iPhone Upgrade Fever: We’ve Lost That Lovin’ Feeling

| Particle Debris

The iPhone has gotten better and better every year. The iPhone 6 sated customer hunger for a larger display, but then Apple had to fill the gap for many who preferred a 4-inch display with the iPhone SE. Along the way, the world economy slowed, the dollar got a lot stronger, dramatic improvements for the 6s just weren't there, and many customers felt like their current iPhone was good enough. So what's next for the iPhone?

The Particle Debris article of the week is from Rene Ritchie at iMore. "Tick-tock... tock?!—The future of iPhone product cycles." What Rene is referencing here is the Intel process for product development. The "Tick-Tock Model." With that as background, Rene mentions a rumor that Apple may have to insert an extra "tock" in the iPhone development cycle. And that implies another year of the "6" models, whatever they be named. OMG.

Time was you'd get something new, then a better version of it, then something new again. You could count on it, like the tick-tock of some great clock. And you could plan for it—getting every one of them if you wanted to, or alternating between just the new or just the improved, depending on what you felt was the best strategy. But now it's all being burned down. Instead of tick-tock we're faced with the ultimate horror: Rumors of a tick-tock... TOCK.

This is an interesting concept to get our head around because many financial observers and the media  are expecting that, while the iPhone 6s/Plus wasn't enough to instigate massive upgrading, all would be made well by the introduction of a dramatically better iPhone 7 in September. Hope springs eternal.

Nowadays, there are plenty of rumors about the (presumed) iPhone 7 features: inductive charging, the removal of the 3.5 mm audio jack, waterproofing, even thinner, dual cameras on the Plus model, the removal of antenna gaps/lines, an AMOLED display (but probably not this version), to name a few.

The Big Question

The question Apple faces, and the one Rene fleshes out, is whether the hype surrounding a new iPhone and its actual features is out of sync with the realities of the market place. That is to say, all the new features may not be enough to move customers into upgrading. Should Apple, instead, stretch out the cycle, adding another "tock" to telegraph that Apple is improving the iPhone mildly, but doesn't expect a massive migration? That puts the reality of the situaiton in better perspective, and it doesn't appear that Apple is failing in its traditional process of dramatic growth and frenzied upgrades.

Another factor that has gone largely uncovered, so far as I can tell, is the movement away from carrier financed plans and towards owning the iPhone, even if on a loan. This shift from the carrier carrying part of the financial burden (in the U.S.) to the consumer carrying all of it has probably made consumers more acutely aware that they're buying a US$650 device every year. Possibly more if a spouse and teenager or two is included. In that case, a really tough decision has to be made as to whether the new iPhone model is a "must-have" every 12 months.

Back to Rene's thesis. Would an extra tock give Apple the time to make really dramatic improvements on a three year cycle instead of two? He concludes:

Likewise, if Apple doesn't make significant design changes in 2016 it won't be because the company is stupid or doomed, but because the design changes coming next are f--cking hard and will take another year.

Only time will tell, but I think the current, global market forces and technology limits are coming home to roost. The iPhone is certainly becoming a very mature device, and the dramatic changes Apple wants to eventually make might be more aligned with 2017-2019 technologies. Right now, Apple is pretty good a coping with the realities marketplace, and Rene has a great thesis. We shall soon see.

Page 2: The Tech News Debris for the Week of May 9th. Planning for your next Apple TV.

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Comments

geoduck

Lots of us saw “peak iPhone” coming. At some point we knew there wouldn’t be any more frontier. No more untapped masses of consumers ready to try a smart phone for the first time. We hit that this year. For me and my 5C, I might upgrade in the coming year. The SE and Apple Pay coming to Canada for real might be enough to get me to jump. Or not. I might wait until the 5C can’t run the software I want and then update. If I do get an SE, I’ll likely keep it for three to five years. The bloom is not off the iPhone, it’s off ALL cell phones. and someone, hopefully Apple, has to introduce something revolutionary to get people to upgrade their phone more often than their toaster.

As far as the upgrade pattern of OS-X vs Windows, two points:
The chart doesn’t add up to 100%. Even if you include OS-X and Linux in the mix there must be a chunk of users on XP still.
Secondly, I always chalked up the differing upgrade patterns to another factor. Sure a lot of the business/government systems don’t upgrade often. But for home systems I think it reflects a different relationship with the computer. Mac users tent to grab the latest OS because they like to use their Macs. Windows users don’t because their Win XP or 7 box is a tool to get something done. A corollary would be with cars. People who like their cars wash them more often and change the oil, people who don’t drive old beaters because they don’t care.

Paul Goodwin

Heck, my 5S running iOS 7.1.2 is still good enough for use as a phone and occasional GPS routing in the car. I use the iPad for everything else mobile. Why would I upgrade? The unsubsidized prices are crazy high.

diverreb

I live in a smaller city (Dover, DE) where Apple Pay is pretty much non existent and where it exists it doesn’t work well or save any time.  So I really don’t see it as an iPhone issue.  The issue I see as an impediment to upgrading is the non subsidy plans from the providers.  More and more people are jumping on these plans to save money, which makes upgrading a lot more expensive.  So if those folks, myself included, are being asked to lay out big bucks for a phone, there better be a compelling reason to do so. 

What I see happening is the price of the phones dropping dramatically.  NO reason it hasn’t happened yet.  Just about every other electronic device has come way down in price or is giving greater value for the buck.  For a long time now phones haven’t followed suit.  Demand allowed the pricing to remain high.  That is over, in my mind.

d'monder

How is this going to sit with people on the IPhone Upgrade Program?

“The contract says you’re eligible for a new PHYSICAL phone every year, nothing says it has to be a new MODEL phone” is the kind of static that everyone hates.  Maybe Apple is indeed becoming an automaker…

So what does Apple do?  “Tock” and give customers the option of upgrading their 6s to a 6s?  Or worse, take another cue from the lesser parts of the auto industry, and dress up existing product (6s) with new plastics and call it something new (7)?

Yikes indeed.

Lee Dronick

  I live in a smaller city (Dover, DE) where Apple Pay is pretty much non existent.

I live in San Diego California, the 8th largest city in the Country and Apple Pay is in many locations. Last week in my neighborhood was the grand opening of Smart & Final Plus, a grocery chain. They bought the closed Hagen supermarket building and completely redid and rearranged the interior, new everything including the cash registers which don’t have Apple Pay or similar service. I will have to check and see if they have the microchip reader for debit cards, my card has not yet been upgraded.

I like Apple Pay, there is less a chance that I will leave my wallet at the register.

Michael33rs

I believe that the era of folks upgrading their phones every year or two is indeed coming to an end. Which I think is a good thing. The entire cell phone market is pretty mature at this point, and it does not make financial sense to purchase a new $650 (or in the case of the top of the line phones $950-YIKES!!!) every year or two. Right now, I have an iPhone 6 Plus and an iPad Air 2 that I purchased via the AT&T Next Plan. My monthly bill is currently about $200, and my Next commitment portion of that bill will be fulfilled this coming October, which will effectively cut my bill almost in half! I just can’t see the need to pay that much for the iPhone 7 or whatever name they choose for it, much less a new iPad, in that time. I’m just going to enjoy the fact that my cell phone bill will go down by a hundred bucks, and be totally good with this and save that for the next SIGNIFICANT update to the iPhone. I’m GLAD that the days of subsidies are OVER!!! No more paying the same price on my bill, even when I don’t choose to upgrade my phone every two years. Just my opinion, of course

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