Totally speculating here. I wonder if this is preparing for a future where Apple encounters supply issues or pricing pressure caused by environmental and political turmoil. I could see the average lifespan of devices continuing to increase and more people using repair services. It also makes it easier to refurb devices for second hand use.
1. Possibly. It could also mean that apple is reaching saturation and evolving from growth sales to replacement-level sales as purchased products get old and wear out.
1) 2/3 of devices Apple has ever sold remain in use today [0]
2) The average lifespan of an Apple device is 4.25 years
That should put to rest the "Apple's planned obsolescence" narrative, but I doubt it will. I think it has always been the case that Apple cares about building really good hardware that lasts. That's not to say that they don't make mistakes (they do), but they care most about making something good, regardless of the "business case."
On the most recent earnings call, several investors had questions about how Apple's new battery replacement program would affect business. For example, would the cost bring down profits, would the replacement prevent upgrades, etc. Tim's response was:
>On the battery, Toni, we did not consider it in any way, shape, or form what it would do to upgrade rates. We did it because we thought it was the right thing to do for our customers. And sitting here today, I don’t know what effect it will have. And again, it was not in our thought process of deciding to do what we’ve done. [1]
I think Apple is doing that because they’re out of growth otherwise. They’ve sold most all the iPads and iPhones and Macs they can. The numbers may go up but nothing like when the iPhone was still growing.
Services is the only part of the business that may have more than small growth levels left in it.
Maybe this will force Apple to be innovative. Or maybe they'll just increase service pricing and gradually cut features and material costs in an attempt to keep both margins and revenue high. My bet with Tim Cook is unfortunately the latter.
Maybe they're preparing for the future. In a few years a $200 subsidized iPhone might be a high priced product compared to a free with contract Android phone. The iPad at $499 might be a premium device compared to a <$200 netbook. The sales of traditional PCs will eventually start to drop as these other devices fill people's needs. We're probably near the high water mark for the Macintosh. Standalone iPods are already starting to seem old fashioned. How many more years can they rely on that market to exist? It doesn't seem the iTunes Store has ever been especially profitable for Apple either. They have to bet their future on the iPad/iPhone.
Yes. A lot of the diehards over at /r/apple let slip occasionally how they are always financing the latest and greatest. Which is absurd to me especially for the mac product lines where you are overpaying by thousands for an outdated machine [1].
And the estimate of 3 year lifecycle for wearables like the watch and airpods seems overly optimistic. My airpods are a year old and the battery dwindles in about an hour or two before needing charging, my watch is bricked after 7 months.
When the current debt bubble pops it'll be interesting if it effects Apple revenue as hard as it will the college debt / car debt markets.
Yes, 10 years ago Apple was undergoing massive growth and establishing itself as a premium consumer brand where customer service was a differentiator.
Their revenue is levelling off now as the markets they're in mature and they need to continue profit growth. They do this by raising prices (see the iPhone 6,7,8,X dance) and reduce their costs to expand their margin. Lowering repair costs is now a key part of their strategy in a way that it wasn't 10 years ago.
That's an interesting point, so more of a game of amortizing upgrades over a few years rather than instigating a massive one-off purchasing craze. I could see how a drip of sufficiently useful AI features and improvements over like '24-'27 would bolster the market. Even then though, this seems like an opportunity to hold rather than really reverse the trend; at some point I think Apple is going to have to reckon with the fact that the market is more or less saturated, though I could definitely be wrong here.
Best case scenario I can see this becoming an iPod sized business. That certainly wouldn’t be bad and I could well imagine that’s exactly what Apple expects this to be. (The margins might be better, so they might be able to make more money.) Anything beyond that seems a fantasy to me.
I think you could also see it in light of competition driving profits down. Manufacturing happens to be as much of a commodity as air travel and gas (Apple has two different manufacturers for the processor in the 6s and frequently switches suppliers for its other parts to ensure lower prices).
I would imagine the demand is going to go up because it only really shines in hands-on use. The Apple Store strategy seems to be working fairly well with this type of product.
Apple has, generally, been a more forward looking, long-term thinking company (outsider perspective) than many others. So I doubt it. They have a fair number of very profitable revenue streams. They have a large amount of money banked, they take out loans because it's cheaper to pay the interest than to lose out on the earnings of that money.
They have profits in the tens of billions of dollars for the past several years. Unless they suddenly see an actual mass exodus, rather than just poor sales of their current hardware, then there's no need for them to panic. Especially considering most (guess on my part, based on anecdata) of their users don't even buy new hardware that often. An Apple laptop easily lasts 4+ years, at least since I've been buying their hardware (circa 2006).
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