When will you next buy a mobile phone?

he days when people camped outside stores to get their hands onthe latest smartphone may well be numbered, if recent sales figures areanything to go by.
Despite
a dazzling array of new devices on display at the recent Mobile World Congress
in Barcelona: phones that fold, phones with buttons,
phones with enormous batteries,
expensive phones, budget phones, 5G-ready phones… they aren’t exactly flying
off the shelves.
Samsung’s overall operating profits were down by 60%
year-on-year for the first quarter of 2019.
Apple slashed its iPhone sales forecasts at the start of the
year, blaming a slowdown, particularly in China.
It
has since repositioned itself to focus on services rather than gadgets, unveiling a new TV streamingplatform, gaming portal and credit card at a star-studded
event in March attended by Oprah Winfrey and the actor Reese Witherspoon – with
not a new device in sight.
That’s their lowest in six years, according to figures released
by the state-affiliated research unit China Academy of Information and
Communications Technology.
Sales had
already been slowing in Europe, says Marina Koytcheva, technology markets
analyst at CCS Insight, and elsewhere, with the possible exception of India and
Africa.
“I don’t think I have seen the market with such a negative
outlook in the last 10 years,” she says.
“I don’t think we will ever again see the growth of five or
10 years ago.”

Innovation (or lack
of)

The top-end handsets have increased in price dramatically in
recent years. In 2017, Apple boldly smashed the $1,000 (£775) price point with
the iPhone X, followed by Samsung with the Galaxy Note 8.
“In
less than a year, the $1,000 phone has become entirely normal,” noted Vlad
Savov on tech website the Verge in August 2018.
Critics of the phone industry argue that at the same time,
innovation has stalled. Each new handset might have a slightly better camera,
slightly faster processors than the last, but for the average consumer, one
black rectangle is pretty much being replaced by another.
In the last few weeks, both Huawei and Samsung have unveiled a
new take on the black rectangle – the folding phone.
The Huawei Mate X folds out into an 8in device. It has
split screen abilities, no notch and is 5G ready.
For those with that cash to spend on a new phone, is it exciting
enough to break the global ennui?
“There will be a small number of big enthusiasts who will
buy these phones but they will have to fall in price quite a lot to make an
impact,” says Marina Koytcheva.
“They will have to start selling in large numbers.”
That will only happen if the device can prove itself useful.
“It’s impressive innovation,” says Ms Koytcheva .
“But why do you need it?”
And
here’s another potential red flag: Samsung has now delayed the launch of its
Galaxy Fold following reports of brokenscreens.

Big screens, small
pockets

The traditionally male-dominated tech sector has been accused ofignoring at least 50% of its target market – women – in not acknowledging that
women’s hands and trouser pockets are generally smaller than men’s while
flooding the market with ever larger devices.
WhenApple announced it was discontinuing its iPhone SE, which has a 4in screen,
Caroline Criado-Perez, author of a new book called Invisible Women, tweeted
that the tech giant had “failed to update the only phone it makes that
fits the average woman’s hand size”.
“Weak applause all round from my arthritic hands,” she
continued in the now-deleted thread on Twitter in September 2018.

5G future

Promises made for it include being able to download a 15-minute
video in one second, potentially making home broadband redundant and getting
all your smart gadgets properly connecting with each other.
They are on their way – although global security concerns
threaten to derail the rollout schedule.
Chinese firm Huawei is one of the few manufacturers of the
infrastructure required for 5G and there are concerns from several countries,
led by the US, over whether it can be trusted.
Mobile provider O2 said Huawei makes up only 5% of its UK 5G
infrastructure, but it would take time and money to remove it all if the
government orders it to do so.
“We thought it would support it, but 5G is coming more
slowly than we hoped.”

