Did the price point of the iPhone X hurt interest in Apple’s iPhone?
The iPhone has been Apple’s main source of profitability for nearly a decade. Customers upgrade their smartphones far more often than computers or tablets, and iPhones have massive profit margins, so while the Mac might have made Apple, the iPhone made it rich. Apple had been able to sell iPhones with immense profit margins in the past because cellular carriers like Verizon and AT&T subsidized the price of the phone into their plans. Consumers didn’t realize how much they were paying. However, carriers have stopped doing that, requiring customers to take a look at the full price of a smartphone more often. The exorbitant price on the iPhone X may have finally made some consumers jump ship. Or could it have been something else?
Last quarter, 87.6% of iPhone owners said they were going to upgrade to an iPhone after they moved on from their current phone. This quarter, only 80.5% of iPhone users are certain they’re sticking with the platform. That might not sound like much, but in only 3 month’s time, around 7% of Apple’s users decided they might not stick with the platform anymore. That’s a huge drop in customer loyalty for a manufacturer that usually sees extremely dedicated users. Apple’s profits depend on people being excited about upgrading to a new iPhone, and a drop in interest in staying on the platform could also reflect a drop in interest in upgrading. This could be the first sign that Apple’s heading to retention problems.
The Most Expensive iPhone Ever
The iPhone X is Apple’s most expensive iPhone ever, and not everyone wants to upgrade for the price. It was supposed to be seen as a premium device, the future of smartphones, but instead it degraded the value of Apple’s current flagship iPhones, the iPhone 8 and iPhone 8 Plus. The barrier of entry for Apple’s latest and greatest is too high for many people. I personally have friends who upgraded to the iPhone 8 only out of necessity, and otherwise refused to “waste money on a bigger screen.” Some can’t see the appeal of the iPhone 8 because it’s not the iPhone X, and won’t upgrade from their older devices. The iPhone X is certainly impressive, and I’m excited about it, but perhaps Apple shouldn’t have cannibalized their own iPhone sales with it. Consumers have spoken, the $1,000 price point for an iPhone is too damn high.
iOS 11 and Diminishing Quality
Consumers haven’t liked iOS 11. They’ve called iOS 11 buggy and error-prone. Just this morning I tried to look at a notification from the Washington Post. As soon as my iPhone unlocked it froze and crashed. The entire OS crashed from opening a notification. I’ve never experienced so many problems with an iOS version, and I’ve been using the betas for years. Simply put, it’s clear that Apple has lost their focus on quality. The key reason iOS users stick around is that everything “just works.” Syncing, the OS, downloading apps, it’s all seamless. But not anymore. If consumers no longer see Apple as reliable, and now are also seeing their products as incredibly overpriced, they’ll jump ship. If Apple doesn’t return to quality and making products for everyone, they’ll lose everyone.
Apple’s plan for 2018 should look something like this:
- Improve quality of iOS and macOS
- Make the iPhone X design available to everyone as the only iPhone design
- Don’t forget professionals still want the best hardware
Apple can do this with a new focus on quality and refinement for iOS, something they’ve been doing for macOS for years. They can focus on new iPhone hardware and manufacturing techniques to bring the iPhones with the large screen design of the iPhone X under $1,000, back down to the ~$700 price point the iPhone is known for. And, for the Mac, Apple can focus on bringing professional hardware that professionals actually want to use. Apple has strayed from their core values. They need to come back.
Source: Chris Mills, BGR