Saturday, March 3, 2018

Apple and Other Phone Companies Struggle to Sell As Many New Model Phones


Image result for iphone models


Summary: As Apple, Samsung, and other big name phone companies are coming out with new models, they are finding that their customers are not willing to upgrade their phones as frequently. Apple's newest iPhone X was about $1000, and while some may be willing to pay to have the latest technology, others are doing a cost benefit analysis and making the decision that the upgrades do not justify the price tag. Instead of paying for the latest phone, many are turning to buying refurbished phones, leasing phones, or holding onto their phones longer (8 months longer this year and an estimated 33 months next year). This has led to decrease in demand, with the article stating that "new smartphone shipments plunged to historic lows at the end of 2017." Anticipating the decreasing demand, phone makers had "banked they could compensate for slowing volume by pushing up prices." However, the increase in price may have been too much since not as many customers seem to be showing interest in the new models. According to CNBC, the demand for iPhone X models since the holidays has "slowed dramatically."

Analysis: This article highlights the fact that consumers make some very practical decisions. Even though we seem to be inundated with messages that we must get the latest and greatest technology, there appears to be definite price points that change the behavior of consumers in a way that companies do not anticipate. The companies then have to change their strategies to continue to meet their financial goals, or they will face the consequence of a steep decrease in their stock prices. Samsung is looking into whether they should "push refurbished flagship devices...over new releases" and Apple is continuing to grow their services like the "App Store and its music and payment services." 

Discussion Questions:
1. Do you  think it is worth the money to keep updating your phone models each time a new one comes out? Why? Is there a price point that would change your behavior as a consumer?
2. What do you think phone companies will and can do in order to increase the demand for new phone models when they come out?

9 comments:

Anonymous said...

Personally, I don't think that it is worth the money to buy each new phone model if my current phone works just fine. However, I understand the appeal of the faster, newer technology and features in each new model, so I do think that updating phone models is worthwhile for some. Moreover, I think that the high price is probably the biggest reason why the iPhone X was far less popular than previous models. Although the all-screen display, face ID, and other features seem intriguing, I don't think they justify a price point that nears that of laptops. Therefore, to maintain a high demand for phones, I think that phone companies should just continue to improve things like the efficiency of the phone's technology, strength of the battery, and camera quality, while keeping it at a reasonable price point, instead of adding on flashy and expensive features.

Anonymous said...

I agree with Emma, that buying a new model of the phone every time it comes out is unnecessary and very pricey. I think it is unnecessary because right now, I feel like people use their phones mostly to call, text, browse the internet, and use apps. Every
iPhone model I can think think of, has those features. Therefore, what's the point of buying a new one, if the one you have already has everything you need? Of course the improvements to the camera quality, and the face id on the iPhone X are captivating additions that may entice some people into buying this phone. However, for most people, the "enticement" doesn't last long enough and is not worth enough to actually buy the phone. I think that iPhones, and honestly most smart phones, have reached their peak in improvements. Therefore, I am curious to know what more phone makers can add to each model...

Anonymous said...

I agree with those above who don't think it is worth the money to buy a new phone every couple months or so when a new one comes out. When making decisions about expensive purchases, most people take into account the longevity of the product they are buying, and I don't think phones should be any different. Sure, there will always be a new model out, but the features are usually only incrementally "better," and don't merit doing away with a perfectly functional piece of technology. At this point, until there is a major breakthrough in smartphone technology that allows people to charge the phone from across the room wirelessly or some other quantum leap in the phone industry, new phones are not very useful. This is especially true with Apple's new iPhone X, as most of the features that have been improved seem to be of little use (face vs. touch id).

Unknown said...

I'm wondering if part of the reason that there has been a drop-off is that carriers no longer have 2-year contracts. Killing of these contracts means that consumers no longer get a subsidy for their phone, so there is more pressure to hold on to older phones.

Anonymous said...

I agree with the point that Michael brought up because it reflects the reasoning as to why I didn't purchase another iPhone this year. Especially because the price of the newest model has increased rather drastically from previous years, the desire for a new iPhone was not sufficient enough to force me into actually buying another one -- even though my phone has been glitching.

Anonymous said...

I also think that it isn't worth it to purchase a new phone each year. Given the prices of smart phones at the moment, buying a new phone each year is a significant investment and it appears that the phones get more expensive each year. Also, as a few have stated above, the technological advancements from phone to phone each year are not that large. In my opinion, these advancements are definitely not large enough to justify the purchase of a new phone considering the price.

Anonymous said...

It's definitely hard for companies to continuously come up with technological advances that can be used in a next generation of phones, but 1. they're often extremely pricey, and 2. the technology doesn't always warrant customers to "upgrade" their current phone. I assume that many customers will wait a few years before buying a model as its price will decrease drastically when the next-next phone comes out.

Unknown said...

Apple used to create products that revolutionized the tech/gadget/phone industry. It had beautiful hardware, fast and reliable software, and a simple, intuitive interface that was way ahead of competitors. As a former user of Apple, I loved their phones up till the iPhone 5s. Since then, I've switched to Android. Not because Apple products since then were bad, but because Android (in my opinion) has caught up to and surpassed Apple in each of these categories. Phone hardware is pretty standard these days, no phone is significantly better looking than any other. Software is similarly comparable between products. In terms of the UI, I think that while Android has been making big advances, Apple has stagnated and created some more confusing and less user friendly approaches. As such, there is less incentive to buy the new Apple product.

Anonymous said...

Apple can only keep "improving" their products for so long until they just run out of ideas. I think their newer models do not appeal to their consumers as they once did. Like Max said, they used to create new, never-before-seen products that everybody wanted. But it is understandable that the demand for a phone without a home button is low... I don't even want a phone like that, myself. Face recognition is not the number one asset I look for in a phone, and the fact that Apple used that as a marketing point for the X seems like they are plateauing with their ideas. In order to bring demand back up, I think their best shot might be to stop trying to come up with ways to modify the actual appearance (you can only have a phone be so big), but rather to redesign some major performance aspects such as the ability to FaceTime more than one person at once.