iPhone X: Now the pain

Well that was a nothingburger. Apple's event is over. The new flagship iPhone X has what? Wireless charging and face recognition. Oh, and don't forget the animated emoticons. For this the price is jacked up by more than 200 dollars to $999 without contract for the cheapest Model X. Seriously? The screen is SLIGHTLY larger in a slightly smaller body. Then the rest is utter cosmetics and trivial tweaks. But the flagship iPhone price is suddenly jacked up by a quarter? This may bring nice revenues from most loyal iSheep but some who were already concerned about the price evolution of the iPhone line, and had started to ponder a possible rival phone, they may well now feel that this is just going too far.

I did expect SOME magic to suggest this, the largest leap in iPhone's price in its history (as percent compared to previous flagship) but no. Nothing there. So while yes, the loyalists will stand in line for the X, this flagship will not grow Apple's iFlock. In fact, this will scare away some who were lukewarm nearly iBelievers and this is a great opportunity for many rivals to snatch SOME high-value iCustomers to the Android fold. And this underwhelming iX comes at a time when Samsung's Galaxy Note 8 is doing record business for the Sammy; and various next-tier players from Huawei to Xiaomi to Vivo are reporting hot sales - and even a nearly-forgotten Nokia brand is doing a flagship for us. The iChains are strong but they are not unbreakable. Some will say they can't see the value in the iPhone X, not if they have to pay $999 or more.

At the same time the other two new iPhone models numbered 8, are also priced very highly and not priced to move the model line into any new market segments at all. The only stuff Apple has for those lesser mortals who would pay TWICE THE AVERAGE RATE of a smartphone - is old obsolete iJunk smartphones. All this spells to me - lackluster iPhone sales into the Christmas quarter ie calendar Quarter 4, and poor performance in China's New Year gift-giving period that follows in the January-March calendar Quarter 1. With Q4 lukewarm sales - after how this year has gone for the iPhone - we can expect roughly flat iPhone unit sales vs year 2016. We could see a fall in iPhone sales vs 2016. That would be the second year of falling iPhone unit sales. (Warning bells? Anyone? The overall smartphone INDUSTRY is still growing. Why is Apple not able to even match the growth level of the industry?)

Worse than that, is how it bodes for the start of next year. This is Apple's 'best shot' of the year, and it is truly underwhelming - combined with highway-robbery level price increases. Any sensible rival can make SMALLER price jumps, but put in some more exciting tech, and steal some of Apple's potential customers - in particular those who are not yet fully in the iSheep camp. Samsung's next Galaxy flagship has a HUGE opening now to move some goalposts (and there is the persisting rumor that we will get a folding-display to double screen size). If we get two years of falling iPhone sales, as is now quite possible - it then sets quite large hopes/expectations for the XS model for this time in 2018. And there IS a surging Huawei coming. It has held the third-ranked smartphone manufacturer title for four years in a row (annual unit sales) and certain to add this year, to make it 5 in a row. In that time Apple has fallen from 20% to 14% while Huawei has climbed from 5% to 10%. By the summer of 2018 we should see individual Quarters where Huawei inches just ahead of the iPhone - and then that will be a dramatic shock to many who have truly iBelieved in the iMagic and in imaginary iEconomics. Around year 2019 we may see full-year sales for Huawei on par with Apple and a true race for second place (Samsung is obviously safely the largest smartphone maker now and then).

Well.. the old adage holds true - to see what Apple will do next on its flagship, just look at an old Nokia flagship. Wireless charging? Nokia had in 2014... Now as to things like OLED displays haha, those have been staples on various rivals from Samsung to Nokia for YEARS. 

Will this new iPhone 8 and X model line sell well? Yes. Will Apple make massive sales revenues and humongous profits? Sure. But will these phones grow Apple's market share? Of course not. Apple has not just stopped growing market share (5 years ago) but it has now stopped even growing mere unit sales. And if you thought last year was an anomaly, and the 'anniversary iPhone' would somehow fix the 'temporary' drop in unit sales then no, that will not happen. These iPhones will continue the slow decline in annual unit sales of iPhones. And while most iFans will just cheer on, giddy in ridiculous-level profits - some sensible analysts will start to get a .. little bit .. alarmed that wait, haven't we seen this movie before?

