The iPhone Is Now Just Another Phone
Apple's first revenue drop in 15 years means it's time for a redesign.
It wouldn't be an exaggeration to say that June 2007 was a watershed moment in our relationship with technology. It was then, already soaring on the success of its iPods and growing Mac userbase, that Apple "reinvented" the phone by launching one of the most recognisable and prolific smartphone devices ever, the iPhone.
But almost a decade later, the glory days of the iPhone may be over. Apple has this week reported its first drop in annual revenues in 15 years. While the company managed to ship more than $200 billion-worth of iPhones, Macs, and Watches in the financial year up until September 24, sales declined eight percent from last year. iPhone shipments fell from 48 million units to 45.5 million units. What's happening?
The iPhone's design is arguably one of its major selling points. No matter what you think of Apple, it's hard not to admit iPhones always look pretty good compared to other smartphones. But in the last few iterations of iPhone, the design has seemed stagnant. The technology inside is evolving, but many of Apple's customers are more concerned about how the devices look. A huge redesign, save for a lack of headphone port, didn't happen with the iPhone 7. With Google's own Pixel phone looking remarkably similar, too, smartphone vendors just aren't enticing buyers like they used to be.
And on that note (not that Note) Apple's competition has caught up when it comes to hardware and design. Google's Pixel, Samsung's upcoming S8, and others, all offer a similar technological experience—if you don't mind using Android rather than iOS. In 2016, there's a heck of a lot more choice in premium smartphones than there was in 2007.
Apple itself has laid the blame this week on supply issues. "Particularly on iPhone 7 Plus, we are significantly supply constrained," the Financial Times quoted Apple's finance chief Luca Maestri saying. According to Maestri, demand for the iPhone was bigger than expected.
Still, this doesn't make up for what has actually been a slowing year for Apple. According to analysts at research company Gartner, Apple's iPhone sales have been falling for a while now, and we can all agree on the phone market being saturated.
"Apple continued its downward trend with a decline of 7.7 percent in the second quarter of 2016. Apple sales declined in North America (its biggest market) as well as in Western Europe," Gartner reported in August. "However, it witnessed its worst sales decline in Greater China and mature Asia/Pacific regions, where sales declined 26 percent."
Gartner analyst Annette Zimmermann told Motherboard that iPhone sales are "normalizing" however, after a bumper 2015 thanks to the success of the iPhone Plus. Zimmermann said Apple's performance is still solid, but the sales it witnessed in 2015 may be "impossible to beat."
On top of that, though, unsaturated markets in Asian and Pacific regions, key battlegrounds for Apple, are being lost as consumers favour cheaper alternatives from the likes of Xiaomi, Oppo, and Huawei. Zimmermann said that Apple's "main thing to worry about" is recovery in China.
But at the end of the day, we're almost into our second decade of iPhones, and unless something just as extraordinary as the original iPhone can be pulled out of the hat by Apple next year, iPhone sales will surely keep plateauing. Apple is still the biggest smartphone vendor in the world by many metrics. But our infatuation with the iPhone is over.
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