Phone freedom

Last
year, France introduced strict rules around the use of smartphones in schools,
banning them for all pupils under the age of 15.
Apple, Google and Facebook also released tools that show you the
extent of your screentime – a move which was greeted with amused horror, and
some criticism.
The phone industry’s response to this desire to detach has been
to unleash so-called companion phones – smaller handsets with more basic
functions, designed to keep people connected without keeping them hooked.
Now
whether the solution to you spending less time on your big phone involves you
buying a smaller phone is perhaps debatable but it shows the industry is at
least listening, having devoted years to producing devices specifically
designed to maintain our interest.
“Yearly
sales of 2 billion mobile phones seemed so close just a few years ago, but
might become a distant dream for the industry,” she wrote in a report on declining sales.
“Our new five-year outlook is for 1.9 billion units on an
annual basis until 2023.”

Apple iPhone sales drop at record pace

Sales of Apple’s iPhones fell at their steepest-ever rate,according to data for the three months to the end of March.
The firm said revenue from the iPhone dropped by 17%, compared
with the same period a year earlier, to $31bn.
Apple lifted its outlook for the three months to June.
That sent shares more than 5% higher in after-hours trading.

The company had warned ofslowing iPhone sales earlier this year, especially in
China, where Apple competes with cheaper rivals such as Huawei Technologies and
Xiaomi.
But Mr
Cook said price adjustments in China, lower Chinese taxes on the iPhone and new
trade-in and financing deals helped sales start to recover toward the end of
the quarter.
He also credited improving demand for products such as the AppleWatch, along with progress in US-China trade talks.
“The trade relationship, versus the previous quarter, isbetter. The tone is better,” Mr Cook told Reuters. “The sum of all of
this together, it helped us.”
Apple has lifted
its guidance for its third quarter revenue to between $52.5bn and $54.5bn.
For the three months to March, total sales hit $58bn compared to
analysts’ estimates of $57.3bn.
However, that is below total sales of $61.1bn in the second
quarter last year. And while demand improved in China, sales in the region were
still down by 20%.
Apple is attempting to shift its reliance on the iPhone towards
services and last month unveiled its new TV streaming platform, Apple TV+, to
take on the likes of more established companies such as Netflix.

But Yoram
Wurmser, principal analyst at eMarketer, said long-term growth in services and,
to a less extent, other devices “depend on having as many users as
possible in the Apple ecosystem, and that’s still primarily about the
iPhone”.

An iPhone SE 2 won’t help stop Apple’s iPhone decline

Services, refurbishments and discounted older generations

A rebooted iPhone SE (pictured) isn’t
what Apple needs, even if it’s what you want (Image Credit: TechRadar)
Apple’s iPhone revenue has declined foranother quarter according to the company’s latest earnings, and
it means income is being dented.
It’s no
surprise – a slow performance in China amid a worldwide slowdown in the
smartphone market is making things incredibly challenging for Apple at a time
when spending on a new handset is being considered more carefully than ever
before.
People are
holding onto their smartphones for longer because they’re still performing –
they weren’t cheap when purchased a couple of years ago, and the high-end
features then are still performing now.
It means Tim Cook and co. will likely
be scratching their heads, wondering how to turn the tide. Could the answer be
the much-rumored, fan-backed iPhone SE 2?
Cook
noted in his earning call to the media on April 30 that revenue decline eased a
little towards the end of the quarter thanks to price cuts to the iPhone in
some markets –  an iPhone XR price cut
in China saw sales increase by 20million– but it still witnessed a major salesshortfall in the region
So
could new, cheaper handsets be the answer in getting Apple’s handset business
back on track?
Apple has refused to
step below the premium tier in the smartphone market to date, and while the iPhone XR is more
affordable than the iPhone XS and iPhone XS Max, it still
carries a hefty price tag which keeps it out of reach for many.
However,
before you get all giddy about the prospect of a new mid-range and compact
iPhone SE 2, realize it’s highly unlikely to ever happen.