Now about movies seen before. I gave you a prediction on this blog about a total flop for the Apple Watch. I said there is no market for smart watches and the iWatch, sorry the Apple Watch will not survive to 3 editions. On that, today I have been proven wrong. Apple did get its third edition Apple Watch out - so yeah, I am not infallible and I got that call wrong. As to smart watches? They are a disastrously bad market opportunity for anyone. If Tim Cook wasn't personally married to the apperance of the Apple Watch as his first 'post Steve Jobs' product, he'd have killed it already. But yeah. There is SOME sales. The sales numbers are so bad - that Apple refuses to give us the numbers and hides behind guesses made by analysts. We know from that, that the true Apple Watch numbers are EMBARRASSINGLY bad. But yeah, I predicted that Apple would pull the plug at this stage. They rather maintain the embarrassment for another cycle. Ok, I got that guess wrong. I still hold that there is no big market for smart watches and that if Apple honestly felt the Apple Watch was a success, they'd be yelling about those sales numbers and publishing them at every Quarter. Apple know the iWatch is a total flop. But ok, they did make a third edition. I did get that call wrong. I am sorry about that. Just don't be mistaken into thinking there is any sustainable mass market for any wrist-based media etc... Some iSheep will wear the iBracelets yes, but there is no mass market for smart watches. It will be a fad that will soon be gone.

Back to iPhones. Am truly disappointed in that Apple had nothing amazing for us, yet it did that outrageous price bump. Again their timing is off. Apple COULD have done this when they did the phablet screen bump. At THAT point, Apple left so much money on the table and had a missed opportunity (I told you then, calculated on this blog, that a market for $1,000 dollar price premium smartphones was viable). But this move now, with this lame an upgrade, is going to hurt Apple. Not that they would be in any danger for their total revenue growth or profits, but for unit sales - now it looks like a second year of unit sales numbers actually fall - or at best, are flat vs 2016. There is no 'recovery' powered by the anniverary iPhone.

Now finally. We do know how Apple intends to revise modern mathematics. The new iMath by Apple goes like this, based on iPhone model numbers: 0, 2, 3, 4, 5, 6 7, 8, X. No ones, no nines. And the 'cool way' to 'write' a 10 (which by octa-math is of course what we know as an 8 on our decimal system) is with X. I could go with that, but by that logic, shouldn't a 'zero' then be a slash? like / or would the zero be \? I am not sure...  

I am not saying Apple is doomed. I have NEVER said that on this blog. I AM saying, that this X model and the 8 iPhones will not resurrect the iPhone line into unit sales growth. And yes, obviously, I was correct back when I said that Apple's market share had peaked. That has never recovered either. More market share declines coming. But Apple the company will be fine, more revenue growth and more profits yes. Just don't think the iPhone or iOS is anything more than a niche market. Rich, large niche yes, but a niche market. The mass market and digital future of the next decade (indeed, this century) belongs to Android and Google.

Comments

[Olivier Barthelemy]

The X is for GalaXy, this iPhone is mostly a Galaxy-ization of the iPhone: AMOLED, small bezels, wireless charging, face unlock... if only it had an SD slot ^^

It's nice, but not $1K nice, unless the VR stuff takes off in less than a year, which I doubt (I actually doubt VR will ever take off, especially on consumer phones).
Disregarding VR, it's very similar to an Android flagship, about at about 2x the price, visually and features-wise. Ther performance is better, but apart from VR what can use that kind of oomph ?

I think the main issue is that it makes the other iPhones look terribly dated. Will consumers still pay a premium for the old-style iPhones when even Apple tells them they're passé ?

[Asko]

@Tomi
"the old adage holds true - to see what Apple will do next on its flagship, just look at an old Nokia flagship."

