In the markets of countries like the United Kingdom, France, Germany, Australia and China, most people who will ever own a smartphone already have one. This market saturation means that phone producers will have to either start innovating or competing on price to attract users from the competition. Instead of trying to develop new products, it appears Apple is focused on other issues, such as patent disputes with Samsung. It does not take a keen observer to notice the biggest differences between today’s iPhone and the one from a few years back. Screen size and processing power have jumped in response to other phones on the market, hastily playing catch up. If Apple wants to beat its competitors, it should get back to its roots by starting industry trends instead of following them.
In 2011 and 2012, about nine million people purchased their first smartphone, but in 2013 that number dropped to 4.8 million. Not only will phone companies have to compete for the dwindling number of consumers who still do not have a smartphone, they will also have to convince their current users to continue upgrading when new models are released. With so many phones competing with one another and a limited number of new users, the industry will begin to see the effects of price wars — a losing proposition for all companies involved. The only way to win is for companies to offer new products that warrant a higher price, just as Apple did when it first introduced the iPhone in 2007.
But Apple has not experienced a technological breakthrough like the iPhone in a while. Much of Apple’s attention has been focused on other issues, including working conditions of suppliers and patent disputes. Apple has competed on price by releasing the more affordable iPhone 5C. Selling the 5C may have helped Apple boost sales in the short run, but continuing to cut prices and offer cheaper models is an unsustainable economic strategy.
Moreover, Apple recently had issues with the power button on the iPhone 5, which led them to offer replacement phones to select users. While this seems like a small misstep, it reveals cracks in Apple’s sterling reputation. If Apple continues to have product issues, it could hurt its future market share.
In an increasingly competitive environment, Apple has two options to gain market share: cut prices or innovate. Over the past several years, it appears that Apple has followed industry trends instead of offering entirely new products and features. It is doubtful that this strategy will remain lucrative in the long run, and Apple should consider investing in other products if its smartphone innovation stagnates.
Adam Fazlibegu is a staff columnist. Adam’s Angle is published every Thursday. Email him at [email protected].
