U.S. and China Demand for iPhone Plummets

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I only upgraded to the iPhone XS this year because I started on the iPhone every year program from Apple, and it cost me next to nothing to upgrade. Otherwise, I wouldn’t have upgraded. The iPhone XS is excessively expensive. While the camera is a dramatic improvement over the iPhone X, nothing else was dramatic. Plus, Apple was still selling it for an exorbitant price. Frankly, I just didn’t want it. As it turns out, many people share my opinion.

Analytics firm UBS asked U.S. consumers if they were planning on buying a new iPhone within the next 12 months. Only 18% said yes. That’s down 3 points from last year, and only one point higher than the all-time low 2015, when Apple released the iPhone 6s.

Their survey in China showed a more dramatic drop. 23% of those surveyed were planning on getting an iPhone next year, down 6 points from the 29% who said the same last year. Apple may have priced their fanbase out of the market.

Is Pricing the Problem?

UBS didn’t ask customers if the high price of the iPhone XS, iPhone XS Max, and iPhone XR motivated their decision. However, analysts have pointed to Apple’s high prices for the seemingly low demand. Apple’s stock has dropped significantly after investors heard the news about Apple’s dwindling demand. Investors are afraid Apple has reached peak saturation for the iPhone in the market, and priced themselves out of easy yearly upgrades. With competitors offering comparable phones for half the price, Apple needs to worry about driving their loyal customers away. Apple’s stock tanked, and consumers prefer, for the first time ever, Apple’s cheapest iPhone model instead of their flagship. The iPhone XR really is the people’s iPhone.

The ‘S’ Year Problem

The other issue Apple’s facing is the fact that this was an ‘S’ year, or an off year on their development lifecycle. Instead of delivering a brand-new design, the iPhone XS and XS Plus are largely unchanged. The iPhone XR, with its lower price and exciting colors, has actually been more popular. Apple’s ‘S’ year phones are never as popular as their new models.

Ups and Downs?

The fact that Apple has off years implies that this is a cycle. Next year, Apple will release a new iPhone, likely one that doesn’t have a notch, or has a smaller notch. Demand will, once again, increase. Customers may even forgive Apple for the high price. Perhaps the iPhone XR will continue into next year, with a further discount? The fact is, in 2019, iPhone demand will likely recover, at least a little. But with Apple pricing itself out of customers’ minds, perhaps that recovery won’t be substantial.

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Source: Ed Hardy, Cult of Mac