Apple's Suppliers Projecting Weak Demand for iPhone 7 Due to 'Lack of Innovation'

[melendezest]

How is it? I'm thinking about trying out a Nexus phone later this year.

I am more than happy with my Sammy Note5. Spectacular device.

Does almost everything I want to (no microSD expansion ).

It's nigh impossible for me to go back to Apple phones now, with their lack of back and app-switcher buttons, zero customization capability (aside from wallpapers), and no file-system access. I want my phone to be "me", not what Apple says.

I wish Apple copied Samsung/Google on many things, 'cause I'm not giving up Macs any time soon and their integration is second-to-none.

Alas, integration comes in distant third in my book, so Android it is for me, for now.

 

[wovel]

Wrong on so many fronts. Touchscreen phones existed before the iPhone. All in one computers existed before apple made them. Apple invented the ipod but it wasn't the first music player by a long shot....ipod is just want apple called it.

There was one single finger capacitive touch screen phone before the iPhone and they sold like 3 of them. (Don't worry all three of the purchasers will soon post how great they were).

 

[v0lume4]

I am more than happy with my Sammy Note5. Spectacular device.

Does almost everything I want to (no microSD expansion ).

It's nigh impossible for me to go back to Apple phones now, with their lack of back and app-switcher buttons, zero customization capability (aside from wallpapers), and no file-system access. I want my phone to be "me", not what Apple says.

I wish Apple copied Samsung/Google on many things, 'cause I'm not giving up Macs any time soon and their integration is second-to-none.

Alas, integration comes in distant third in my book, so Android it is for me, for now.

Ah, so refreshing to hear! I'm happy to hear you're so satisfied with your Note 5. Unfortunately, when I hear "Samsung" my brain still defaults to the S2, and S3 days when Samsung was really just playing catch up instead of surpassing Apple. Of course now things are different. Samsung is killing it these days. On iOS, a big irk for me as of late has been not being able to change default apps (I'm looking at you, Apple Maps) as well as having to go through 2-3 steps just to transfer a file from one app to another. Its ridiculous. If Apple doesn't have any "wow" features in iOS later this year, I'm looking forward to trying Android. My last Android phone ran 2.2. Yikes!

 

[modeyabsolom]

Its looking like its going to be the most depressing Fall iPhone introduction for Apple ever! AAPL shares are going to haemorrhage big time. A great time to buy I'd say until they (hopefully) skyrocket next Fall after the introduction of a completely redesigned iPhone 7. I reckon this September they'll be going with the iPhone 6SE moniker...or maybe not, that could be a marketing disaster! But from what I've read so far about it. It doesn't really deserve the iPhone 7 moniker either. Its going to be interesting to see how this all plays out...and how low Apple shares will fall.

 

[v0lume4]

This year, I'm all about Android. I have a S7 Edge, Note 5 and I am still using my Note 4 and Note Edge. It's amazing what these phones can do today.

How's the S7 edge, coming from an iPhone? I've been having a conversation with @melendezest and his recent switch to Android. Android looks a lottt different than when I last used it (version 2.2).

 

[modeyabsolom]

Ah, so refreshing to hear! I'm happy to hear you're so satisfied with your Note 5. Unfortunately, when I hear "Samsung" my brain still defaults to the S2, and S3 days when Samsung was really just playing catch up instead of surpassing Apple. Of course now things are different. Samsung is killing it these days. On iOS, a big irk for me as of late has been not being able to change default apps (I'm looking at you, Apple Maps) as well as having to go through 2-3 steps just to transfer a file from one app to another. Its ridiculous. If Apple doesn't have any "wow" features in iOS later this year, I'm looking forward to trying Android. My last Android phone ran 2.2. Yikes!

And so the exodus of Apple iOS users begins! I'm sorry but they brought this upon themselves. Apathetic that's Apple over the last few years. Still love my Mac though! So much better than Windows laptops. I'll hold off until next years iPhone redesign, but if it isn't stellar and Apple doesn't show a genuine willingness to vastly improve all of their services (and iOS in useful ways) then Android might be the way forward for me too. Spec wise and even aesthetically they already slay the iPhone.

