I think looking at the past to claim success in the future is always a fools game in tech.
And it's something we all do on tese forums. Whats important is trends. (if we're talking about the business aspect, often times, we discuss business and interchange that with quality of the product).
I just feel that a lot of the discussion here tends to be quite superficial in nature.
Where I see a potential issue is the slowdown of sales today causing a potential ripple affect of the future. If prices are so high today that people are opting to just not buy or are opting to buy a cheaper android instead. That's a lost sale that may never return tomorrow.
Enough people start doing that and you end up in a situation where your overall market may decline (Not market share, talking about how many devices are actually out there)
a further Hypothetical Apple needs to be wary of. If say Apple sells in 2019 one million iphones. But, 2 million iPhone 6 devices get retired due to age and end of support, than Apple's overall market to sell their wearables and accessories is now 1 million users smaller.
Apple has to pay attention to ensure that their pricing (which does affect volume of sales) doesn't lower those sales to the point that they're no longer replacing as many as are retired.
Except that the reality is that Apple's active iPhone user base continues to grow. We have 900 million active iPhones as of end January, and I think Apple is well on track to get its 1 billionth user by the end of this year or early next year.
What people seem to fail to acknowledge is that 2nd-hand iPhones tend to hold their value fairly well, and there is a rather healthy market for such products. That's probably why Apple is actively encouraging users to trade in their older iPhones. On one hand, trading in an older iPhone helps offset the cost of upgrading to a newer iPhone, making the prospect more palatable.
It's likely also why Apple is willing to support older iPhones for so long with software updates. While a 2nd-hand iPhone might not bring Apple any money directly, it's still an extra device which can bring in revenue in other ways, from the sales of accessories (eg: apple watch and AirPods) to apps and services. I suspect a larger install base also gives Apple leverage in negotiating for a higher fee from Google in order to keep google search as the default on ios. In short, Apple has no shortage of means to continue monetising their existing user base after the sales of the initial device. Something android handset OEMs can't do.
This does make me wonder what Apple does with all those iPhones traded in. Do they get torn down for spare parts, or does Apple have their own channel for reselling those devices in the grey market?
Typically though, in tech markets, when a marketplace becomes mature. A vendor has 2 options. Go upscale. Or go volume. Going upscale might bring in a lot of short term revenue, but will typically lower your user base due to higher price points and price elasticity being a thing. Companies that go upscale tend to need something that stands above and beyond the competition as a selling feature that you cannot get anywhere else. Many can argue that Apple is no longer offering compelling enough featureset to warrant $300 more for the device. Hence, the last couple quarters we have started seeing volume declining.
See my argument above as to why I feel the criticism of Apple going upscale (lower device sales) is more than a little shortsighted.
The high-end segment of the market is getting saturated. Apple knows this, and has been taking steps to wean themselves off their dependence on iPhone sales. This comes in the form of higher prices, more hardware and more services.
In short, Apple has chosen to pivot from selling iPhones to selling to people with iPhones. I think that this will prove to be the right move in the long run.
The other option is volume. If people are balking at buying new products because of a diminishing returns on the evolution of the products (The X to the Xs was not a major update), than if you want to ensure you sell volume enough to grow that user base for the sales of other ancillary products and services, than you lower the price to reduce that as a barrier to update.
I don't see volume sales working for Apple. For one, that Apple's margins have more or less remained constant (or even fallen slightly, as was the case when Apple lowered their prices in overseas markets like China to counter the lower exchange rate). The simple reason is that Apple devices are costing more partly because they are costing more to make. So I fail to see the logic in selling more devices at dramatically lower margins (because that hasn't really worked out for many an Android OEM who has gone down this route).
That and Apple does sell cheaper iPhones (usually older models sold at a discount) for people looking for a lower-cost device. That's why the 5c didn't work. Apple has aggregated the best customers. History has shown that people don't want cheap iPhones. They want the best (or at least, what was once the best), and are generally willing to pay for it. That's why we are Apple customers.
And if you want to grow your user base, then Apple has demonstrated that a combination of an array of iPhones at varying price points, plus a healthy grey market for used iPhones is working in achieving a similar effect to what you are proposing, while allowing them to still rake in healthy amounts of profit.
It's probably why we've seen in the last couple years companies like Huawei and Oppo and other chinese brands do so well. they're offering 90% of the performance and features at 60-70% the price. These lower prices are easier to swallow yearly than higher prices.
I think the reality is that these Chinese brands are more of a threat to Samsung than Apple. Apple has its ecosystem, which gives users a very strong incentive to keep using Apple products (or at least, a very strong disincentive not to). Samsung has no such moat, which puts them at a disadvantage against companies who are not afraid to slash prices in order to garner market share.
Samsung is increasingly forced to rely on their hardware chops to compensate for their lack of software or services platform, but this is an uphill battle against Chinese OEMs who seem capable of mimicking whatever Samsung does for much cheaper. Not to mention that more hardware specs doesn't always result in a better user experience. For example, I don't think that 8gb of ram would matter any more to the average consumer over 6gb of ram.
Conversely, I believe it is much more difficult to replicate the unique Apple experience in its entirety, for the simple reason that they lack the tight-knit control over hardware, software and services that Apple does. The way I see it, Apple will continue to leverage this integration to create an even-stronger ecosystem of devices, which will serve to not only strengthen its customer relationships, but also attract new customers
Just so we are clear, I don't think that Apple is invincible, but I do believe that Apple is a lot more resilient than many critics here give them credit for. Their much-maligned services keynote in March gave me the impression that Apple is moving rapidly to consolidate power within its own ecosystem, and it fills me with confidence in Apple's future, rather than dread or pessimism. I see the emergence of a new world order where companies like Google and Facebook increasingly play second fiddle to Apple (especially as Apple shows that it is not averse to encroaching on their territories and offer its own alternatives to their offerings).
And I look forward to being a part of this brave new world that Apple seeks to usher in. One where Apple is no longer in equilibrium with the other FAANG companies, but has ascended all the way to the top.
Now won't that be a sight to behold?
