Has Apple already sold an iPhone to everyone that wants one?

Apple General
#1

Continuing the discussion from Wednesday Morning News:

I know Tim Cook likes talking about customer satisfaction, but what about penetration saturation?

The iPhone has been out for a long time now. With iPhone sales growth slowing down, now more than ever we’re forced to consider the possibility Apple has already sold an iPhone to everyone that wants one, and every iPhone sale from here on out is a previous iPhone owner upgrading from an older model, with much smaller slices of that pie going to switchers (in roughly the same proportion as those switching away from the iPhone) and people buying iPhones for the first time.

If Apple has already sold an iPhone to everyone that wants one, this is very bad news, seeing as the iPhone makes up more than two-thirds of Apple’s revenue. It’s possible that this is the reason why Apple wants to expand into markets it hasn’t yet tapped, including China and India, although breaking into new markets is hard when you consider Apple’s premium pricing compared to other manufacturers.

1 Like
#2

Apple have had a huge rise thanks to this market segment, but even if saturation has been reached and there is no significant change in market share thanks to ongoing R&D… well they would still be making money hand over fist. Yes it’s not growth… but is that such a bad thing? (Maybe for investors, but for consumers?).

The iPhone is considered a temporary purchase for most (??), so everyone will eventually replace it, hopefully with a new iPhone. In short that revenue stream doesn’t go away just because everyone already has one!

If reliability goes up and new features slow down more and more people will choose to hold onto their devices longer, so (again assuming saturation has been reached) there would be a dip in sales as the “replacement/upgrade” markets level out. But again, when you’re making buckets of cash doing that is that a terrible thing?

Just like the PC markets, the smartphone space is likely to shrink because things get cheaper and need less replacement… yet it all still survives. There are a lot of cheap rubbish and a few premium products in the market… but people still want/need computers. Smartphones are no different.

Services. That’s where the future seems to be and while Apple have a good penetration they can sell Apple Centric services, but as they learned with the early iPods and iTunes… there are a lot of Windows users out there.
I’d love to see Apple sell services that cross platforms. iMessages on my Windows desktop at work to start with… Of course that makes it harder to sell your high margin iOS devices so I’m not going to hold my breath.

#3

I think most people who want a smart phone have one, at least in Australia. Curiously when I was in Japan recently I saw more people using older style flip phones and candy bar things in a week than I’ve seen in Australia in the last 5 years.

Other than children growing up and getting a phone (if they aren’t issued them at birth these days), I’d imagine that most people who buy an iPhone are upgrading from an older model Android or iPhone, and these phones are getting better and better. I can’t fault my iPhone 6, the battery is beginning to be a bit dodgy, and it’s perhaps slightly slower than it once was, but I doubt the performance gap between iPhone 6 and 7 will match the chasm between the 3G and the 4. I loved my 3G but couldn’t wait to upgrade to the 4 two years later. I don’t feel the same about the 6 to the 7.

#4

I don’t know what the %'s are, but I’m sure even if Apple was basically dolling out a very similar phone each year, there would still be a large number who would upgrade, due to Telco plan modelling. We’ve had a long time now getting used to this concept, so I dare say it would continue even if the next iPhone could only offer “basic” improvements on previous models.

Of course, as noted, this will sustain a company… but not advance it… My boss is having kittens because the yearly figures have been stagnant for the past 3 years - after 17 previous years of increases. She’s still making a bucket load of money… but has likely well and truly reached saturation, not to mention now facing a lot more competition.

#5

I have been with iPhone since the first 2G one which I imported from USA and then upgraded with every major revision. Skipping the ‘s’ models. Though I’m seriously thinking of skipping the upcoming iPhone 7. Just keep my 6 plus for another year as the battery life is amazing and features what I need.

I’m expecting share price to dip even further for Apple unless they can release a brand new feature for iPhone or completely new product/category.

#6

I started with the 3G and have had every model (including the S’s) up to the 6 Plus. Last time around I couldn’t see the value in the 6S Plus for the $1500 odd it was going to cost (and to be honest I couldn’t really afford it at the time either) so am holding out for the 7… but, like you, I’m seriously considering sticking with the 6Plus since it does everything I need.

#7

It would be if they’d been thinking the ride was never going to end, which seems highly unlikely. 15 years ago they were a computer company, 10 years ago they were a computer & iPod company, now they’re basically a phone & tablet company with a few hobbies. There’s nothing in their history to suggest that they don’t plan well for the future. And don’t underestimate the value in China and India for current products. There are more than 2.6 billion people between them, many of whom are racing to be like us crazy westerners. There is huge potential there for them and it looks like they’re aware of that.

#8

Sure. And while I’m willing to admit two-thirds of Apple’s revenue isn’t going to disappear overnight, Apple’s “services” business already brings in double the profit of Facebook’s entire revenue stream. But for how long?

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

#9

I think a good slowdown/share price drop/whatever would be good for Apple. Might shock them into doing interesting things again. And by interesting, I don’t mean thinner and lighter. I find things like putting 1GB of ram into a 2014 phone (the iPhone 6) reminiscent of Apple’s dodgy early 90s cost cutting. (http://lowendmac.com/2014/road-apples-second-class-macs/)

#10

Hmm… iPhone … penetration …

Ok, jokes aside, I’m sure Apple execs have considered that at some point they’d hit the wall and considered future products and markets and that is where the entry into the car market began. My feeling that is that they’ll keep innovating in all their current markets with improved models, expanding Apple Pay and other aspects of the phone market that haven’t hit the peak of the curve and continue to use that revenue to develop new and radical products.

Regarding Japan, it costs at least $50/month to run a smart phone – closer to $100 in reality once everything is taken into account. Money conscious people and companies use flip phones, as on a family plan, it costs only $10/month. Businesses probably sign up in bulk and very few will be sophisticated enough, let alone even care about all the things they could do with their staff if they had smart phones. Everyone here still has, and still uses, faxes here.