 

[v0lume4]

And so the exodus of Apple iOS users begins! I'm sorry but they brought this upon themselves. Apathetic that's Apple over the last few years. Still love my Mac though! So much better than Windows laptops. I'll hold off until next years iPhone redesign, but if it isn't stellar and Apple doesn't show a genuine willingness to vastly improve all of their services (and iOS in useful ways) then Android might be the way forward for me too. Spec wise and even aesthetically they already slay the iPhone.

I'll definitely keep my options open when the iPhone is redesigned next year. I hope Apple knocks it out of the park. But man, as it stands right now, Apple has some heavy competition. And I feel that Google's services are second-to-none, whether or not you think Google is evil. Apple is GREAT, but they can't coast on their name forever. They gotta stay a step ahead of the competition.

 

[modeyabsolom]

I'll definitely keep my options open when the iPhone is redesigned next year. I hope Apple knocks it out of the park. But man, as it stands right now, Apple has some heavy competition. And I feel that Google's services are second-to-none, whether or not you think Google is evil. Apple is GREAT, but they can't coast on their name forever. They gotta stay a step ahead of the competition.

I agree but I just don't think that's possible anymore with Cook at the helm, he's not a product guy (Jobs own words!) and is too distracted by other things. Apple has lost the razor sharp focus it once had. And as for their services (my biggest Apple bugbear!) as long as Eddy Cue continues to run them, I believe they'll continue to stagnate and fall even further behind the competition than they already are. Apple's executive team needs to be shaken up.

 

[dk001]

I'm Apple's favorite customer. I'll never switch to another platform...ever and I mean that. Mac User since the late - 90s and my entire life is powered by iDevices from CarPlay, iOS, Apple Watch, multiple Macs, iTunes purchases and AppleTV.

So I legitimately am unaware that Apple is not catching up in the smartphone market. I've never even looked at a phone from another maker, not since I upgraded from my Palm Treo 650 to iPhone in 2007.

What is Apple behind on in innovation that others are doing? How much can you do to a phone these days that hasn't already been done? What is Samsung doing better? Why should I buy a non-Apple anything?

So, you're a Settler. Enjoy.

 

[edgonzalez32]

I mean, what else does everyone else need on their phone? What other peripherals do people want now? I don't get it.

 

[dk001]

More buggy than ever rank nonsense & before you ask I also use a Note 5 alongside my iPhone 6 S+. Both OS types suffer bugs at various times but I haven't noticed one worse than the other in this respect.

I agree except... if I have a buggy core app I can default an alternative in Android. Wish I could in iOS.
[doublepost=1463086980][/doublepost]

You don't have to shell out $700+ just because subsidies are gone.

The carriers have switched to payment plans.

...

Still, most will go for the cheaper option and place themselves on a 30 month plan. Now if you have a family, say with 3 devices, that can make your monthly bill become a bit burdensome.

Don't forget that the original design was a planned every-other-year user procurement cycle for the USA. That slowed and carriers started to push back. Then there was the rise of the smaller pre-pay carriers and now Google FI. Add in TMo. Then Apple comes out with the yearly financed replacement option to keep local yearly sales looking good. Personally I think it was a wrong move.

OEM's need a growth market to sustain their business model in supporting Apple. If that falters or goes stagnant, they will likely be in trouble financially.
[doublepost=1463087551][/doublepost]

YOU DON'T HAVE TO PAY $700 FOR A PHONE!!!

You didn't then and you don't now.

You will eventually pay $700 over 24 months... but you paid $700 even with the "subsidy"

NOTHING HAS CHANGED.

And it's not $700 vs $200.

The $200 was a lie.

You might have paid $200 up-front... but the rest was financed over the course of the 24-month contract. They called it a "subsidy" but YOU were paying for the phone the entire time.

Again... nothing has changed.

Not true. I'll use myself as an example.
AT&T Family plan with three devices. Paid $199 with a 2yr contract for each device and my plan costs including linking, lets ballpark at $150 / month.

Now I same scenario with the Next plan. Have my Family plan at $150 / month. I now pay $27 per device / month for the next 24 months. That means my monthly bill is $231 vs. the legacy $150. I'm laying out a lot more on a monthly basis for the same plan. I just don't have a 2yr contract any more.

And that $199 up front cost originally? Quite often, depending on device, I could garner from a third party like Amazon for well under the $199. That option is also gone.

This was great for the Carriers. Not so much for the customers.

 

[mi7chy]

Seems Apple is doing better in the lower end segment with the $399 iPhone 5SE so potentially there's a maket for $299 iPhone 4SE.