You forgot all the other iHype:
AR - 2011 in Lumia 800 and Nokia maps
Animated smileys - 2012 in Lumia 920
Face recognition to unlock - 2014 in Lumia 950

[chithanh]

A day before the Apple event, Qualcomm reminded us in a blog post how innovation comes to Android first. Seems they got tipped off that the iPhone X does not include any noteworthy new features over Android phones.

https://www.qualcomm.com/news/onq/2017/09/11/android-firsts-brought-you-qualcomm

They are also not afraid to rub in Gigabit LTE now that Apple is stuck with inferior Intel LTE modems.

Though if I were Qualcomm, I'd probably not shout too loud about it, lest people notice that 64 bit is conspicuously absent from the list, because Qualcomm slept through that one.

https://blog.hubspot.com/opinion/qualcomm-apple-64-bit-chip-hit-us-in-gut

[James Glu]

Sales are going to be fantastic. The latest Qualcomm chips powering the latest Android flagships aren't even performing as well as last year's iPhone and Apple just upped the ante 70% more with the A11.

A11 has built in neural network which powers the FaceID and photos. Nobody has even bothered to criticize Samsung for putting out a Face biometric that can be unlocked with a photo. We expect Samsung to put out crap and Android isn't secure anyway,

Portrait lighting looks nice. Certainly better than the laughable Bothie from "Nokia"

Apple has their own graphics chip now and their own ISP chip. AR on Android doesn't have a chance to be as good.

Interesting that Apple lowered the price of the iPhone SE to $349 and is keeping the 6s and 7 in the line up.

Not just OLED, but HDR, wide color gamut and color calibrated accurate colors for the screen.

I'm glad Apple didn't follow Samsung's tall and skinny method for the screen.

Wireless charging check mark formthose that care. I still don't.

Will wait and see about how durable the glass back is. I put my iPhones in cases anyway.

The iPhones will sell well....because they are iPhones. I got a new one last year so I'm not buying this year. There are lot of iPhone 6 and 6s upgrades coming. It is not a question of "what has Apple done to win the buyers over". It's the competition that has nothing to entice people who like what iPhones are.

I'm disappointed Apple didn't keep the Apple Watch 2 in its lineup with a cheaper price.

[RickO]

While no body was watching - BBK Electronics (parent to - Oppo,Vivo,Oneplus,Imoo etc) collectively is outselling everyone (in the last few quarters) except Samsung, albeit for their meager $200m+ profit. They are not fighting in the lucrative and very profitable top 8% of the market that Sammy and iPhone own and not seemingly interested in the US market. Yes - Huawei is getting there slowly but will Nokia put a dent in everyone's sales. Interesting times ahead.

[john F.]

Note 8. Some of the biometrics, including the ability to unlock your phone by scanning your face or irises, are so poorly executed that they feel like marketing gimmicks as opposed to actual security features.

The iris scanner shines infrared light in your eyes to identify you and unlock the phone. That sounds futuristic, but when you set up the feature, it is laden with disclaimers from Samsung. The caveats include: Iris scanning might not work well if you are wearing glasses or contact lenses; it might not work in direct sunlight; it might not work if there is dirt on the sensor.

I don’t wear glasses or contact lenses and could only get the iris scanner to scan my eyes properly one out of five times I tried it.

Shipping features like this is what separates Apple from Samsung and the others, everyone can ship a face recognition that works mediocrely, it's bot being first, it's being great what matters.*

Remember, nothing Apples does will ever be good enough

3rd Generation Apple watch and what happened with iFloop?
*extracts from around the net

[john F.]

@Tomi

A few years ago you published an article called iFlop, immediately after the Apple Watch was announced, I told you back then that you should understand the watch industry to understand the strategy behind it and mentioned that the size of the market of the above 500 US$ watch is small, you got it wrong Tomi.

Now, you say "I still hold that there is no big market for smart watches "

You will be proven wrong again, you still don't understand this industry ( I work for a consultancy company and "watch" and wearables is one of our focuses)

The wearables division is doing great Tomi, before you know it it, if it would be an independent company, it will make it to fortune 500. The numbers can be "guessed"

Can you prove, facts in hand, that they are EMBARRASSINGLY bad? It's a strong claim or you are just guessing?

