We have previously written about how iPhones sales have stalled. Today it is reported that Apple is cutting iPhone production by 10% due to lack of demand. Nikkei Asian Review reports;
Apple is cutting its current production plan for new iPhones by about 10% for the next three months in a sign that the U.S. smartphone maker is expecting a further hit this year
Much of this lack of demand is because the continued price increases for the phones. Launch prices increases for each generation. @Asymco shows the development of iPhone prices.
The chart is an excellent illustration of price development. It is a stairway to heaven. For each new generation iPhones the launch price is higher than the previous generation. Even though prices eventually comes down, the higher initial price at launch scare away buyers. The incremental improvements for each new generation of phones are also smaller. Consumers are less and less likely to buy a new phone, especially if prices continue to increase. Forbes sums it up;
The problem here is that at some point, your audience is going to decide that enough is enough and you are charging too much. The trick is to catch the price increase before you hit this point. Tim Cook and his team have overshot, and the sales are collapsing.
Now consumers are more focused on buying older generation phones at lower prices. Macworld writes;
We’d say that it’s worth buying a new iPhone within nine months of it launching, but by June/July we’d recommend putting off your purchase until the autumn – unless your current iPhone is broken and won’t tide you over for three or four more months.
It’s easier to say when the worst time to buy a new iPhone is – that is without a doubt in the months leading up to September. So don’t buy an iPhone in August, unless you want to be kicking yourself a month later.
IPhones sales have plateaued. Apple is facing increased competition from other smartphone makers, offering phones at much lower prices with almost the same quality. Apple cannot fight the laws of economics. Consumers have spoken. The only way it can keep selling its phones is to lower the prices. Of course this will hit their margins. But selling a phone at a positive margin is better than not selling a phone at all.