 

[kemal]

No innovation? But what about the watch band colors? All that matters at Apple is that Anna Wintour approves. And she does.

 

[OneMike]

Not surprising to me

 

[mi7chy]

I am more than happy with my Sammy Note5. Spectacular device.

I switched from iPhone 4S to Galaxy Note II. Even though it was released in 2012 it's still more advanced and better experience than iPhone 6S Plus. Looking forward to the Note 6.

 

[Michael Scrip]

Well, for me at least, it's NOT the same result. My total cost (phone + contract) is going to increase by about 50-60% of the phone's cost now if I choose to keep my unlimited data plan -- contract price remains +/-$85/mo inc tax.

Previously I was able to buy the phone for $399 but then at the end of the contract, unlock and sell the phone for $300 or so. Now I have to pay $900 and then sell it for $350 in two years year. Net cost w/ subsidy was $99 + contract. Net cost w/o is $450 + contract (or +27/mo.)

Yes, I have looked into data based plans and those come out to be even more expensive -- by about $30 more a month, but w/ less data. So it's fantasy if you think the new plans are same as the old in terms of cost, just divided out differently. The new plans are a stealth price increase. Period.

I agree with almost everything you said except the last sentence.

"Nothing has changed".

Like I said in my previous comment. A little over two years ago ATT started giving you a credit after the contract was done. People that bought a 5S on a two year contract like me saw the price go down. That did not happen with the 4S. I was paying for a subsidized phone that was already paid off. Not upgrading was the worst option. I was "forced" to upgrade. The way things are now is much better. I can make the decision just on the value of the phone. My wife and I decided the 5S is good for us for now. A lot of people are probably in the same boat. I predicted this sale decline two years ago when the credit started. This is IN PART a market correction in response the the fairer service bill from the carriers.

On the other hand there are people like maflynn that have a wrong perception of the new system and to them it just "feels" like paying significantly more. Just like there are people that want the IRS to take more than needed from their paycheck so they can get a tax return effectively giving the government an interest free-loan because it "feel" they are paying less than having to pay a little with your tax return and have more money every paycheck. This is also PART of the reason sales are down.

I am sticking with iOS and OSX (macOS?) even if I am no longer on a two year upgrade cycle. I updated my iPad last Christmas and this year it will be time to upgrade the iMAC that is going to be 5 years old. Maybe next the year will be the iPhone's (plural, I can't add an "s" for plural or an Apple executive will yell at me) turn.

Yes, he knows that.

It does not change the fact that the actual full price reveal can affect the purchasing decision.

(Think of all the ways that automobile dealers try to hide the real price a buyer is paying!)

It's a human thing. Not knowing the actual price made most people feel better

---

From the carrier standpoint, it's far more than just a renaming, too.

With subsidies, and under GAAP rules related to hardware that goes with a long term service plan, they were unable to instantly write off the amount they had to pay upfront to the phone maker. Thus they gained tons of extra debt and related stock price drops every time a new iPhone came out. (Sometimes almost a billion dollars, in AT&T's case.)

A separate lending plan is much better than monthly subsidies from their viewpoint.

Financially nothing changed (in fact, it's slightly cheaper), but don't forget:
a. Sticker shock
b. Corporate phones; most companies have a BYOD policy now, which means you 'buy' the phone, and they pay your monthly contract. With subsidy going away, you no longer get a bulky $100 monthly charge, your best case scenario is an itemized single bill. You are on the hook of paying your own financing, so people will be less likely to take an upgrade every 2 years.

That's why programs like NEXT for example flourished for corporate users; and that's why the lack of subsidy will hurt corporate users sales.

Still, most will go for the cheaper option and place themselves on a 30 month plan. Now if you have a family, say with 3 devices, that can make your monthly bill become a bit burdensome.

Don't forget that the original design was a planned every-other-year user procurement cycle for the USA. That slowed and carriers started to push back. Then there was the rise of the smaller pre-pay carriers and now Google FI. Add in TMo. Then Apple comes out with the yearly financed replacement option to keep local yearly sales looking good. Personally I think it was a wrong move.

OEM's need a growth market to sustain their business model in supporting Apple. If that falters or goes stagnant, they will likely be in trouble financially.
[doublepost=1463087551][/doublepost]

Not true. I'll use myself as an example.
AT&T Family plan with three devices. Paid $199 with a 2yr contract for each device and my plan costs including linking, lets ballpark at $150 / month.

