Apple has paid Samsung $683 million. Is it due to a lawsuit? Nope. Patent dispute? Nope. Apple simply didn’t sell enough iPhones. Now, how are these related? Samsung provides the OLED panels for the iPhone XS and iPhone XS Max. Apple entered an agreement with Samsung, guaranteeing them that they’d sell X number of iPhones. They did not. So, in order to cover the cost of production, Apple owes Samsung another $683,000,000 for the unused panels. Assuming the panels cost $80 a piece, an assumption made from this article, that means Apple sold about 8.5 million fewer devices than expected. However, because Apple could get a discount for buying in bulk, they could have missed their figures by a lot more.
This was Apple’s expected minimum sales. They assumed they couldn’t sell less than that volume. However, they ended up 8.5 million devices short of this “safe” estimate. That indicates a device with extremely low demand.
Is the iPhone in trouble? Yes.
Declining Sales
The increased price of the iPhone with the introduction of the full screen display in the iPhone X decreased demand for Apple’s most expensive device. Sales of the iPhone 8 lineup as well as the iPhone XR may have taken the place of these flagship sales, but chances are, smartphone design for Apple’s products, like most of the rest of the industry, is declining.
Why? Devices haven’t changed much. Apple, a company known for innovation, has been using the same basic design for the past 4 years, and they’re expected to do so again this year and even next year. That will be the same design for over 5 years, an eternity in tech time.
Furthermore, added features are becoming less exciting in many mainstream flagship devices. A company can only ignore consumer concerns over battery life for so long. Selling no improvement in battery life and a slightly faster processor and slightly improved camera just isn’t exciting. Who wants a new $1,000+ device that’s barely better than the one they bought two years ago?
Change
Apple needs to change. They need to stop designing incrementally. Apple needs a new, exciting iPhone design. They need to consider new, exciting technologies, like in-screen. fingerprint readers, more durable phones, longer battery life, or drastically improved cameras. Oppo and other manufacturers are selling phones with 10x optical zoom now. Others eliminate the notch with flip-up cameras. Apple’s two camera setup, with one of the cameras being utter trash, is not going to excite consumers. It’s boring and tedious.
I’m on the iPhone every year plan. I could get a new iPhone for next to nothing. Still, I almost didn’t get the iPhone XS this year. If the iPhone 11 isn’t a more drastic improvement over the iPhone XS than the iPhone XS was over the iPhone X, I’ll be keeping my phone until Apple realizes that boring isn’t supposed to be in their nature.
Sources:
- Tim Hardwick, MacRumors
- Ju-min Park, Heekyong Yang, Reuters
- Christian Zibreg, iDownloadBlog