It’s not like iPhones have somehow gotten worse. Other phones, though? They’ve gotten a whole lot better. And they’re cheap. “The phones we have right now are good enough, to the point where I don’t need a premium phone to do everything I need to do,” says Gartner analyst Tuong Nguyen. “Even if I got a mid-tier phone, that’s probably more than I need.”
In truth, many affordable smartphones have moved beyond “good enough” and many, like the (currently discounted) $300 Nexus 5X, are excellent. This shift comes as US carriers abandon the two-year contracts that long masked the true cost of phone ownership. An entry-level iPhone 6S costs $650, and buyers feel every penny of that, either up front or through monthly installments.
Dawson sees cheaper Android devices eating into high-end Android sales more than iPhone sales, especially in non-US markets. Even if Android and iPhone users tend to stay in their lanes, though, the price gap between the two creates a median that’s much harder to cross. An iPhone 6S may be better than a Nexus 5X, but is it $350 better? That’s a question Apple must answer to win converts.
The $400 entry-level iPhone SE could help, but not yet. “I don’t expect an immediate boost from the iPhone SE, which was designed for late adopters” says Avi Greengart, research director at Current Analysis. “Nobody should expect blockbuster sales numbers in its launch quarter.”
In fact, Apple didn’t even make enough of its budget iPhones to service all those who wanted one. “We’re thrilled with the response that we’ve seen on it,” said Cook of the iPhone SE. “It is clear that there is demand there even beyond what we thought.”
Meanwhile, the death of the two-year contract has had another significant impact: It removed an artificial prompt to buy another phone. “People are holding onto their smartphones longer,” says Dawson. As a function of getting better, smartphones now also last longer. If you can postpone shelling out for a new phone, why wouldn’t you?