A couple of weeks back I wrote Peak iPhone which was a post on how Apple problems are related to how iPhone is maturing as a product, as against blaming the issue entirely on trade uncertainty. It now appears that there is more supportive evidence coming our way (after the release of Q4 data from 2018).
In fact, yesterday Wall Street Journal (sub required) ran an article that claimed several times that iPhone has matured.
“They’re in a bit of a midlife crisis,” said Steve Milunovich, an analyst at Wolfe Research, an equity research firm. “The iPhone has matured. Patience is required.”
I had argued that prices are going to come down, which is looking to be true.
“We’re seeing fewer upgrades than in the past,” Mr. Maestri said. He added that the company has lowered the price of the iPhone XR in China to negate the effect of currency changes.
In fact, looking at just released data from last quarter of 2018 we see the evidence of slowdown in China.
As discussed in the previous post, customization is coming. Some folks have already started mulling about it.
Customizing iPhones for China would carry risks. Apple has generated huge profits by making just a few iPhone models and selling massive quantities, a streamlined strategy established by Steve Jobs. China-specific iPhones would add costs and complexity that threaten profit margins.
It is bad news for sure, but not the end of everything Apple. In fact the services market is looking up — the revenue from other products and services grew by 19%.
Clockspeed dictates that the iPhone advantage is over, and it is best for Apple to look elsewhere.