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Here's why the iPhone rocketship is running out of fuel

Here's why the iPhone rocketship is running out of fuel

Apple is holding a launch event tomorrow where we expect the unveiling of the latest iPad and an iPhone. Behind the scenes, though, Apple won’t be as cheery as usual. That’s because sales of iPads are falling and the iPhone's are flatlining. Don’t get us wrong. Both devices will continue to generate the kind of profits that, say, HTC can only dream of. But I think the iPhone rocketship is running out of fuel.

apple iphone 6 samsung galaxy s6 back camera
The first iPhone was in a class of its own. That isn't the case any more. / © ANDROIDPIT

From zero to hero

When the first iPhone was launched in 2007, its potential market was pretty much everybody on Earth: it was the first smartphone of its kind, it worked in a way that no other smartphone worked, and it didn’t have any serious rivals. Android was in its infancy and Samsung was making phones that looked and worked rather like Nokias and BlackBerrys.

The iPhone sold in big numbers, but the total number of iPhone owners was still a tiny proportion of the overall market. So when Apple made a vastly improved iPhone - with 3G this time, and copying and pasting, and apps - it could sell to three kinds of people. It could sell the new iPhone to people who wanted to upgrade from the original. It could sell the new iPhone to people who wanted to switch from lesser rivals, and from feature phones. And it could sell the new iPhone to people who didn’t have any kind of mobile phone at all.

Over time, though, each of those groups has got smaller. The difference between the iPhone 6 and the iPhone 6S isn’t dramatic, so there isn’t the need to upgrade that there was when the iPhone became the iPhone 3G. Rivals have caught up and in many respects overtaken the iPhone, so a Samsung Galaxy S6 owner is more likely to get a Galaxy S7 than an iPhone. And pretty much everybody has a smartphone, so there aren’t many newbies around.

AndroidPIT Samsung Galaxy S7 vs S6 18
You're more likely to go from an S6 to an S7 than from an S6 to an iPhone. / © ANDROIDPIT

Eco a-go-go

There’s another issue, and that’s the arrival of the ecosystem. You don’t just choose a phone any more. You choose an ecosystem, a world that includes not just the phone but maybe a tablet, a smartwatch, in-car entertainment, home automation and a whole bunch of apps and online services. The more of these things you have, the more of a pain in the backside it is to switch.

So the more Android products, apps and services you have, the more likely you are to stick with Android - and as Android sells in much bigger numbers and in a much wider range of price brackets than Apple, that starts to reduce the number of potential switchers. Persuading a Galaxy S7 owner to switch to an iPhone is tough enough, but a Galaxy S7 owner with a Galaxy tablet, a Galaxy Gear watch and a Galaxy VR headset? Good luck with that one.

Android Wear is rubbish on iOS, and the Apple Watch doesn't work on Android. / © Motorola

Everything is awesome

Another reason for slowing sales is technological: we’re in a lull after years of exceptional advances. Any firm’s Excellent New Phone is almost certainly very similar to last year’s Excellent New Phone, except a little bit slimmer and a little bit faster and with little improvements to bits and pieces.

Battery tech hasn’t followed the same incredible trajectory as processors, 5G is years away and cameras can already shoot in higher quality than most people’s TVs and computers can display. That’s one of the reasons for the hype around wearables, VR, home automation and in-car systems: if you can’t make the phone really exciting, maybe you can attract people with goodies such as headsets or smartwatches instead.

androidpit samsung galaxy s6 vs samsung galaxy s7 4
Meet the new boss, slightly thinner than the old boss. / © ANDROIDPIT

Cheap can be nasty

“Why would you buy an iPhone when you can do pretty much everything on a Moto G for a fraction of the price?” Someone asked us that the other day. It’s a really good question, and the answer is that you wouldn’t, because if you’re considering an iPhone you aren’t thinking about any Android, let alone a specific handset. That’s why the iPhone SE is coming: it’s an attempt to get iPhones into the sector where people don’t pay enormous sums for their phones.

There are two problems with that. One, Android already caters very well for that market with its Motos and its OnePluses and so on. And two, for many people iPhones are status symbols, and cheap ones are not. Remember the iPhone 5C, the gaudy, plastic iPhone? It bombed: it was too cheap by iPhone standards and too expensive compared to Androids. There’s a very good chance history will repeat with the iPhone SE.

iphone 5c colors
The iPhone 5C. In a word: aaaaaaagh! / © Apple

History’s repeating

Where is all this heading? We suspect it’ll play out just like the PC market did: unless there’s a spectacular new technological development the smartphone market will become increasingly commoditized. Apple will continue to target the most affluent purchasers and rake in the lion’s share of the profits, but it won’t have the high end to itself: it’ll be sharing space with the likes of Samsung, and maybe Huawei and Xiaomi too, and Android will continue to dominate the mass market.

Apple isn’t doomed and the iPhone isn’t a bust, but its extraordinary sales growth couldn’t last forever. Every rocketship has to come back to Earth eventually.

What do you think? Can the iPhone ever repeat its extraordinary success? Let us know in the comments.

