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Is an iPhone Upgrade Really Necessary?

There has been a lot of noise recently about consumers buying older iPhones instead of the latest iPhone 5. It seems like the question that people are asking themselves en masse when standing at an Apple Store (or even before that) is “Why upgrade when I can have almost the latest iPhone for less?”

Some analysts are worried and disappointed about the not-so-high iPhone 5 sales. Shares of Wall Street's favorite company start to shake when these worries transform into figures.

The Los Angeles Times reported that Apple's profit margins have suffered because so many consumers have been opting for older iPhone models. Nevertheless, Foxconn is pushing its employees to work harder to meet demand for the iPhone 5. These two pieces of news seem to contradict themselves, don't they?

Thanks, But No Thanks

Upgrades that come too fast with too few new features are drivingconsumers away from the every-18-months upgrade treadmill.

Upgrades that come too fast with too few new features are driving
consumers away from the every-18-months upgrade treadmill.

Justifications
One question that worries investors is whether {complink 379|Apple Inc.} is giving new versions of its iconic iPhone enough new features and innovations to justify the extra money consumers have to pay to remain on top of the game.

The LA Times article mentions something that Apple has repeated many times: People who buy an Apple product keep on buying Apple products as they become satisfied customers. After all, Apple customers love their devices. I can say by experience that this is absolutely true. Once I got my first Apple product, I didn't want to own anything else. I need reliable products, and that's what Apple gives me.

Now, back to the iPhone upgrade situation. According to Apple, when the iPhone 5 was released in September, 5 million units were sold in the first 72 hours — 1 million more than the iPhone 4S sold in a similar period in 2011 and 3.3 million more than the iPhone 4 sold in 2010. So why did iPhone 5 sales slow after that? More importantly, how will this affect the next-generation iPhone?

Fast, furious, too frequent
I have said several times in discussions here on EBN that iPhone upgrades come too frequently. People don't have time to adapt to the new phone. If there are just a few new features or a little innovation at a premium prize, many consumers may think just moving one model up is enough. They save some money and get almost the latest Apple technology. Who loses? Apple.

There are hipsters who want the latest cool thing. They will queue in front of an Apple Store every time Apple offers a new iPhone — no matter what. However, is Apple's customer base shrinking, or are the customers simply not upgrading the way they did before?

I once said Apple should stop responding with an iPhone update every time Samsung upgrades its smartphones. It would make more sense to respond more to Apple's faithful customers. However, this is unlikely to happen. Samsung is playing the same game of replying to Apple's updates with updates of its own. It's a game that goes in circles.

The continuous updates from the two rivals, the short product lifecycle, and the constant shifts in marketshare have become too stressful for some consumers. As a result, iPhone customers are not upgrading — at least not in enough numbers to keep the competition up.

40 comments on “Is an iPhone Upgrade Really Necessary?

  1. SunitaT
    May 8, 2013

    People who buy an Apple product keep on buying Apple products as they become satisfied customers.

    @Susan, slowly but surely this trend is changing. People have realised that instead of paying extra premium to Apple they can get even advanced featured smartphones if they buy android based smartphones. That is the reason why Samsung was able to sell record number of galaxy series phones.

  2. Daniel
    May 9, 2013

    Susan, in product wise a frequent updation may be required because competitors like Samsung, BB etc are releasing new models frequently. But on usage wise, whether we need such a soficated device, I don't think so?

  3. Daniel
    May 9, 2013

    “People have realised that instead of paying extra premium to Apple they can get even advanced featured smartphones if they buy android based smartphones. That is the reason why Samsung was able to sell record number of galaxy series phones.”

    Tirlapur, you are right up to an extent. Only medium and low profile customers have similar thoughts for shifting to Android devices. Upper level customers are always looking for premium products with brand value and they will continue with the Apple products. Another issue with Android devices are security concerns and malware apps.

  4. SunitaT
    May 9, 2013

    Upper level customers are always looking for premium products with brand value and they will continue with the Apple products.

