Comment In the late ’90s, Eric Schmidt was an accessible tech CEO with a problem. Novell’s product was so good and so reliable nobody needed to upgrade it. If one day people decided to stop using their current version, they wouldn’t switch to another version of Novell, the one that Eric was trying to sell, but something else entirely. I thought this was the worst job in the world and Eric probably did too, washing up as the adult supervision at Google in 2001.
Apple has a bit of an “Eric problem” today. Much enjoyment can be heard around the internet at Apple’s unprecedented difficulty in shifting iPhones. This week it slashed $300 off the price of its iPhone XR, a product that’s just one month old. With its flagships phones priced over $1,000, it has simply got too greedy, say gleeful mockers, and gone for obscene margins rather than trying to win over new customers.
One analyst cut his stock price target for Apple last week and expressed the belief that Apple needs to “seriously contemplate changes” next year in how it does business. iPhones, he implied, must get better or cheaper.
But three things, all of Apple’s devising, help account for this “crisis”, and all three are very unusual for a consumer company.
Apple makes its money by persuading people who already have an iPhone to upgrade to a newer model. It’s been years since it boasted about people switching from Android to iPhone. Both ecosystems are now bedded in. The problem for Apple is the lack of a compelling reason to upgrade.
Older iPhones last longer than Androids, are better supported, and now run faster than Androids of a comparable age. To top it all, 2018’s iOS update gives older models a new lease of life. Anyone with, say, an iPhone 6 from 2014 should give iOS 12 a go.
The fact iPhones are well made and continue to chug along so well brings along an ancillary benefit: they retain their value much better than Androids. Which, again, makes them attractive to buyers in the second-hand market. Apple sees nothing from second-hand trade.
This combination of decisions is both ethical and commercially damaging. We should be applauding Apple for shooting itself in the foot, as it’s done the Right Thing by consumers. Who else relies so heavily on an upgrade cycle, but then goes out of its way to avoid forced obsolescence?
Of course, there are other reasons for Apple struggling to bring queues back to the Apple Stores on release day. There isn’t much excitement you can add to a new phone as they do so much so well already. This year’s iPhone models in particular seem so similar to last year’s that they just don’t raise the pulse. Even among iPhone fans. In 2014 a larger iPhone (the 6+) saw an upsurge in buyers, particularly in China and other parts of Asia, where large phones are preferred. This year has brought a larger iPhone and… well, maybe that price (£999, rising to £1,449) just puts people off?
Apple represents a strong alternative to people creeped out by Google’s disconcerting data slurping. And it’s even more unsettling lobbying tactics. But the fact is you can board the Apple ecosystem for much less than £999. The street price for a refurbished iPhone SE with a 12-month guarantee is around £150. It’s an outstanding choice.
Here at El Reg we have no reason to be nice to Apple. They’re not nice to us. A petty-minded animus against The Register has lingered long after Steve Jobs’ death. But thank you. You have actually done something right. You’ve behaved ethically, putting long-term consumer concerns first. ®