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  • My take as an Android fan? There is a latent demand for a 4" iPhone as many iPhone users thought the 6 was too big (and they are right as the home button adds a lot of real estate). At the same time you're hitting a lower price point without being two generations old. Apple as usual is playing the market well, this will not only retain their market but expand it. There are few android phones that are small, have high quality hardware, and a middling price. The only thing close is the Sony X compact and it's more expensive than this.

  • One thing I've noticed is that people kept saying that companies like apple have to introduce drastic developments if they want to stay in top, but seriously, what do you expect them to do? In my opinion smartphones are already in the pinnacle of their era.

  • I agree with the author. Apple has to do more with iOS to keep the iPhone relevant in order to attract new customers and keep their existing customers. As Android OEM's have matched the build quality of iPhones it's becoming harder to justify why one should buy an iPhone over an equally well built Android phone especially if it costs less. While I have both an iPhone 6 and a Nexus 5X. I like my Nexus way better than my iPhone and I probably will buy another Nexus or some other Android phone instead of another iPhone.

    As Android matures as an operating system and becomes more optimized like iOS Apple will have to do something they've never been willing to do before and that's allow users to use iOS the way the want to instead of the way Apple wants you too.

    Lastly, Apple should think really hard and start bringing their apps to Android as that's the way I found myself wanting to know more Android. Google has done an excellent job of bringing their apps to iOS and that led me and I suspect some others to take a closer look at Android and make the switch.

    • And the fact that Apple has brought their music service to Android says a lot. They are trying to keep the people that have left ios for Android tied to them with respect to their music because apple makes money by the sheer volume of music they have available. And hoping to get more users from the huge Android customer base.

  • Paolo Mar 21, 2016 Link to comment

    Yeah, this article's on point. The Galaxy S7 class and LG G5 are solid proof that Android can finally achieve the air of superior build the iPhone achieved. BUT iOS is STILL the "superior" platform just because apps and games come there first, and almost all the time, stay there. Apps run MISERABLY on Android (Facebook's a RAM hog, Snapchat produces potato pictures, games are ALL in-app-ocalypses compared to the walled garden of iOS), which is unfortunate, because Android can do so much more...

    • The reason why iOS recieves apps before Android :
      Android is a fragmented ecosystem. It is much bigger than iOS and it's web services are much more superior. Because Android is open source, OEMs are free to do whatever they want to do with software on their device(often to distinguish themselves from the competition). This leads to all kinds of tweaks and features that are not usually available in stock Android (skins and Custom ROMs).
      On the other hand, Apple has complete control over iOS. Their devices are exclusive to iOS, so the number the Apple devices to support apps reduces significantly.
      Android is the exact opposite. Developers have to ensure a lot more if their app has to run on in the vast ocean of Android devices.
      So, it's true that some apps come to iOS before Android, but Android is catching up. And Android is the future. iOS is taking backseat. Android N will support multi-window mode and tablet app developers will get a boost. So, I have huge hopes from Android and IMO Android>>>iOS.

  • The article so nailed it. The era of iphone domination is closing in on them. Smaller oems are coming up with good devices (thanks to chinese oems) that makes one wonder why spen so much to get a phone that cant offer anything significantly different. Phones are becoming very expensive these days and its only a matter of time before people realize theres really nothing special about the high end smartphones that cost a fortune.

  • Apple is stingy and greedy.

  • what you want to do with your phone and what you can actually do with it is more important than just buying for status symbol.if we take a competition of iPhone owners about how to use it 90% will fail.

  • as for other I phones SE will also get a bunch of buyers which already using I phones.but switching from your Android device to SE seems very dreamy and illogical. I agree with author as good Android devices for smarter prices are available.all the best to Apple for SE the little baby.Long live Android.

  • Latest are getting loose

  • Going back to the original 4" iPhone is probably a very good thing for Apple. A lot of people still prefer the small size. Re-using the iPhone 5 case is probably a very bad idea in that the public will not see it as a "new" phone - only an upgrade to a very old phone. (I on the other hand actually welcome using the original design) ..... There is nothing much 'new' under the sun these days in the phone industry.... it's all becoming the same old stuff..... nothing really new and earthshaking anymore. ... even the "smart watch" is not so smart...... just another gadget not really needed except as an ego booster..... This will be interesting how this "new" iPhone does and if it canibalizes some of Apples sales on the phablet phones.

  • Good article! No iPhone can never crossed their own margins or break their profit record in the smart phone arena. Because day-by-day, non techs are growing technologically and no tech guy with good electronic background would buy an iPhone.

  • Mark
    • Admin
    Mar 20, 2016 Link to comment

    I think there is one more point you did not touch on. That is the Status symbol and the cool phone to own is starting to wear off of the I phone and gadgets in general. That is what going to bring down the I phone not the competition.

    • agree

    • Agree somewhat. Apple at least to me appears greedy. The iPhone 6s plus is similar to the nexus 6P and the 128 GB version has a price difference of $300 US. Hmmm, that 6P is looking tempting and there's a lot you can do with an extra $300. Both are made in China so the manufacturing cost should be about the same which is why apple has such high profits. But they can sell at what the customer will pay, and plenty have including myself (switched from a droid incredible). So where do we go from here, it all depends on how invested you are in the eco system. Me personally am now looking at an Android phone as my next one, if for no other reason than to keep money in my pocket.

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