Yesterday when Tim Cook revealed that Apple may be falling short of its revenue estimation in fiscal Q1 2019, the world was quick to react and blame Apple’s ‘exorbitant‘ pricing strategy of iPhone. Tim blamed fewer iPhone upgrades for the falling iPhone sales though, but a closer look at the iPhone users’ buying patterns reveal a lot more about the fast-changing upgrade preferences of consumers. And guess what, it’s nothing but the optimal performance iPhone is tweaked for is hurting Apple’s revenue book the most.
It all began with the increasing number of complaints of sudden shutdown of iPhone last year. In order to compensate the degrading batteries in the older iPhone models, the company decided to throttle older iPhone. The move, however, resulted in the sudden shutdown of iPhone, resulting in hue and cry by users who were still hooked up with the older models of iPhone. To control the damages, Apple announced a steep discount of 60% for iPhone battery replacement.
Battery life has been the biggest challenge to deal with for most iPhone users for a very long time. A sizable share of people who upgraded their iPhone in the last few years had claimed that battery performance was driving their decision to upgrade.
Barring the battery performance, older models of iPhone are among the topmost satisfying smartphones for users. Launched in 2016, iPhone 7 Plus is rated as the most satisfying smartphones by users in 2018. iPhone 8 and iPhone 8 Plus also ranked among the top 5 most satisfying smartphones. To put things in perspective, iPhone X was ranked way below than many Galaxy and other iPhone models in the list then.
The high customer satisfaction scores of older models of iPhone eliminated the immediate need for an upgrade for most of the users in 2018. Apple’s decision to cut down the price of battery replacement came as a boon to those iPhone users who found battery as the only troubling aspect. The battery issue also enlightened iPhone users about the throttling issue and how to turn it off, which eventually helped them to experience improved iPhone performance.
The increasing ASP of iPhone and exorbitant pricing strategy of recently launched iPhone XS, iPhone XS Max also played a role in further defusing the interest of prospective buyers towards the latest iPhone models.
Consequently, a majority of iPhone users decided to go with battery replacement instead of upgrading their device in 2018. The decision had a direct impact on the sales of iPhone and it’s quite evident with the YoY decline in the last few quarters. In a way, the fewer iPhone upgrades in the last quarter was a result of high satisfaction score of older models of iPhone – something that has put Apple in a dilemma whether to cherish or feel disappointed.
While nothing is certain yet as all Tim Cook’s letter portrays only an unfinalised picture of Apple’s performance in its first fiscal Q1 2018 – the quarter known for the record iPhone sales and revenue until now.