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Comment by JohnTHaller | Hacker News Reader

The record results include one not so happy metric: "Apple iPhone Sales Grow at Slowest Rate Ever, Company sees revenue in current quarter declining at the steepest pace in 15 years" (From: http://www.wsj.com/articles/apple-reports-slowing-growth-in-... )

Free click-through-Google link to read: https://www.google.com/search?q=Apple+iPhone+Sales+Grow+at+S...

iPhone sales are basically flat from last year, growing at about 0.4%. This isn't just an Apple phenomenon either. As with desktops/laptops several years ago, and tablets over the last couple years, we're getting to the point that it doesn't make sense to upgrade your phone every year or two. As long as your phone still works and does what you need it to, anyway.

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> we're getting to the point that it doesn't make sense to upgrade your phone every year or two

The biggest reason for this (in the US at least) is the decline of 2-year mobile phone contracts over the last year. Many people are rethinking their upgrade cycle now that cellphones are a direct expense instead of being subsidized by the carrier.

Absolutely. Even though most carriers are doing something like T-Mobile is with their 2 year payoff period for phones with no interest, people see that their cell phone bill can be less each month if they don't upgrade. On the high end for the iPhone 6s Pro with 128GB ($229 up front plus $30/month for 2 years) or a Galaxy Note 5 ($0 up front plus $29/month for 2 years), people see that they can save quite a bit of money by keeping their phone longer.

Yup- and this is key. You didn't have a choice before, at least not with the big carriers. They were going to take you for a full subsidy/installment/whatever phone plan, whether or not you reaped the rewards of it. As such, it was silly to not sign a new contract and pay a couple hundred for a new $800 phone every 2 years.

Even back into the turn of the century, if you bought an unlocked phone off eBay, you were paying full whack for your rate plan, even though you didn't use a subsidy. I even had Cingular once try to tell me I was under contract, simply because I had signed up less than 2 years ago -- even though there was no contract (I paid for my own phone).

Then a couple of years ago, they started offering "BYOD" pricing plans, so I paid my $300ish ETF, got my iPhone unlocked, and "saved" $15/mo. It was roughly breakeven.

Now I just pay full price for my phone if and when I want a new one. It helps me recognize the full cost of what I'm buying, and it means I'm not tied to a carrier.

Exactly. Remember when your phone only worked on a specific carrier so even if you paid it off and got it unlocked you couldn't take it to the carrier of your choice (or any other carrier at all)? shudder Never again.

You make a very interesting point here. My thinking was that the yearly upgrade programs such as AT&T's "Next" would drive even more growth as consumers upgraded their phone every 12 or 18 months. It would seem that these programs might not be so popular after all.

But Apple must have some insight into the process, since they quietly introduced their own 12-month upgrade plan:

http://www.apple.com/shop/iphone/iphone-upgrade-program

(Oh yeah, with free AppleCare+ insurance)

It sure looks like Apple is planning for a future where everyone is paying $25/mo forever to lease the latest handset that tickles their fancy, with the carrier being a swappable option.

I think the intent behind "Next" program is to mainly mitigate loss of subsidy, rather than drive growth. ATT makes no money selling these phones; they make money on smartphone data plan. If vast majority of your clients are already on smartphone data plan, then there's not much incentive to keep the subsidy.

Makes you wonder if dumb phones will make a comeback...

"Dumb phones".. There are phones out there like the Moto G that are pretty darn nice phones for less than $200. Heck, the Moto G is even waterproof! The camera, screen, etc isn't the most amazing, but it works really well.

Tainted by Lenovo, though...

$200 is still pretty expensive, if you just need phone call and maybe text messaging.

I wouldn't expect a huge number of people to go back to "dumb phones" though. Even if their carrier won't subsidise it or provide a payment plan, people will buy new smart phones, because they're use to having the features. Upgrades will just be less frequent.

The Moto E is $89

No ones going back to dump phones

I think the equivalent of the "dumb phone" is a phone that is 2 or 3 years old and is perfectly good enough to keep using and not replace.

Growth is about to be stalling with smart phones and you talk about a dumb phones comeback. ...to me what this means is that smart phone companies are about to start shriveling up and dying while other companies that are able to would have to take a hit on their margins. Why would someone who wants and could now afford a cheap smartphone by a dumb phone???

I dont understand why you would think smart phones would make a comeback.

Nothing was ever subsidized by the carrier, it was just amortized over those two years. The difference of off contract was exactly the price of a phone over a two year period. Which is why they started that ATT Next nonsense to get people locked into renting their phones.

The difference of off contract was exactly the price of a phone over a two year period.

