Happy birthday to the iPhone! As difficult as it may be to recall a time when the popular, defining smartphone from Apple Inc. (NASDAQ:AAPL) wasn’t around, it was ten years ago today the Steve Jobs vision for a portable, connected computer became reality.
Even more difficult to recall amongst the iPhone 10th birthday chatter is the fact that the device arguably turned a struggling, so-so company into an icon, and turned AAPL stock into one of the most fruitful investments of the past decade.
Perhaps most difficult of all, though, is the fact that after seeing what a game-changer the iPhone has been — for the company as well as society — in just ten years, a mostly disappointing response to the iPhone 7 calls into question the marketability of the upcoming iPhone 8. Some AAPL shareholders are understandably concerned we may not even bother to remember the phone’s 20th birthday.
Phone 7 Marks End of Apple’s Smartphone Reign
There’s no denying the iPhone has earned its stripes. As they say, though, nothing lasts forever. A combination of time, saturation and competition has finally caught up with the iPhone.
The evidence of this slowdown started to materialize with the response to the iPhone 6s late last year. It was the first iteration of the iPhone that not only didn’t sell as well as its predecessors, but also the first to see a dropoff in sales in the two quarters following its launch.
Some of the company’s staunchest supporters explained that most consumers were holding out for the iPhone 7, which would be a superior device.
Maybe there was some truth to the idea. The same party line is being recycled now, however, with would-be iPhone buyers now reportedly holding out for an iPhone 8. It leads one to wonder if the consumer response to the iPhone 8 will be as lackluster as the response to the iPhone 7 has been, with the bulk of them holding out for what will be the iPhone 8s or the iPhone 9.
And that’s when it hits AAPL investors right in the gut… at some point, the company has to sell iPhones right here, right now, and grow those sales as Apple managed to all the way through the iPhone 6.
Perhaps the crux of the problem isn’t would-be buyers waiting for the next version. Perhaps most everyone who is going to own any smartphone has a phone they can live with for a while. Perhaps competitors have finally figured out how to make a smartphone that’s just as impressive as the iPhone used to be compared to alternatives. As mobile industry consultant Chetan Sharma observed:
“Apple has the strongest ecosystem, with its hardware, software and app and content stores. iPhone users looking for an upgrade stick with Apple. But in a year when Samsung dropped the ball in a huge way, Apple didn’t have a phone with a compelling enough feature set to lure Samsung owners away.”
And make no mistake — the iPhone 7 hasn’t been flying off the shelves the way it was expected to. Two weeks ago, the Nikkei Asian Review reported the company cut its planned Q1-2017 production of the iPhone 7 by 10% compared to iPhone production from a year earlier [production of the iPhone 6s].