Apple had its quarterly conference call yesterday and the news wasn’t great. For the first time in THIRTEEN YEARS year-over-year total sales declined as did year-over-year iPhone sales. It’s that second thing that alarmed Wall Street and chronic Apple doomsayers. In the second quarter of 2015 Apple sold 61 million iPhones, but in the second quarter of 2016 the company only sold 51 million—that’s a whopping ten million less than the same period a year before.
Before I dive into an autopsy of why 2016 will continue to be rough for the iPhone-maker, it’s worth noting a few points: first, any other smartphone company would kill to sell “only” 51 million smartphones. That’s still a mind-boggling, staggering number of devices to sell in only three months. Second, it’s not like this wasn’t expected. When Apple gave its Q1 conference call earlier this year, the company said they expected Q2 iPhone dales to be down year-over-year—and they were right.
So why did Apple experience its first quarterly year-over-year sales decline ever? Here’s what Tim Cook had to say, reports the Wall Street Journal: “In an interview with The Wall Street Journal, Apple Chief Executive Tim Cook said it was ‘a challenging quarter’ for the company. It struggled with tough comparisons on iPhone sales compared with a year earlier, when demand for the iPhone 6 and iPhone 6 Plus was booming. What’s more, demand for those models prompted some consumers to upgrade sooner than usual, and sapped interest in the latest phones, he said.”
On the financial call, Cook went further and revealed other reasons for the fall in sales. Most notably, he said iPhone 6 sales were so good in 2015 and the device, with its new screen sizes, was so well received, that it prompted many people to upgrade their iPhones early. Since the iPhone 6s kept the same design features, those that upgraded early to the iPhone 6 didn’t see a need to upgrade again only 12 months later.
But this can hardly be news to Apple because the same thing, more or less, happened with the iPhone 5 and iPhone 5s. Granted this time around was much more obvious, but the moral of the story is simple: people are waking up to Apple’s lazy update strategy and opting to miss out on buying new hardware because, well, there’s no compelling reason to switch hardware every 12 months in Apple’s current ecosystem. In fact, it’s more like every 24 months.
And that’s risky, especially with the likes of Samsung and LG on the hunt for new customers. Personally, I believe Apple has gotten away with this for so long it believed its own hype. But now that the market is kind of saturated, the numbers of floating voters are dwindling and that means EVERY release — not just one every 24 months — matters. This appears to be the lesson Apple has taken on the chin this quarter. It became a victim of its own success.
But now that this bad quarter of iPhone sales is behind the company, will things get better in 2016?
In my opinion, I don’t think they’ll get worse, but I don’t expect them to get much better. Here’s why:
1. There are some kick ass Android handsets that have already come out in 2016
From the Samsung Galaxy S7 to the Huawei P9, the iPhone has some stiff competition. Plenty of these handsets have a design that are as good or better than the iPhone, but also virtually all of them have better specs. Now, I’ve said this time and time again, but in some regards, specs do not matter. Does 4GB of RAM in an Android handset mean it will run faster than an iPhone 6s with only 2GB of RAM? Not necessarily as software optimizations have a lot to do with how quickly apps and an OS can perform tasks in conduction with the RAM.
That being said, lots of Android handsets have unarguably better specs that do matter. For example, most Android flagships start at 32GB storage. Apple still cheap out and offers a 16GB entry level iPhone. Many Android handsets also offer better front and rear cameras than the iPhone 6s. And some Android handsets, like the Huawei P9, are already offering dual lens cameras, which blow the iPhone’s camera out of the water. And then there is the display technology. Plenty of Android handsets have 2x the screen resolution that the iPhone 6s has. If you like iOS as much as Android and don’t really care which you use, the iPhone doesn’t beat in hardware offerings like it used to.
2. The iPhone no longer holds the design crown
Another issue is design. The iPhone 6s used the same design as the iPhone 6. Now, this is to be expected, as Apple operates on a two-year design cycle usually. But the thing is, where Apple once was the only company to use cutting edge materials in its iPhone designs, now virtually all Android flagships are made of glass and aluminum—and many look very, very good. Why this is important to iPhone sales for the rest of 2016 I’ll explain next.
The iPhone 6s, iPhone 6s Plus and iPhone SE, as updates go, were about as exciting as watching re-runs of Country File while eating unflavoured porridge made with soy milk. They brought nothing of merit to the space, save for 3D Touch and some minor updates and tweaks which, by themselves, can hardly be cause for rushing out to buy something, especially when you’re current-generation iPhone, likely an iPhone 6 or iPhone 5s, is still working admirably.
Then you have handsets like the LG G5 and the Galaxy S7 EDGE which not only beat the iPhone when it comes to battery life and performance, but also look a hell of a lot better doing it as well. This, along with a bunch of other factors, is why iPhone adoption is lower this year. Apple used to inspire people with its products, now it seems as if the company has gotten so content with being on top that it has forgotten what got it there in the first place.
3. The “iPhone 7” appears to be a relatively minor upgrade
Now, we won’t know what the next iPhone looks like until Apple unveils it in September, but if all the rumors are right so far, it’s going to look A LOT like the iPhone 6s does now. And if it does that is going to be a HUGE problem for year-over-year iPhone sales. People are used to Apple’s two-year design upgrade cycle. But it seems like the iPhone 7 will sport the same design, and if it does, people are going to feel let down and many will probably hold off on upgrading until 2017.
What’s worse is that all of the Android hardware features I listed above that outshine the current iPhone don’t appear to be making it into the iPhone 7 based on rumors. The iPhone 7 is still expected to start at 16GB storage, have the same screen, and only the iPhone 7 Plus is expected to get a dual lens camera.
I upgrade my iPhone every year, but if the iPhone 7 looks roughly the same as my 4.7in iPhone 6s, I think this will be the first year I skip an upgrade. This will definitely happen if the rumors are true and Apple doesn’t put a dual lens camera in the smaller iPhone. I’m even more likely to hold off upgrading this year because all rumors point to the 2017 iPhone being mind-glowingly kick ass with an all new design, display, and home button integrated into the screen.
And it’s that last point why I don’t think yesterdays numbers mean the iPhone is doomed. 2017 is going to be a banner year for the iPhone. But 2016? It’s going to be rough.