty much the same animal it was in 2007. The original iPhone was capable of doing most of the revolutionary things that we do with our iPhone today. My point is that each successive model is not so radically different that you are left in the stone age if you don't upgrade.
I have no idea what no subsidies would do to Apple sales. If it was financed, I could see people holding onto them for more than 2 years. I could also see early upgraders every year. It's hard to predict.
No it isn't.
Most young people are willing to skim on quality for their car or where they live. But they won't skimp on their phone.
They don't skimp on their sneakers either so what is your point?
Do you use your TV everyday? Your car?
For a huge chunk of the population the phone is the most important. Car breaks down? Fine. Rent a car. Hell hundreds of millions of people in the richest cities around the world don't even own cars but use subways. Look at NYC. Billions don't own homes but own phones.
Then lets look at the milenia generation. Phone is #1. Not cars, not homes. They don't mind driving a POS car or living in a 300 sq ft apartment as long as they have their phone.
Millennials in 2014 already said a smartphone is more important than a car:
http://www.forbes.com/sites/michelinemaynard/2014/01/24/millenials-in-2014-take-my-car-not-my-phone/
And this gap will continue to widen as taxi services like Uber continue to grow in big cities.
The truth is smartphones are very cheap for what they do. Compare it to the cost of owning a car. Or owning a large McMasion. Or cost of a cable subscription.
Rubbish,
I spend more time in my car/on my tv than using my phone EVERY day!
I enjoy every minute driving in my car and I only watch one show/day that I care about and enjoy every minute of that.
My iPhone is a tool, I read/respond to emails, text a few times and that's about it. It's not something I fawn over, it's merely a tool that facilitates my work but gives me little enjoyment.
Yet most in Wall street is saying these installment plans are a negative to Apple because customers will opt for cheaper Android phones once they find out iPhones don't cost $199 but rather $650.
I say hogwash. Most customers don't care. All they care about is their monthly payment.
True, most people only care about monthly payment. (Amusing to go buy a car and have the guy try and pull "monthly payment" nonsense -- I tell him the final price is the deal maker/breaker and we'll worry about payment later -- he does not know how to react)
Anyway, this is actually a negative for Android as the big name Android (G S6/6edge etc and the other high end phones) are all priced about the same (some even higher) than the iPhone. So people will be able to see that the iPhone is really not overpriced in comparison. The people that buy the crap $250 MSRP Android phones wouldn't buy the iPhone anyway as the crap $250 MSRP Android phone was $1/$0 under contract compared to $199 anyway.