Price, and the high cost of buying an Apple designed product, is set to become a major issue for the US Company, as competitors deliver superior products at considerably cheaper prices.
Apple is trying to overcome this issue by cutting a deal with the Indian Government to manufacture cheaper iPhones in the sub-continent.
Talk to analysts and they will tell you that the perception is that the iPhone is getting “long in the tooth” or bluntly “old” and that consumers will not be prepared to pay a premium for inferior design, battery life, poor display quality and a proprietary OS that is lacking a lot of features that Google is now building into their Android OS.
According to BusinessWeek customers are opting for less expensive models with the average selling price for iPhones likely decline this year.
They said that some purchasers are settling for older iPhone 6S models, rather than the iPhone 7, introduced in September, analysts said.
Apple is scheduled to report quarterly results on Feb 1st Sydney Time.
Analysts currently predict an average selling price, or ASP, of US $688 for the this is down from $691 a year earlier, according to estimates compiled by Bloomberg News.
“Recent smartphone customers increasingly are opting for the iPhone 6S,” Barclays analyst Mark Moskowitz wrote in a note to clients this week as he downgraded his recommendation on Apple stock to hold. “We detect increasing concern among industry participants that smartphones in general have evolved technologically to become more than good enough to serve most users’ digital needs over multiple years or until the device breaks.”
“We know what a smartphone looks like and does,” billionaire technology investor Peter Thiel told the New York Times recently. “It’s not an area where there will be any more innovation.”
Last year iPhone sales accounted for almost two-thirds of Apple’s US$216 billion annual sales and what Apple is now banking on is their next model iPhone which analysts have dubbed the iPhone 8, 10 or X, they say that should it fall short of the $54 billion expectation, that may suggest slack demand for current products as buyers await the new model.
“The iPhone 10 gives Apple a little bit of protection,” said Gene Munster, the co-founder of Loup Ventures and long-time Apple analyst.
The new device gives executives a ready excuse should the March outlook disappoint, he noted. “It’s a good get out of jail free card, since investors want to own the stock for the next product cycle,” Munster said.