It’s an inevitable situation every company that sells a product is going to face, saturation and competition. A new report out from Argus Insights says that Apple iPhone demand has dropped globally, especially in the United States. The only bright spot for Apple has been the Chinese market where consumers there are scooping up the iPhone 6 and 6 Plus models. The fact that Chinese consumers are buying the year old devices instead of the newer 6s and 6s Plus shows they don’t want to pay the higher price for newer hardware, even with new features. The iPhone 6s and 6s Plus did boost sales in the United States for a brief period of time when it was launched but demand tumbled quickly with promotions following quickly.
Demand fell the most in the US market. After the initial boost around the release date of the 6S and the 6S Plus, demand almost disappeared. And then the holiday promotions started rolling in, not only for iPhone but also Apple Watch and iPads, discounts on the actual price, not the typical retailer trick of offering a gift card to comply with Apple’s “you can’t compete with the Apple Store pricing” mantra for retailers, meaning that Apple endorsed what started off as “door-busters” evolved into recurring discounts similar to what Samsung has done in recent years to boost demand in the face of competition from Apple.
Especially hard hit were the major US carriers, where fierce competition to grab consumers upgrading to the larger screen iPhone 6 and 6 plus in 2014 bucked many consumers out of their normal two year upgrade cycles. Even Best Buy, iconic outlet of tech you can still touch and buy, saw demand trend flat for iPhones in Q4. Part of this is due, as you can see in the graph above, that overall demand in the US market is falling year over year as consumers are keeping handsets longer, due to both lack of reason and lack of resources to upgrade. Apple just got to ride the waves of adoption all the way to the beach before falling off.
Even though Chinese buyers are opting for the older iPhone models China remains a growth foothold for the company and we’ll likely see them continue to leverage it. But if Apple wants to boost sales worldwide they’ll need to pull a rabbit out of the hat. That rabbit could be in the form of the iPhone 5se which will have a 4″ screen which Apple hopes will entice current iPhone 5 and 5s users to buy. Whether or not this will work remains to be seen. Even with a new 4″ iPhone, Apple needs to make some drastic changes to their user interface and allow users to customize their phones a little deeper. With dozens and dozens of Android OEM makers pushing out devices at less than half the cost of an iPhone we can see why people are opting for savings instead of status.
Even so, I myself have made some interesting observations in my own social circles. Android users who once were devout Android users are moving to the iPhone in numbers I wouldn’t have thought would happen. My observations don’t invalidate Argus’s report as I am pulling from a very small pool of users, but it is interesting the general public isn’t buying iPhones like they used to and even more interesting hardened Android users are now buying the iPhone.