Now I same scenario with the Next plan. Have my Family plan at $150 / month. I now pay $27 per device / month for the next 24 months. That means my monthly bill is $231 vs. the legacy $150. I'm laying out a lot more on a monthly basis for the same plan. I just don't have a 2yr contract any more.

And that $199 up front cost originally? Quite often, depending on device, I could garner from a third party like Amazon for well under the $199. That option is also gone.

This was great for the Carriers. Not so much for the customers.

Thank you all for the comments.

The price of the iPhone hasn't changed. It still starts at $649 for the current flagship model.

Under the old "subsidy" plans... you paid $200 up front and then some unknown amount was included in your bill. Logic dictates that the amount would be $18.75 a month to bring you to the total of $649... $200 + $18.75x24

Under the new "payment plans" you don't have to pay anything down... and you pay $27 a month for 24 months which is the same $649

Now... you could actually be playing more total per month... but that might be due to the price of the service going up. Carriers haven't really been known to reduce prices year after year.

So that might be why it seems to cost more with the "payment plans" than it did with the "subsidy"

Plans are always changing. It's difficult to do an apples to apples comparison from a plan in 2016 versus one from 2014 or 2013 or 2008.

My whole point was simply this: you don't have to pay full-price for an iPhone. The whole "ZOMG sticker shock $700 price tag" isn't really a thing.

The carriers have always put focus on the "alternative" to the full retail price... either with payment-plans or contracts/subsidies.

Besides... I thought people hated contracts. Aren't we glad those are gone?

 

[nviz22]

With all the talks about bigger changes in 2017, 2016 just seems to be a meh year for a new iPhone.

 

[lincolntran]

Give me a good working device with a basically bug-free OS. Not asking for too much here...

Actually, you're asking for the impossible. I haven't seen bug free software of ANY kind on this planet since computer was invented.

 

[Chupa Chupa]

Now... you could actually be playing more total per month... but that might be due to the price of the service going up. Carriers haven't really been known to reduce prices year after year.

No. My plan price is virtually unchanged - ATT did just go up $5/mo for data. What has changed is that use of a phone used to be $99 or less (I made money once) under the subsidized program. Now use of a phone will cost me about 4x that. (Use of phone mean my out of pocket after I sell it after 2 years).

Your point that "The carriers have always put focus on the "alternative" to the full retail price... either with payment-plans or contracts/subsidies" does not hold true. Now it's pay full price for the phone and pay full price for the data.

The new plans are not an "alternative" pricing scheme, they are a veiled price increase. I don't have a problem with them increasing their prices -- they have to make $. I have a problem with people telling me it's not a price increase, just another way to skin the cat as if the old business model and the new one were somehow equivalent. If that were the case the cellcos would have had no motivation to change policy.

 

[Michael Scrip]

No. My plan price is virtually unchanged - ATT did just go up $5/mo for data. What has changed is that use of a phone used to be $99 or less (I made money once) under the subsidized program. Now use of a phone will cost me about 4x that. (Use of phone mean my out of pocket after I sell it after 2 years).

Your point that "The carriers have always put focus on the "alternative" to the full retail price... either with payment-plans or contracts/subsidies" does not hold true. Now it's pay full price for the phone and pay full price for the data.

The new plans are not an "alternative" pricing scheme, they are a veiled price increase. I don't have a problem with them increasing their prices -- they have to make $. I have a problem with people telling me it's not a price increase, just another way to skin the cat as if the old business model and the new one were somehow equivalent. If that were the case the cellcos would have had no motivation to change policy.

By "alternative" I meant you weren't forced to pay the $649 retail price up front. You didn't... did you?

I've never paid the full $649 (or $849 in my case) up-front for an iPhone. Ever.

I've always used the carrier "alternatives" to paying the full price for a phone over time.

Whether it was the old subsidy model... or these new payment plans... you don't HAVE to pay the full retail price all at once.

Which is why I jumped into this conversation in the first place after reading the comment "people now have to pay $700 instead of $200"

No... you don't have to pay $700 for an iPhone all at once. You didn't under the old subsidy model... and you don't under the new payment plan model either.

