Pysan

Much has been written on this topic recently given Apple’s latest Q4 slip in results. I know I have found myself in this situation, where I am now on my way to a 3-year refresh cycle, and perhaps longer than that. For the first time since my first iPhone (3GS), I have gone beyond the 2-year refresh cycle. Typically I have always upgraded every 2 years, but for the first time the price was too high, for too little benefit. Truthfully, the speed of my 7+ is still doing great, and I don’t really have any complaints from a speed side of things.

This is a first, as typically that has been the driver for me to be comping at the bit to get the latest upgrade. Physically the device is still doing great (I keep it in a cover and with a glass screen protector) and so there is nothing really driving me to upgrade. The only big thing I see myself as missing, is wanting FaceID, but TouchID still works great for me, so that is a minor need. I know Apple is trying hard to push AR as a big feature, but I see no need for it right now in my usual day-to-day. Certainly not enough to justify a major investment in a new device to use it. So it would seem Apple is sitting where Microsoft sat for years and years, where they need the next “big thing” to drive hardware upgrades. If there is no demand for hugely increased processing capacity, then no one will upgrade to that newer hardware.

To further complicate Apple’s situation, is the latest move since the iPhone X last year of dramatically jumping the price up. I typically get a maxed out device at each upgrade, so I have a 256GB iPhone 7+ currently, and as of right now I still have 114.7GB free on my device, so I really would have been fine with the 128GB version. But all-in with AppleCare I think my 7 cost $929 2.5 years ago. Now the starting price for the X series (or Xs now) is $999, not counting tax, if I add the AppleCare and 256GB (because 128GB isn’t an option) I am looking at a cost of $1,348. If I wanted the Xs Max, add another $100 to that price-point. Really I have decided after the years of having a plus-sized phone, that the X-size is more my style, so even the Xr won’t work for me, as it is too big physically and there is no choice of the smaller size with the similar specs of that.

So from my vantage point, the issue is one of lack of solid selling point to drive consumers to spend for the latest devices that in their use-cases are appreciably better. On top of that the asking price has jumped up by $300 or more, and the more economical choices are rather limited.

As I have thought of my own upgrade cycle though, I have had this chart in mind, although this is the first time I’ve actually put it paper so to speak.I have modeled this after the basic starting price of an iPhone Xs for this example.

To me the last column is really the one in question, as you have to ask yourself is the value I would receive for purchasing a new device be worth the cost difference of waiting 1 more year. You’ll notice there is a pretty quick tail-off on the diminishing returns after year 3-4. If Apple truly is contemplating turning the iPhone into a “subscription hardware service” then these are the #’s I would be comparing that against. If you look at what the situation was for the iPhone 8 and previous, where it started at $699, you can see those results below. Compared that $300 price jump to the X pricing level definitely made a difference.

In the end we each must decide where we are willing to spend our $$ on that scale, but for me, I’ve pushed for the first time down into the 3-year cycle length, and if it weren’t for the size issue, I might even be willing to push into the 4-year territory, but only time will tell.