We've been hearing for months that long-term customers are sourcing on the iPhone upgrade cycle, and now there may be some evidence to back it up. According to a survey conducted by Bank My Cell of around 38,000 people, iPhone owners are 15 percent less loyal than their last year, and 73 percent of respondents claimed they stuck to Apple. They are still strong numbers, but it is the lowest maintenance rate since the company began to track in 2011.
You can quibble with the Bank My Cell methodology anything you want, but the numbers are significant. According to its tally, 24.5 percent of iPhone users made in the fourth quarter of 2018 (when the iPhone XR, XS and XS Max were launched), because they moved to a new brand of smartphone, overwhelming Samsung and LG. (I'm willing to bet it wasn't Galaxy Note or V40 ThinQ.)
It's no secret that the iPhone's average sales price has created in recent years. Since the launch of a thousand-dollar iPhone X, Apple has covered a slow decline in sales with much higher prices. The cheapest current X-model iPhone, iPhone XR, starts at $ 749, and if you want the flagship XS model, you pay no less than $ 999. It's not going to change.
Of course, Apple is not alone in this room. The Galaxy Note 9 and S10 + both start at $ 1000 and phones like the LG V40 and G8 and the Google Pixel 3 XL are pretty close. But that part of the market is becoming increasingly niche, while the center area explodes with phones from Samsung, Google and One Plus, all of which have what were once advanced specifications, such as dual cameras and fast charging.
But not Apple. Though it made a big difference to how the iPhone XR has many of the same features as the iPhone XS at a 25 percent lower price, the fact of the matter is just a bargain compared to the other iPhones and premium Android phones. There are purchases and payment plans to soften the blow, but if you want an iPhone that is actually affordable, Apple expects you to buy an iPhone 7.
While the Bank My Cell report may not be alarming for Tim Cook & Co. At the moment, if the trend continues, it can become real ugly real fast. Because let's face it, no one will be thrilled with an iPhone 8 by 2020.
Meet me in the middle
It's funny, but Apple was actually in front of the middle basket. Back in 2016, it launched the iPhone SE between iPhone 6 and iPhone 7. It had an iPhone 5S body with plaster on an iPhone 6s for almost half the price. It was strictly a response to customers who wanted a smaller, cheaper phone. Cook said so much during the launch event: "Many, many customers have asked for this. And I think they will love it."
For a while they did. But Apple never paid the attention it deserved. Instead of continuing to update it, Google will probably do with the Pixel 3a – it was left to endure for years, only receiving the most mandatory update. Where Pixel 3a expands the platform to a segment of users who wouldn't otherwise be able to afford it, the iPhone SE always seemed like the phone Apple didn't want you to buy.
Basically, premium smartphone specifications peaked in 2017. It is certain that monitors may be slightly higher and pack a little more pixels, and processors are far faster than they were, but it has already been achieved the best sweet spot: between 5, 5 inches and 6.5 inches, a Quad HD display, two or more cameras and wireless charging. We do not need more pixels, and we do not need more speed. The A12 processor is incredibly fast, but the A9X chip in my 12.9-inch iPad Pro has no problem keeping up, either. What I want is a $ 450 iPhone with a standby processor, retina quality LCD screen and plastic body that looks like I paid $ 900 for it. That's what Google provided with Pixel 3a.
Google's Pixel 3a is basically a master class in how to deliver a space alternative to a premium smartphone, but the market is still very mature for disruption. $ 399 Pixel 3a has a killer camera, great screen and excellent battery life, but it's more prefatory than revolutionary, and basically increases the midline to where it should be. It looks like a Pixel, and it seems like a Pixel, and that's enough for a $ 399 phone. Google is going to own the middle area with a phone that's not entirely innovative or even interesting.
But it doesn't have to be a one-phone show. Apple can revive the spirit of the iPhone SE with a new mid-sized iPhone that gives the whole iOS experience a lower price. It doesn't even have to have a headphone jack. Something with an A10 chip, 64GB storage, polycarbonate shell and an iPhone XR style camera would be a great start, but the big breakthrough would be Face ID. No other phone in this area includes anything close to something as safe as Apple's 3D face scan, and a mid-range phone with Face ID will show that Apple is looking at privacy and security.
As it stands, Apple has completely stopped listening to yours. It's not that people don't want an iPhone. They do. But while iPhone users may not be flying in big numbers now, as more phones like Pixel 3a or Samsung's Triple Camera A50 arrive, providing premium-like experiences for a fraction of the cost, the iPhone will look more and more overpriced. Google played it perfectly: Pixel 3 makes Pixel 3a look like an even bigger value than it is, just as the iPhone XS improves the value of XR.
There is much to be excited about in future iPhone releases – triple cameras and reverse wireless charging in September; 5G and censorship during 2020 but until Apple starts to notice the middle, more and more people are starting to beat their iPhones for something that doesn't have an Apple logo on the back.