    @Jacob, you are right. Some people always look for premium products with brand value. But since we are not getting major upgrades in the Apple products, Apple is loosing its brand value. Moreover Apple users are unhappy about certain key features like Apple maps. This will definitely impact the brand value of the Apple products.

  5. SunitaT
    May 9, 2013

    in product wise a frequent updation may be required because competitors like Samsung, BB etc are releasing new models frequently.

    @Jacob, I dont think its a good idea to release the new models just because competitors are releasing new models. If I am not wrong Samsung is planning to release flexible display smartphones and if this happens it might severely impact the sales of Apple.

  6. Wale Bakare
    May 9, 2013

    I agree with you, it needs to work on it. That distinguishes Samsung, BB from Apple.

    And by the way, how long would Apple continue to rely on a microscopic market segment of queues in London, New York and perhaps few other places to still remain at the top? 

  7. _hm
    May 9, 2013

    @Susan: How often do you replace your auto and do you get luxury car? How many shoe pairs, clothes and like you have in far too many number? One do not need them but these are objects of desire. You earn money and you spend them for your enjoyment.

    Apple porducts are one addition to it. In general there is no logic behind upgrading iPhone or even having one. This is also true for other products too.

     

  8. Wale Bakare
    May 9, 2013

    I think best way to describe a success of growth for any company is to be able to win a new customers not struggling to hold unto an old/existing ones. 

     

  9. Susan Fourtané
    May 9, 2013

    tirlapur, 

    I didn't mean to say that it's bad that Apple products' consumers keep on buying Apple products after their first one. 🙁 On the contrary, I believe this is a good sign of high customer satisfaction. No one on his right mind buys a second product from a maker/brand that didn't satisfy him, right?

    For example, I had a really bad experience with a Sony Vaio. After that, I never considered buying any other Sony Vaio, and regretted the high price I paid for a piece of trash that died before two years after having countless software and hardware problems almost sice day one.

    This also meant to me that high price doesn't necessarily mean high quality. In those days I regretted daily not having bought a Mac, instead. 

    -Susan

  10. Susan Fourtané
    May 9, 2013

    Wale, 

    “I think best way to describe a success of growth for any company is to be able to win a new customers not struggling to hold unto an old/existing ones. “

    Yes, yes! I totally agree with that. 🙂 However, earning new customers implies that many conditions have to be given. 

    -Susan

  11. Susan Fourtané
    May 9, 2013

    Jacob, 

    “in product wise a frequent updation may be required because competitors like Samsung, BB etc are releasing new models frequently”

    That is exactly what I am saying it's wrong, and part of the problem. Is BB still around? lol 

    I don't think smartphones are considered sophisticated devices anymore. Why do you think they are sophisticated? 

    -Susan

  12. Susan Fourtané
    May 9, 2013

    Jacob, 

     “Another issue with Android devices are security concerns and malware apps.”

    At least with an iPhone you don't have to constantly worry about those things, which is a plus.

    -Susan 

  13. Wale Bakare
    May 9, 2013

    >>Is BB still around?<< 

    @Susan, much attention over survival of Apple as no 1 brand phone and its Samsung rival left others to now exist in shadow of themselves in world markets. Sadly enough, markets where BB has been strongholding for years now seem weakening as a result of competition and/or software technology. 

  14. SP
    May 9, 2013

    Phone upgradation is normally common among young age groups and people who work in customer facing like sales. iPhone upgrade is really not necessary but then if you want to set the trend and belive in little show off and if you can afford it why not.

  15. Susan Fourtané
    May 9, 2013

    tirlapur, 

    Samsung showed a prototype of a smartphone with a flexible display at CES this year. However, in later news it was said that Samsung would not be releasing any flexible display any time soon. On the other hand, LG said it would announce a smartphone with a flexible display late this year. 

    -Susan

  16. Susan Fourtané
    May 9, 2013

    Wale, 

    You have to admit that the microscopic segment leaves Apple with a gigantic profit. 😀 

    -Susan

  17. Susan Fourtané
    May 9, 2013

    _hm, 

    I don't need a car, so I don't have one. 😀 Shoes? 🙁 But, but you mean shoes? :/ Okay. Maybe now I have too many shoes that I don't need, but I do have because they make me happy. 🙂 Is that a valid answer? 