I'd be surprised to find there was no carrier profit built into this.

There is always carrier profit. They aren't buying Apple phones for Apple price.

So perhaps "exactly" is not the adverb you intended?

In my case, it was exactly the cost difference.

Actually they were/are and it has been tough for the carriers.

http://articles.latimes.com/2012/feb/10/business/la-fi-iphon...

Some carriers had no difference between on and off contract. With those, if you didn't upgrade your phone every two years you were leaving money on the table.

That also occurred, people sitting on old phones, paying that monthly amortization costs forever.

This sounds reasonable but in my experience I have noticed that the price of the monthly phone payments have often been more than the discount given for the previously offered non-subsidy plan.

This has been the case for T-Mobile and Sprint, at least in the scenarios that I have looked at.

Quite a few carriers in the US charged the same rate whether you got a phone with them or not for years. I think Verizon was the last holdout to give a discount if you bought your own device outright.

It's hard to draw strong conclusions here because China's launch was bumped up 2 weeks from 2014 which put them into the September quarter (+22% growth). Granted that's only a week of prior quarter but they sold 13 million phones that week.

If you move 3-4 million phones for China launch from prior quarter to holiday and suddenly growth in the holiday quarter doesn't look all that anemic (or the previous quarter as spectacular).

The revenue growth for the two quarters combined is 9.2%.

iPhone 6 had a killer feature some had been waiting 5+ years for, its size. The 6s has... 3D Touch and bit better camera.

Add mild economic slowdown and strong dollar, result: flat growth.

Meanwhile those of us with normal-sized hands and pockets long for the days when you could safely grip and operate your phone with one hand.

I've never been an iPhone guy because I largely prefer Android-style notifications and deep Google integration and that is a major selling point to me. Right now the Nexus 5x is looking pretty nice.

To each his own. I prefer to type with both hands in landscape on a screen I can see. When listening to podcasts I use the headphone remote. Hopefully the rumored small iphone will become reality.

Right now the Nexus 5x is looking pretty nice.

A friend of mine that works at Google -- and received a free Nexus 5x for Christmas -- told me the n5x is a pretty lousy phone.

I Googled around, and sure enough, it looks like a lemon.

6p is the perfect phone.

I have some big hands and even then I feel uncomfortable using my 6, I was so used to the 5S size and now the 6 keeps sliding through my hand, I can't completely use it single-handed, etc.

And I can reach all of the corners with the thumb while holding it, it just doesn't feel comfortable.

iPhone 6 had a killer feature some had been waiting 5+ years for, its size. The 6s has... 3D Touch and bit better camera.

And twice the RAM (1 GB iPhone 6 vs. 2 GB iPhone 6s) and a faster CPU and other goodies.

Normal folks don't notice those things, even the camera improvements are lost on them.

I bought a 6s and love it (since I upgraded from a 5) but if I already had a 6 I wouldn't have upgraded.

I've got a 6 and didn't bother with the 6s yet but the shortcuts provided by 3D Touch apps would save me a good few minutes every day.

Is the upgrade cycle slowing, or are Apple et al. running out of dumbphone users to convert?

I think the biggest thing, and one that a lot of people are missing, is that the 6/6S phones caused a one-time burst of switchers who were only on Android because they wanted big phones and they previously couldn't get them from Apple. (Evidence: a year after the 6's release, this happened: https://theoverspill.wordpress.com/2015/09/01/premium-androi...) Now 1.5 years into the 6/6S cycle, almost all of them have switched, and iOS-vs-Android market share (in saturated markets) has reached a new steady-state.

Actaully didnt APple come up with their own upgrade cycle with the new phone they released last year? I think that way of having people upgrade like that was a bad idea on their part since in my view you could get a better deal on a phone via your carrier even though the intention seems good getting a new phone from them

Total number of users might still increase though, doesn't it? People are not throwing away their old phones, just buying fewer new ones.

I am still waiting Apple to enter the low cost phone arena. There is plenty of profit and certainly market for them to do a near original sized iPhone but with modern electronics for around three hundred or less. It might never see the shores of the US but I do think there is a lot of market out there for it world wide.

Apple already has 92% of smarphone profits. Entering low cost phones area would give them nothing.

I beg to differ. The reason it doesn't make sense to upgrade your phone every year is because of lack of innovation. What am I really getting, a faster processor? I'll live another year without it.

This is what happens when you turn over leadership of a company to a supply chain guy from a creative genius. Sure they can make bigger, better, fast, more and make record money, but the creative soul of the company is gone. RIP Steve.

It has all to do with product maturity, and nothing to do with Steve.

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