According to a new analyst memo, Apple only seems to be landing itself in one financial trouble after the other. The latest reason for unrest in the company is that, apparently, iPhone users are not inclined to change their handsets every year. The reason for this is pretty straightforward: iPhone owners do not have as deep a pocket as the tech giant would want them to. #GareebJanta
According to Bernstein’s Toni Sacconaghi, iPhone owners are likely to use their phones for four years, if not longer, instead of buying a new one every year. This shouldn’t come as a surprise seeing how the price tag seems to shoot up exponentially with each model launch, with the highest priced model at almost Rs. 1.5 lacs. For that amount, you’d get a MacBook!
It is estimated that in Apple’s fiscal year 2019, only 16 percent of the iPhone install base will be replaced in some form and that would mean a 19 percent decline in annual sales, according to the analyst’s projection. In contrast, approximately one-third of the install base bought new iPhones in the 2015 fiscal year.
To add to their woes, it was also noted that up to 32 percent of the active iPhones are possibly second-hand models and that buyers were not very keen on spending on brand new iPhones. They were likely to buy second-hand iPhones even when they wanted to upgrade.
Sacconaghi said that according to Business Insider, “Current upgrade rates have slowed dramatically and may be lower than investors realize.“
He also added that the lower-than-expected iPhone sales could potentially slow down the growth of the company as a whole since a large chunk of the revenue is dependent on the sales of the iPhones. Their newer ventures, like Apple Music and Apple News, are faring relatively well in comparison and is also venturing into original video, but their services are tied to the hardware. So, the lack of new buyers may put a cap on the number of subscribers. It is also unlikely that second-hand buyers will loosen their purse strings to pay for extra services.
In his conclusion, Sacconaghi said that Apple’s service revenue is expected to grow only 15 percent in the fiscal year 2019 which shows how the number has dropped from the more than 20 percent growth in the last three years. #AppleKaTimeKabAayega?