    “One do not need them but these are objects of desire.”  

    This is a nice thought for meditating on it. However, these objects can be both, needed objects and objects of desire. I don't need a car. Therefore, I don't have one. For some other people a car can be a need, or an object of desire, or both. 

    I do need shoes for walking. Do I need all the pairs of shoes I have now? No. The ones I don't need are objects of desire. They make me happy, that's why I have them. In a deeper meditation I should analyse why they make me happy. 

    Clothes I also need. Do I need all the dresses I have? No. The ones I don't need are also objects of desire, and I have them for the same reason I have the shoes. 

    Apple products I need to do my work. Did I desire Apple products? Yes, I did. For a long time. For a long time I couldn't afford one. I could only desire them. When I could, I had one. I have Apple products because I do need them, and I also desired them.

    What we need and what we desire can be relative some times. 

    I love your comment. It makes me think. Thanks, _hm. 🙂 5 stars. 😀

    -Susan

  18. Susan Fourtané
    May 9, 2013

    Wale, 

    BB has been almost dead for a long time now. Or you really see that RIM can have a coming back? 

    -Susan

  19. Susan Fourtané
    May 9, 2013

    SP, 

    Why do you think only younger people upgrade their phones?

    I don't have any stats about this, but it doesn't make too much sense as the ones who upgrade the most need to have the money for it. I believe we are talking about students here, I don't think they upgrade their devices as often as working people do. 

    -Susan

  20. _hm
    May 9, 2013

    @Susan: Thanks for in depth reply. I almost concur with you. I may like to add following:

    If you effectively employ objects of desire and explore its capabilities – it is worth spending money and effort. I love those enthusiastic people, but I find very of them.

     

  21. SunitaT
    May 10, 2013

    Phone upgradation is normally common among young age groups and people who work in customer facing like sales.

    @SP, I agree with you. Younger generation is more keen in upgrading their smartphones because they are the ones who are well-versed with technology. Young generation is more interested in latest features of the smartphones because they need such features to play latest games and install latest apps.

  22. SunitaT
    May 10, 2013

    On the other hand, LG said it would announce a smartphone with a flexible display late this year.

    @Susan, thanks for this update. I am not sure if LG really will make it happen this year. Lets not forget that the company has missed several release dates of its $10,000 55-inch OLED TV, which now is due out in July instead of March or in 2012. So it would be interesting to see who will release the flexible display smartphones first.

  23. elctrnx_lyf
    May 10, 2013

    The latest version of iPhone is definitely not people were expecting to see. Everyone wants to see some magic feature rather a basic incremental features in terms of size and shape. So it is not really surprising that the sales are going down. With Samsung who is fast and Nokia who are slowly catching up with Apple are going to divert the sales of Apple much more in future.

  24. FLYINGSCOT
    May 11, 2013

    I recenlty upgraded the OS of my Iphone and my battery life bought the farm.  It is a real pain going back to the old OS but it seemed the only way to fix the issue.  Maybe that is one reason for people not upgrading too.

  25. Susan Fourtané
    May 11, 2013

    Flyingscot, 

    From what to what was your upgrade? 

    What I am saying is that if you had an iPhone 3GS or an iPhone 4 it makes more sense to upgrade to an iPhone 5 than if you have an iPhone 4S. In this case I wonder if the upgrade is necessary, you see?

    -Susan

  26. Susan Fourtané
    May 11, 2013

    _hm, 

    “If you effectively employ objects of desire and explore its capabilities – it is worth spending money and effort.”

    Yes, I agree. For some people an object of desire represents a goal to be achieved. The object of desire becomes a motivation, a drive to keep you going, improving, doing more and better. When you get to your goal it transforms in satisfaction, in sense of achivement, in knowing that you can go further if you just have the motivation you need. 