You can still pay for a phone, a little at a time, just like you always have. There is no "sticker shock" now that subsidies are gone.

The price tags still advertise the monthly options because people WON'T spend $700 for a smartphone. So the carriers invented the subsidy model where you only have to pay $200 down... and the rest is financed over the life of the contract.

Now it's $0 down and the price of the phone is spread out over 24 months. It's the same idea.

And why can't you sell your phone after 2 years on a payment plan? You still own the phone after 24 months just like you did under the subsidy model. I don't see how that is any different.

Why did carriers change the model? Because people hated contracts.

Remember when T-Mobile became "The Uncarrier" ? That was a move away from contracts. They were the first major carrier to get rid of contracts and let you buy your own phone and simply pay for service.

But guess what... as much as people hated contracts... they hated paying $700 for a smartphone even more. So T-Mobile quickly introduced the "Equipment Installment Plan"

Which is a payment plan.

And then the other carriers followed... (although I think Sprint went back to offering contracts)

The point is this: the price of an iPhone didn't go from $200 to $700 now that subsidies are gone.

You were always paying the full price of the phone over time... whether it was a $200 down-payment and a hidden payment inside your "subsidized" bill... or a "monthly equipment plan" today.

 

[v0lume4]

Actually, you're asking for the impossible. I haven't seen bug free software of ANY kind on this planet since computer was invented.

Not to be "that guy," but iOS 6 was pretty darn close.

 

[sideshowuniqueuser]

Apple recently reported its first year-over-year decline in iPhone sales, with CEO Tim Cook claiming one of the reasons is that the upgrade cycle for the larger iPhone 6 and iPhone 6s series has stretched out longer than it anticipated.

Despite the launch of the lower-priced iPhone SE, that decline is expected to continue into the second half of this year. In reporting its first negative-growth quarter since 2003, Apple forecasted another revenue drop next quarter.

The sales decline is placing downward pressure on Apple's overseas suppliers, who have ridden the iPhone's coattails to success over the past half-dozen years. Not only does LCD supplier Japan Display reportedly expect to post a nearly $300 million loss for the fiscal year ended March, but Nikkei reports that Apple's slowdown is also sending Taiwanese suppliers into a downward spiral.The report claims Taiwanese Semiconductor Manufacturing Company (TSMC), one of Apple's primary chip suppliers, may ship up to 30% fewer chips in the second half of 2016 compared to the year-ago period. The decline is attributed to the iPhone 7's expected lack of innovative features, saturation of the smartphone market, increased competition, and a global economic slowdown.Apple suppliers Largan Precision, LG Display, Catcher Technology, Foxconn, and Pegatron have and will likely continue to face similar declines in the near term.Apple is expected to announce the iPhone 7 and iPhone 7 Plus, the latter of which may be branded with a "Pro" name instead, in September. Newly leaked drawings suggest both smartphones may have no 3.5mm headphone jack and a single speaker, while a dual-lens camera system and Smart Connector will seemingly be exclusive to the larger 5.5-inch model with 3GB of RAM.

Article Link: Apple's Suppliers Projecting Weak Demand for iPhone 7 Due to 'Lack of Innovation'

[doublepost=1463116263][/doublepost]I for one won't be buying the 7 simply because of the lack of physical headphone port. Bluetooth is an unreliable dog of a technology, and I NEED to know the sound from my phone won't be escaping through the speakers at work and other sensitive locations. I suppose I'm finally going to have to get a droid.

 

[dampfnudel]

Speculating on rumors is what this site does. We're not commenting on MacFacts.com. And generally, these rumors have been pretty decent predictors in the past. The leaks of the iP6 specs, camera bump, antenna lines, and the 5.5 size were 100% correct.

Exactly, based on how accurate the iPhone 6 rumors were two years ago, I think these rumors should be taken seriously.

 

[igorsky]

Hey, Joe Rossignol...were you out sick the day they taught journalism in school? Quotations imply the exact words of a source. In the title, you're implying that one or more suppliers used the term "lack of innovation" when referring to the iPhone 7; nowhere in your article do you actually quote a source saying that. So great job.

On top of that, you've now given fodder to the self-professed design/engineering/analytical experts here at Macrumors to post 9 pages of stupidity based on your false quotations. So great job, again. You are awesome.

 

[ferrous]

I feel the same about all consecutive iPhone models... maybe it's the time to look at the other phones...