Apple isn’t doing so great right now. The company is still reigning supreme among the top smartphone manufacturers of course, but it’s sales have been steadily slumping.
And in a recent letter to investors, CEO Tim Cook blamed it on customers. Yeah, no kidding.
In his letter, Cook observed that their sales numbers are dropping because consumer upgrade cycles are getting longer. Basically, not enough new iPhones are selling because people are keeping their older devices for longer.
This is particularly the case in Greater China, where Apple is being pushed out by local Android manufacturers like Huawei and Xiaomi. Cook says that, rather than buying new iPhones, people are taking advantage of “significantly reduced pricing” to instead replace their batteries.
Of course, that reduced pricing is thanks to Apple’s own bungling. Back in December 2017, it emerged that the company had been secretly slowing down older iPhones on newer versions of iOS. Apple later claimed it was to prevent “unexpected shutdowns” when the older batteries were stressed by the modern OS, but the problem was they hadn’t informed their customers or given them an alternative.
So their only recourse was to offer battery replacements at a discounted cost for a year for anyone with an iPhone 6 or later. And that move seems to have cost them in sales too.
Cook says Apple expects iPhone revenue in the first quarter to be $9 billion lower than they had previously estimated, approximately $84 billion instead of $93 billion. “Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline,” he wrote.
However, he does note that other hardware categories like the iPad are still growing. And there may be a good reason for that.
You see, Apple has continued the pricing model it uses in the US, where the exorbitant buy price can be offset by pairing them with EMI phone plans. In countries like China and India especially, that’s not an option. So instead of a somewhat expensive status symbol, we’re technically being marketed an obnoxiously overpriced piece of hardware. And fluctuations of the Rupee against the dollar don’t help either.
India is still an emerging market, which is something companies like Xiaomi understood when they rode in with sub-Rs 10,000 devices. Since then they’ve upgraded too, but no one except Apple charges more than Rs 1 lakh for a phone. And that’s completely the wrong move for a market already very entrenched in Android.
So really, perhaps Apple should just be looking inward instead of blaming their user base. After all, even many of their fans can admit that the new range of iPhones are absurdly priced. Demand isn’t “weak” then, it just doesn’t have a reasonable outlet.