    I suppose we all need some kind of motivation to keep us going. At the end of the path you reach a certain degree of happiness. And life goes on. New objects of desire come into the picture –the smartphone market, for instance–, new motivations drive you. New goals. New accomplishments. New moments of happiness. 

    From here I could argue about reaching happiness through the accomplishment of acquiring a material object of desire. I could argue about  consumerism, and how society is driven by it. Or I could go back to a recurrent thinking of mine on simplicity, and what it means to achieve it in order to pursue happiness. But then I would be here writing forever. 😀

    -Susan

  27. Susan Fourtané
    May 13, 2013

    tirlapur, 

    What percentage of the younger generation can upgrade their smartphone every six months at a starting price between 500 to 700 dollars? I am here thinking people up to 25 years of age. Most of them are still students. 

    -Susan 

  28. Susan Fourtané
    May 13, 2013

    tirlapur, 

    “I am not sure if LG really will make it happen this year. “

    Yes, I agree with you. I don't think it will make it either. Now I am really looking forward to seeing what Apple will come up to in its next announcement. 

    -Susan

  29. Susan Fourtané
    May 13, 2013

    elctrnx_lyf

    The latest iPhone was taken out of the oven before time. Apple was not ready for a good update. And it's not bad not to be ready. It's worse to get disappointed consumers who will question themselves if it's worth it to upgrade or not. 

    “Everyone wants to see some magic feature rather a basic incremental features in terms of size and shape.”

    Exactly. 

    -Susan

  30. t.alex
    May 13, 2013

    If we can afford to upgrade, why not? The electronics industry is churning out newer and greater components and software ever year which really improve the user experience. Either upgrade or switch to any brand we think it is better such as Samsung, LG.

  31. Wale Bakare
    May 13, 2013

    What's possibility of Apple making new phone?

  32. Eldredge
    May 13, 2013

    Apple is competing for a limited disposable income…but in this case, they are competing against themselves.

  33. Susan Fourtané
    May 13, 2013

    Eldredge, 

    “Apple is competing for a limited disposable income…but in this case, they are competing against themselves.”

    LOL 😀 

    -Susan

  34. Daniel
    May 14, 2013

    “But since we are not getting major upgrades in the Apple products, Apple is loosing its brand value. Moreover Apple users are unhappy about certain key features like Apple maps. This will definitely impact the brand value of the Apple products.”

    Tirlapur, you may be right. since am using Android products (Smartphone & Tablet), am not sure about any of the Apple features, but there is no doubt that such silly things can spoil the brand name.

  35. SunitaT
    May 14, 2013

    What's possibility of Apple making new phone?

    @Wale, possibility of Apple making new phone is very high. According to some reports new iPhone will begin production in the second quarter of 2013, possibly setting it for a summer launch. Its also been reported that Apple might release low-cost iPhone.

  36. SunitaT
    May 14, 2013

    The electronics industry is churning out newer and greater components and software ever year which really improve the user experience.

    @t.alex, no doubt electronics industry is churning out newer phones but we are not seeing any new innovative features in the new mobiles. I think in future we will see major updates to the smartphones like flexible display, projection camera etc. I am sure such new features will compel users to upgrade their smartphones.

  37. Daniel
    May 14, 2013

    “I dont think its a good idea to release the new models just because competitors are releasing new models. If I am not wrong Samsung is planning to release flexible display smartphones and if this happens it might severely impact the sales of Apple.”

    Tirlapur, I know it's not good, when looking from customer angle, but they are forced to do like that because of market competitions.

  38. Daniel
    May 14, 2013

    “At least with an iPhone you don't have to constantly worry about those things, which is a plus.”

    Susan, that a major plus point, especially dealing with corporate and sensitive datas.

  39. Eldredge
    May 14, 2013

    It seems like the personal technology market is becoming saturated, meaning that there are so many options available, competing for the same disposable income, that the technology companies are experiencing a tail-off in product acceptance. In general, this was predictable – the difficulty is determining when it would happen.

  40. t.alex
    May 14, 2013

    tirlapur, 

    and perhaps in the near future it is Google Glass ?

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