In order to find out how Apple’s current situation is unfolding, all you need to do is step back and take a look at the intricate details of the iPhone launching event which took place last week. You will maybe figure out that it won’t make iPhone sales any better because the strategy relies on pulling more money from the pockets of the customers that Apple already has and there are very few differences between how the iOS operates when compared to its Android competitors.
Some say that Tim Cook uses the strategy of a pressure cooker which so far, let’s face it, managed to increase the revenue each year, but pressure cookers are doomed to fail sometime. Does he have an exit plan for the company which will allow it to change course to a more secure path for the long-term?
The Register’s Andrew Orlowski pointed out that the recent launch of the iPhone XR, iPhone XS and iPhone XS Max acts as confirmation of Cook’s inflexibility to change strategies, particularly the one of milking more money from customers, as much as possible each year. Orlowski stated that “iPhone revenue is up 20 percent year-on-year with unit growth of just 1 percent. A quarter earlier, we saw the X effect as ASP rose from $628 to $728”.
iPhone XS and Tim Cook
When it comes to high-end brands, it is clear that Apple takes the lead. However, its operating system, the iOS, is losing more ground on the marketplace to Android with every single day that passes. Recent reports about the iPhone XS pre-orders show that the process is sluggish and, so far, below expectations. The 2018 iPhone family brought joy initially but that doesn’t necessarily translate into increased sales. Perhaps Cook was aware of this and that’s why he made them restricted to the average users by increasing the average selling price of the devices.
On average, you’ll have to spend $100 more in order to buy the most entry-level phone available, the iPhone 7 and that’s because the previously cheapest one, the iPhone SE, was removed from the bottom end of the range, it was removed completely. In terms of price, the iPhone XR, which is dubbed as the ‘cheapest newest handset’ is found between last year’s iPhone 8 and iPhone 8 Plus. So, compared to last year, you would have to pull out $50 more from your pocket. The iPhone XS Max will mean serious cash; maxing out all the options would cost you nothing less than $1,500.
Everybody is sure that Apple’s revenue will show an increase in the next couple quarterly reports and also, the services side will also benefit from a raise due to people appealing to them more often for their expensive devices.
However, there is a problem with this strategy and that is represented by extracting more from a resource that is definitely finite. By increasing the average revenue extracted per user (from either ongoing services or straight handset sales) the level is slowly but surely approaching the top of the curve.
So, we come to a question that is vital for the trillion-dollar company, ‘how much more blood can the CEO draw from a stone?’. The logical answer would be that the business should focus immensely on growing their user base so that more stones can be added to the squeezing process. However, this has been on Tim Cook’s mind for these last years and, until now, it has proven to be too big of a challenge for him. In terms of annual sales, the numbers stagnated since the launch of iPhone 6 and 6 Plus in 2014.