[E.Casais]

"Interesting that Apple lowered the price of the iPhone SE to $349 and is keeping the 6s and 7 in the line up."

It is not interesting, it is typical of Apple's past strategy regarding the iPhone lineup. Nothing new/disruptive/imaginative there.

Actually, the iPhone 8/8+ are also very much in line with Apple's traditional approach: one year, major new features are introduced (this happened with the 7/7+); the other year, features are improved (this is what happens in 2017 with the 8/8+).

There is thus nothing out of character regarding that specific offering. Apple has been exactly following its product strategy.

The iPhone X on the other hand feels odd. I agree with Olivier Barthelemy: this is the first time ever that I feel like Apple is copying Samsung and not the reverse. Not just in the catching-up regarding features (face-recognition, wireless charging, bezel-less display...), but also in its market positioning. I feel the same about it as about many of the Galaxies S/edge and Notes (and high-end Huawei and the like): sure, some of their features are technically better, but how could this justify the price differential with even a 25% cheaper product in the lineup?

It is also the first time (if I remember correctly), that an iPhone model will only go on-sale 5 weeks after it is launched, and become finally available almost 2 months after its announcement. This again feels more like a Samsung-like approach and a bit out of character for Apple.

Time will tell how successful the new products are -- and how right or wrong Tomi is in his predictions.

[b]

iPhone X is a very lame. It looks too much like Galaxy. If one wants a Galaxy phone will buy a Galaxy and not an iPhone. iPhone X looks like and iCook idea.

@JohnF.

> You will be proven wrong again, you still don't understand this industry ( I work for a consultancy company and "watch" and wearables is one of our focuses)
> The wearables division is doing great Tomi, before you know it it, if it would be an independent company, it will make it to fortune 500. The numbers can be "guessed"

JohnF, you are the one who got it wrong! iWatch is compared always and should always be compared with other businesses from Apple. This is the expectation which iSheep and market analysts have. Everybody expects that Apple will always come with products which are in iPhone class of profit and selling numbers. It is already a failure when starting to compare iWatch with other watch makers which do not do mobile phones. So, iWatch is a big iFlop and iWatch 3 is the last version to be ever made by Apple.

Regarding wearable, they do not have a very long future in my opinion because those cheap (cheap when compared to serious medical devices) wearables meant for non-medical use are just for fun. No medical doctor will ever trust and use for medical purposes the blood pressure, pulse, blood sugar, heart beats counts, steps taken, calories burned, etc. from such wearables. Also if one comes with a a wearable which can be used by medical doctors than suddenly one needs FDA approval (and have fun obtaining an FDA approval => see 23andme & FDA) Just enjoy the wearable fad it while it lasts.

[Per "wertigon" Ekström]

@John:

Why isn't Apple releasing the watch sales numbers, if sales were great?

What is in it for Apple to *not* boast how great the watch is doing?

I can't see a single good reason for that. Can you?

[E.Casais]

"iWatch is compared always and should always be compared with other businesses from Apple."

Incorrect. Comparisons with other watchmakers abound.

Actually, in this very blog, commentators have repeatedly compared Apple Watch to Rolex, gushing about how Apple managed to achieve a comparable level of revenue.

Except that Rolex watches are in the luxury segment, _precisely_ the one in which Apple had to beat a hasty retreat after the failure of its precious metal bands and "personal demo on appointment in Apple shops" approach.

If the watch division of Apple is to be compared, then it is with Citizen or Swatch Group -- not Rolex.

By the way: the same commentators who continue to compare improperly Apple Watch with Rolex are up in arms when comparing iPhones with Chinese manufacturers, because "they are not in the same market".

Consistency of argumentation is not exactly widespread.

This being said, in absolute terms, Apple Watch is a very nice business. But it is not the one that can sustain Apple in a perspective of a successive replacement of product lines entering maturity and decline (iPad, perhaps iPhone soon) by new ones.

[b]

@LongAAPL1997

> iPhone 4S was the first to have 3-axis gyroscope

Again this is bullshit!

Samsung SCH-S310, released in 2005 was the first phone with 3-axis gyroscope!

