Apple’s long profitable ride is expected to hit a speed breaker. A drop for the first time as much as six percent, said analyst Katy Huberty in a research note over at Morgan Stanley that has now turned into the talk of the tech town.
This prediction isn’t surprising given that iPad sales saw a dip for the first time, lack of new innovation (read Apple Watch) and the fact that the company’s record-breaking cash registers are ticking owing to iPhones. Huberty believes that iPhones will see 218 million sales mark in 2016 which is a 5.7 percent decline.
Getting to figures, the year 2015 ending September, Apple recorded iPhone sales of 231.11 million units that was up by 34 percent compared to 2014. Despite the upward trend so far, the analyst believes the iPhone sales may not be stronger, owing to saturation in international markets, the 2-year upgrade cycle normally seen with Apple users coupled with Apple’s revelation about 30 percent Android switchers (the largest ever) for last year. Well, the points are valid, but this may not necessarily mean Apple’s upswing days are numbered.
Along with its premium, cutting-edge products, there’s ‘one more thing’ that gives Apple an edge over competitors – a loyal fan-following. So, the brighter side is Apple doesn’t have to worry about attrition or retaining costumers, and rather focus on adding more numbers to this loyal list. As Huberty points out saturating markets is the prime concern, but the company knows it better than all of us.
Apple has swiftly moved from launching one model to two, and likely to launch three models of the iPhone in 2016. The expanding portfolio of iPhone clearly reveals that the company is poised to take its money minting iPhone to different price segments.
Unlike others, Apple hasn’t tapped on the potential of emerging markets like India. The company failed at building the cheaper iPhone 5c and the latest iPhone 6s models didn’t really take off due to sky rocketing prices. The company rather realise that India is a large market but an emerging one that swears by ‘value for money’ devices. By value for money, we don’t mean cheap and the fact that iPhone 5s was received better than the 5c will vouch for it. The company is playing along a similar game of keeping the prices for latest device high and slashing the prices of the older products. For instance, the iPhone 5s recently got a massive price cut, but is it really worth the buy? This would remind some of us about how the iPhone 4s was considered the best selling Apple device in India even after generation of leaps.
With the new device that is reportedly set for March launch, the company could possibly change this. The company’s alleged iPhone 7c – a mix of the iPhone 5s, 5c and 6s – will be positioned as a budget device and the company is likely to ship between 20 million and 30 million units by the end of the year, according to the chatter online. It is said to feature a 2.5D screen, along with a A9 processor, paired with 2GB RAM and dipped in gold, silver and black colour variants. If priced well, the company could reach out to the mid-rangers who will be willing to make the much required switch as Apple is considered a status symbol here.
Besides, the company has been gung-ho about the China market and over the time has learnt to not treat India as a trash bin. In the past we’ve seen Apple introduce buybacks, aggressive advertisements and more. In fact, it surpassed the 1 billion mark in India, wherein it doesn’t enjoy a good market share. Apple has become more flexible and open in the last couple of years. It has learnt to adopt and re-strategise, putting behind some stringent statements it made in the past. If the iPhone is driving force for revenue, then a well-priced iPhone for emerging markets will take its numbers further sky rocketing. The numbers Apple has been achieving by mere two models compared to the scores of Androids available there is commendable.
With Samsung’s sales sliding off a slippery slope, it is quite possible that there will be a fair number of switchers this year too, unless Samsung pulls out a device that will give others a run for its money. Moreover, the number of users adopting iPhone even after year ending September figures has been growing by leaps and bounds. For instance, the survey by the Yahoo-owned analytics firm Flurry showed Apple accounted for 49.1 percent of smartphones and tablets activated over the Christmas week, compared to 19.8 percent for South Korean rival Samsung. A lot had been said and written about Apple has a ‘falling empire ‘ after Steve Jobs death, but the company under the leadership of Tim Cook rose above all odds and turned profitable than ever before.
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