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« No Time to Panic as One Quarter Shows Minor Dip in Smartphone Sales - Total Smartphone Market Will Grow This Year (and here's why) | Main | TomiAhonen Almanac 2016 Edition is Just Out - Get it while it's hot »

May 04, 2016

Comments

Per "wertigon" Ekström

@Lullz:

I still maintain that part of the reason Apple is so successful is that they offer great devices without compromises (for better and worse). Low-end is all about compromise.

That's why I do not believe Apple have much to gain from the low segment. It will destroy several of their key advantages - such as iPhone users much more willing to buy apps (though IAP has eroded that advantage as well).

Apple has painted itself into a corner where they on one hand can keep on catering to their premium segment of the market, which will stagnate and actually shrink to maybe 300M units by 2020, or, move low-end and thus gain more market share but quite possibly at the expanse of what makes Apple great. They have a very very fine balancing act to make.

Apple is in a situation where, if they are to succeed, must walk from New York to San Francisco on a tightrope - without ever touching solid ground except for the designated stopping grounds. So far they managed to cartwheel the entire first day and barely managed to make it the second day.

But if anyone can make that trek it's Apple, for sure. :)

Wayne Borean


- I still maintain that part of the reason Apple is so successful is that they offer great devices without compromises (for better and worse). Low-end is all about compromise.

Is it?

- That's why I do not believe Apple have much to gain from the low segment. It will destroy several of their key advantages - such as iPhone users much more willing to buy apps (though IAP has eroded that advantage as well).

I heard the same arguments about why Apple wouldn't introduce inexpensive MP3 players. Apple introduced inexpensive MP3 players anyway, and sold a lot of them.

You don't have to destroy your advantages moving into the lower end of the market if you work smart. Apple before the Next acquisition could not have done this. After the Next acquisition Apple had done this successfully.

Will this happen? I don't know. It looks possible. Ask me in five years and I'll be able to give you an answer. Of course by that time you'll have seen the answer yourself.


Per "wertigon" Ekström

@Lullz:

No, read again what I said - I said, premium segment will shrink to maybe 300M units.

There will be more premium units than just Apple units even if Apple dominates that pie with maybe 75% market share. That it will shrink is inevitable as the market matures. It has happened in virtually every other market as well - as things get "good enough" premium segment shrinks.

@Wayne:

It seems to me that Apple has a herculean balancing act to make for the next five years. It can pull it off flawlessly, but at the same time, their margins for error are really thin.

Not counting them out entirerly, but at this point it's not plausible they do not hit a stumbling block or three (but anything is possible of course). :)

Robert

Re Second hand market, from March:
http://gulfnews.com/business/sectors/technology/dubai-becomes-major-hub-for-second-hand-iphone-market-1.1691979

'If a refurbished (CPO) iPhone 6 is traded at $450 in the market, the price of a new iPhone is traded at a $100 premium.

“Apple does it in such a way that they bring certified pre-owned of the models that are not available in the market. There’s huge demand for iPhone 5 and 5s and even the 4s as they’re available for relatively lower prices,”'

The above quote is from Deloitte for the Middle East. Now introducing the SE at $399 is below current refurbished iPhone 6 price.

Would think provided SE model was widely available that it would be market clearing around the $400 price point. Am suspecting this will push second hand price for iPhone 6 down to around $350 say, especially as more units come onto the market with introduction of new model in September.

The current secondhand 5, 5s and even 4s mentioned above would push down to $200-$300 perhaps?

Would be interesting how much if any profit Apple gets from second hand sales, Deloitte is predicting total second hand market rising 50% in units this year to 120 million units.

Abdul Muis

@Robert & @Tomi

I really wondering about this refurb iPhone. Does apple put the number in their earning report of sold iPhone seperate from the new iPhone, or seperate it. How big is this market?

Do apple re-count this again? I mean when Apple re-sold this refurb, does this phone counted twice?

Abdul Muis

http://www.bidnessetc.com/68824-apple-aapl-attracting-fewer-time-smartphone-buyers-bernstein/

"The firm estimates that by the end of 2015, Apple’s iPhone installed base was around 550–600 million units, equivalent to the last 12-13 quarters' worth of iPhone sales."

"Mr. Sacconaghi notes that this estimate is consistent with the firm’s view that on average, users upgrade their iPhones after every 2.5 years, and that there is a used-iPhone market that perhaps extends the installed base of phones by an additional half to three-quarters of a year."

"Apple pointed out during its latest earnings call that its installed base had increased by 80% during the past two years. According to the analyst, many investors have struggled with this fact since if the installed base is roughly equal to the last three years of sales, it would suggest that installed base growth in the 2-year period was only about 45%, well below Apple's claim. “In fact, the only way we can get to Apple's 80% installed base growth number is if the installed base of iPhones was equal to the last 9-10 quarters, suggesting that the iPhone's replacement cycle has expanded materially during the period,” said Mr. Sacconaghi."

"The analyst further notes that Apple includes used and resold iPhones in its installed base calculation, which comprise a big portion of the base."

Per "wertigon" Ekström

Interesting. It looks like Apple is shortening the approval cycle for the App store.

http://arstechnica.com/apple/2016/05/report-apple-is-approving-apps-more-quickly-to-increase-services-revenue/

I really hope this is Apple genuinely finding a way to speed up their approval process as opposed to starting to cut corners in the approval process - If it's corner cutting that means quality with Apps will start to suffer, which means another "premium" advantage will be eroded within a couple of years.

It is critical that Apple maintains that "Premium" image.

Abdul Muis

I guess iUser should thanks Google/Android for that

Kicker

It's year 2016. 9 years of iPhone and still the iPhone CAN. NOT. GET. SMS. DELIVERY. REPORT.

FFS even Windows Phone 7 (P)OS supported SMS Delivery reports!!!!

"Nothing to worry about"?

Per "wertigon" Ekström

@Manufacturingisbig:

Android is where Windows was in the nineties with Windows 3.1/95. Just you wait until Androids answer to Windows 98SE... :)

Win95 gave Microsoft their chokehold on the PC industry. 98SE cemented it. We see the same thing with Android today...

chithanh

@Manufacturingbig
It was not price which gave Android the edge (though that played a role to a certain extent). It was open source, adaptability, and time-to-market. Read all about it here:

http://esr.ibiblio.org/?p=2975

Want some feature in your phone that Windows or iOS don't support? Tough luck. With Android, no problem. This is why most innovation came to Android before the other two systems, often taking them years to catch up.

On the other hand, any cool feature on iOS/Windows was available in Android within few months.

@Per
Apple needs to react. Android has much faster turn-around time in almost any area. That means multiple smartphone releases per year, but also getting apps on the platform faster.
Since "iOS first" is no longer a thing (except maybe paid games), developers are less inclined to wait for Apple just to release on multiple platforms simultaneously.

Per "wertigon" Ekström

https://marco.org/2016/05/21/avoiding-blackberrys-fate

Another interesting angle on Apple. Chances are they might get caught with their pants down. But it's a big maybe.

Tomi T Ahonen

Hi Everybody

I have an update to this story. While Apple doesn't break out its split of phones, IDC and Barclays have counted out the SE sales out of total iPhone sales for the year 2016. They had the SE contribution as 15% of total volume.

Thats 32 million iPhone 5SE models sold. That means Apple would have only had 183 million sales without the SE and thus Apple market share was headed nastily into the toilet at 12% for 2016, were it not for the SE model released. And the gain to Apple iPhone actual market share out of this 'low cost India' model was.. 3 points of market share.

Tomi Ahonen :-)

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