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Apple is having a tough time persuading fans to buy new iPhones. These charts help explain why. (AAPL)

Published by Business Insider on Wed, 23 May 2018


Apple's iPhone business has stagnated in terms of the number of devices the company is selling.A new report by GBH Insights, based on consumer-survey data, offers explanations why.Consumers generally haven't been impressed with the new features in Apple's phones and think the iPhone X is much too expensive, the report says.But Apple fans are still super loyal, and with their phones getting older, the company is due for a big upgrade cycle soon, GBH says.Apple has had a tough time growing its iPhone business, at least in terms of the number of smartphones it sells each year.A new report from financial-research firm GBH Insights offers some hints at why that may be the case.While iPhone owners tend to be loyal to the brand, many haven't seen much of a need to upgrade, and, overall, many consumers think the new flagship modelthe $1,000 iPhone Xis just too expensive, GBH found."Apple is the dominant player in the smartphone market, with a strong base of loyal customers," Daniel Ives, GBH's head of technology research, said in the report. But, he added, the company "may have reached a saturation point'."You can see Apple's struggles in its sales data. At the end of its second fiscal quarter in 2016, it had sold 232 million iPhones in the proceeding 12 months, a record number for the company. At the time, its 12-month sales had grown faster than 20% every quarter for the previous five quarters, and they had always been above 10%.Since then, the company has never sold more than 217 million phones in a 12-month period. Its 12-month sales have never grown faster than 5%, and, in recent quarters, they've hovered closer to 1% or less.The iPhone X did boost Apple's smartphone revenue. But that's not because the company saw a huge upsurge in the number of phones it was selling. Instead, the iPhone X boosted revenue because with a base price of $1,000, it cost hundreds of dollars more than previous models.The iPhone is losing market shareTo be sure, the slowdown in Apple's iPhone sales came as the growth rate in the overall smartphone market started to slow. But Apple's sales growth slowed much more markedly than the overall market. In the past two years, the company has lost market share.You can get a sense of the obstacles that Apple's iPhone business is facing in a series of charts that Ives and GBH put together for their report, which was based on proprietary consumer-survey data.One that jumps out is why consumers choose to upgrade their phones. When Appleand other phone manufacturersrelease new phones, it tends to emphasize all the devices' new features. But those generally aren't what get people to upgrade.Instead, consumers tend to upgrade for a much more mundane reason: Their older phones either stopped working or have become too slow. In other words, consumers don't generally buy a new phone unless they feel they need to.Some of the reason for the lack of enthusiasm about new iPhones may be the particular features that Apple touts. With the iPhone X, for example, Apple emphasized its edge-to-edge display and FaceID, the facial-recognition system the phone uses to identify owners and unlock the device.But the most important thing consumers are looking for in a phone is something much less exciting: a long-lasting battery. Other top considerations are similarly prosaic, such as the amount of storage space a phone has, the clarity of its display, and the kind of camera it has."Despite the emergence of new, innovative smartphone features, smartphone owners remain mostly concerned about the basics," Ives said.Consumers think the iPhone X is much too priceyBut the biggest factor Apple's faced lately in growing its iPhone unit sales is price. Consumers overall are balking at paying the premium Apple's charging for the new iPhone. While the base iPhone X is priced at $1,000, the upgraded version costs $1,150.Several reports have suggested that Apple might come out with a new, bigger-screen model of the iPhone X this year that could cost even more. GBH took things to an extreme, trying to see what the appetite might be for a theoretical $1,500 iPhone X. The short answer: not much.The lack of enthusiasm among consumers for Apple's latest features and models can be seen in some other data GBH collected. iPhone owners, on average, have older devices than the typical owner of a non-Apple smartphoneand have held on to their devices longer.Meanwhile, more than four in 10 iPhone owners have a model that's more than two years old, and about three-fourths have a model that's more than a year old.But this could be a big opportunity for AppleTo Ives, though, all this looks like an opportunity. Despite their blas response to the latest iPhone models, Apple customers are extremely loyalmuch more so than customers of any other major phone brand, as GBH's research shows.And the iPhone has a good enough reputation. Apple is far more likely to attract switchers from other brands than any other major phone maker, except Samsung.Add all that upthe older phones and the brand loyaltyand the company is poised to see a major upgrade cycle over the next 18 months, Ives said. Some 350 million iPhones could be swapped out for new ones just in the next year.Apple remains the clear dominant smartphone vendor with the majority of its user base in the "upgrade window" in coming months, Ives added.SEE ALSO:Tim Cook says Apple's iPhone X sales were a Super Bowl victory ' even if you wanted the team to win by 'a few more points'Join the conversation about this storyNOW WATCH: Steve Jobs made 3 AM phone calls to argue about Apple ads
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