To paraphrase one of my favorites from Lennon and McCartney, “I read the news today, oh boy, about the iPhone growth crisis.” Crisis? Well, the iPhone isn’t growing as fast as it used to so that’s bad for Apple, right?
Funny thing. True story, too. The entire smartphone industry for 2017 has just mirrored the entire personal computer industry the past few years. We’ve reached, not peak iPhone– but peak smartphone. Exactly how does Apple fare during these trying times?
One can easily argue that the entire world is awash in computer technology these days and there’s nothing new under the sun to propel us forward into a new era. Honestly, does your Mac or Windows PC do more than what they did five years ago? Are not all smartphones today just knockoffs of iPhone– flat slabs of glass filled with a good screen, big battery, plenty of applications? Oh, and a phone.
It’s not peak iPhone. It’s peak smartphone. Says who? Financial Times:
Sales of smartphones in China — the world’s biggest market, responsible for about one in every three shipments — fell last year for the first time since 2009, raising fresh concerns about the strength of the global handset market.
Strength? Maybe what we have is a mature market where growth is next to nothing because smartphones– like personal computers– are everywhere and inexpensive.
By the way, that information comes from IDC, so consider it something of a guesstimate— especially since only Apple releases actual sales numbers each quarter– but they’re not alone.
IHS Markit said global smartphone sales had dropped 4.5 per cent in the last quarter of 2017, with only Xiaomi and Lenovo’s Motorola experiencing any growth in shipments.
So, it’s not just China. Smartphones are not growing as they did just a few years ago. What’s going on?
Guesstimators are out in full force these days.
Analysts forecast demand will slide further this year… worldwide smartphone shipments will dip 2 per cent in 2018, led by a 4 per cent decline for Chinese brands.
For the first quarter of 2018’s fiscal year, Apple’s iPhone sales were down about a day from the same period a year ago, yet revenue was up 13-percent. Apple sure knows how to squeeze profits from marketing trend lemons, no?
Gokul Hariharan of JPMorgan:
Over half the global market as it stands today has [smartphone] penetration of 70 per cent or higher, meaning that is largely a replacement market.
Based on Apple’s real numbers vs. the estimates, iPhone remains a desirable product to be replaced every few years, and an aspirational product for those who languish as Android smartphone owners but want more.
So, yes, we’ve entered peak smartphone, the doldrums of technology which looks much like the doldrums of the entire personal computer industry the past five years or so. That said, note that iPhones still sell at around record levels, so Apple owns the plateau; much as it does with the Mac which outgrew the PC market while soaking up half the industry’s profits.
Is Apple the only smartphone maker to hit the wall? IDC:
Apple experienced a slight downturn from the previous holiday quarter as iPhone volumes reached 77.3 million units, a year-over-year decline of 1.3%. Volumes were still enough to push Apple past Samsung and back into first place in the smartphone market, largely because of iPhone 8, 8 Plus, and iPhone X. Apple continues to prove that having numerous models at various price points bodes well for bringing smartphone owners to iOS. Although demand for the new higher priced iPhone X may not have been as strong as many expected, the overall iPhone lineup appealed to a wider range of consumers in both emerging and developed markets. Apple finished second for the full year in 2017 shipping 215.8 million units, up 0.2% from the 215.4 million units shipped in 2016.
Apple up, Samsung down. Take those numbers and positions with a grain of salt because Apple stated iPhone X has been the company’s best selling iPhone model since it launched late last year. That also means Apple’s game plan remains on track– premium product maker at premium prices; that keeps revenue up, profits up, and competitors searching for ways to cut costs just to stay in business.