There’s an image to uphold

Applehas built its reputation on producing premium products, and it’s what gives
consumers the confidence to buy as they know they’ll be getting a high-end
device. 
IDC’s
Associate Vice President for Devices, Francisco Jeronimo  told us
“launching a mid-range handset [such as an iPhone SE 2] would be good for
short-term interest, but it won’t help the brand in the long term as the image
of Apple is premium…it’s much better to sell discounted older and refurbished
devices as it keeps Apple’s band at the high level.”
Appleis one of the very few manufacturers that can make refurbished devices part ofa successful business model, as iPhones generally hold their value well thanks
to their exclusively high-end existence. 
That’s
why Apple offers its trade-in service, something Jeronimo believes it’ll
continue to push heavily, as it not only provides a way for customers to
upgrade to the latest phone sooner by cutting down on the new device’s upfront
cost, but also allows Apple to make a second margin on an older phone by
repairing and then reselling it.
The
key thing to spur a new smartphone purchase is either an old model not working
as well, or the latest device being so appealing that not upgrading becomes
impossible. 



So
to offset this, whenever Apple launches a new iPhone series, it cuts the price
of the previous generation, moving the handsets towards a more mid-range price
point, rather than producing dedicated devices for the price point which would
have to, in some way, compromise on Apple’s premium aesthetic.
This
way, even if you opt to buy a ‘cheaper’ iPhone, you’ll still be getting a
handset which was once at the top of the pile.
Apple still sells the iPhone7 and 7 Plus – launched as flagships in 2016 – through
its website, and at less than half the cost of the new iPhone XS and XS Max,
they provide a clear entry to point to the ecosystem for those on tighter
budgets.
Trade-in
is offered across all the iPhones it currently sells, allowing you to reduce
the cost of the cheaper, older handsets too.

The 5G and services solution

Asfor where Apple goes from here, Jeronimo told TechRadar that he sees short and
long term ways the firm will look to revert the slump back into growth, without
launching a specifically mid-range handset.
Part
of the short-term action, he posits, is the trade-in service Apple offers, but
it’s what’s available on your iPhone which is where a lot of money can be made
quickly.
That’s why the brand
even held a standalone event for the first time in its history earlier this
year for new Services, to unveil products that weren’t hardware, in the shape
of Apple News PlusAppleTV Plus and AppleArcade.
Revenue
from Services is now almost 50% of the revenue of the iPhone business, showing
huge growth thanks to the likes of Apple MusicApple Pay, the App Store and the new additions will
only bolster this further.
By
getting more and more iPhone users to sign up to these services, Apple won’t
need to worry as much about pushing consumers to upgrade to the latest iPhone,
as they’ll be able to make significant revenue from these services no matter
the model in a person’s hand.
Apple News Plus was announced in March 2019
(Image Credit: Apple)
Looking longer term, and
it’s 5G which
could be another big revenue driver for iPhone, as Jeronimo explains.
“5G
will have an impact on providing an incentive to replace your phone, but it
won’t happen this year, as it will cost quite a lot and the [network] coverage
won’t be that high.
This is something that
Cook alluded to strongly in the recent earnings call, where – when questioned
about adding 5G to the iPhone – he mentioned the highcost of components, and only when the price point Apple desired
could be reached would they consider adding new technology.
“5G will have a strong impact [on
the upgrade market] when consumers who purchased iPhones in 2018/2019/2020 are
ready to upgrade [to a 5G phone] in 3-5 years time,” added Jeronimo.
With rumors suggesting we won’t get a 5G iPhone until 2020 or 2021 at the earliest,
there’s no short-term gain for Apple from the fifth generation network, but at
least by the time a 5G iPhone does emerge the networks will be more mature and
the services offered more robust, meaning the Cupertino brand is likely holding
out until the improved connection offers some real, material benefits.
Whether the mix of trade-in upgrades,
refurbs and a buffet of services will be able to recover Apple’s lost revenue
remains to be seen, it’ll take a few years for the true impact of these models
to be fully realized, but for now Apple fans should mourn the iPhone SE 2: the
affordable, compact and modern iPhone that never was.