[E.Casais]

"Apple now has the biggest selling watch in the world and is now bigger than Rolex"

Improper comparison. Rolex watches, new, range from EUR 1500 to 400000. Apple Watch just does not play in that luxury category.

Appraise Apple Watch against Swatch Group or Timex Group for a somewhat more correct perspective.

[Olivier Barthelemy]

I LOL'ed at

"Apple also btw covers all the price points now.
Apple Watch is between $249 and $1299
Apple iPhone is between $349 and $1149
Apple iPad is between $329 and $1279
Apple Mac is between $499 and $7128"

There are excellent phones below $200, usable ones at $100. Starting at $349 is "all price points" only for someone terminally in the iBubble. Ditto tablets, the Fire HD 8 is $75, the excellent Teclast T10 is $200; Win10 PCs start at $100 (and start feeling nice at $250... but sometimes you need qomething, anything, even if its not nice).

And then there's the question of what you get for those iPrices. iOS and Apple flair might make it worth the price to some, but the performance and features certainly aren't up to par with similarly-priced Android phones. $350 would be last year's flagships: GS7, LG G5, .. camera, storage, performance, screen, sound on those are just not comparable to the iPSE. The same can be said for desktops, laptops... only iPad Pros are w/o equivalent beyond OS and looks; maybe Surface et al but apps are missing; the cheap iPad is debatable (quasi 2x the price of the T10 ???)

[b]

@LongApple

> Nope. iPhone 4S was the first. Lumia 800 did not have gyroscope. Lumia got one year after iPhone as did some other phones too.

Again you are repeating this bullshit!

Samsung SCH-S310, released in 2005, was the first phone with 3-axis gyroscope! iPhone 4s was released six years later in 2011!

[b]

@LongApple

> Oh BTW Apple is now competing against the Playstation, Xbox and Nintendon with the Apple TV 4K. So this will be interesting.

Again this is bullshit!

Apple TV 4K competes with Chromecast Ultra! Apple was again second when launching 4K and Google was first!
http://uk.pcmag.com/feature/91141/apple-tv-4k-vs-roku-ultra-vs-chromecast-ultra-4k-showdown

[Olivier Barthelemy]

"Oh BTW Apple is now competing against the Playstation, Xbox and Nintendon with the Apple TV 4K. So this will be interesting.".

If it could start by competing with Roku, Chromecast...

Basically, any iDevice that is not an iPhone/iPad/Mac is just there to milk the locked-in Apple customer base. That base is strongly enticed to buy those iPeripherals (iWatch, iTV, iHP) by various Apple restrictions and proprietary stuff; and nobody outside of iUsers even looks at the non-iPhone iStuff. Same with services.

Apple is 100% (well 80+% actually) dependent on iPhone because all those sales it classifies as others (services, iWtch etc...) are ancillary to iPhones, and can't exist w/o it.

[chithanh]

@b
I would not recommend engaging in such dialogue with LongApple/LongAAPL1997/etc. That user (users?) is engaging in something known as the "Gish gallop", spewing misinformation and falsehoods faster than it is possible to debunk them. In the time you manage to show one claim wrong, he already produced three more.

(The Gish gallop is named after infamous creationist Duane Gish, who first mastered this technique.)

[Lullz]

What about the virtual SIM Apple implemented on Apple Watch? Will the operators accept that? It's obvious that the same technology could be used on a phone. Actually it looks more than likely that Apple will introduce a phone with a virtual SIM. Maybe not next year but in future.

Any comments about Apple's Augmented Reality? Looks like Apple is now the biggest player on that field. ARKit really looks cool and similar technology is not available to Android phones. At least not to those phones selling in reasonable numbers.

[john F.]

@ Per
I can't see a single good reason for that. Can you?"

Yes, every person that follows apple closely can tell you.

For way too long Apple shares have been judged by one metric on Wall Street: iPhone unit sales, for some time now the narrative is changing, will they succeed is another story, "unit" and market share are obsessions for many and apple is working on different things that will change the company product mix that contribute to the bottom line

But no matter what I tell you, many people's kids are already made up.

Can u please tell me how many phones google sold? An exact number please.