There is no need for Apple to release revolutionary devices every year

Apple has announced the much awaited 2015 iPhone lineup yesterday. Should I say that I am disappointed? I am not disappointed. I was pretty sure that the new iPhones will be evolutionary. Anticipating, not so great upgrade, I purchased an iPhone 6 in the month of July. I would’ve felt devastated if features like wireless charging, water resistance, bigger battery, FullHD resolution display were added to the iPhone 6S. Now, I get to keep my iPhone 6 for 2-3 years and think about an upgrade only when Apple decides to phase out iPhone 6 or when Apple only provided minor upgrade to a future OS, say iOS 11 or 12.

Let us take a look at the number of smartphones released by leading brands in the industry. Samsung, even after massive cut down on models released per year has released 30 smartphones. LG released 18 smartphones, Sony released 20 smartphones, Motorola released 9, HTC released 17 smartphones. Apple, on the other hand is yet to release a smartphone in the year 2015 and iPhone 6S and 6S Plus are their models for FY2015-16. Apple will continue to sell older models and they keep updating OS for the models that are available in stores. This way, those who need a lower range iOS device will go with older phone like iPhone 5 or 5S and those who need the best one will wait and get the new device at the end of a calendar year.

Apple strictly follows the tick-tock model for iPhones. The Tick marks a subtle upgrade while tock means redesign, excitement, whistles and claps in ‘launch event’. iPhone 4 was tock, 4S was tick. iPhone 5 was a tock, 5S was tick. iPhone 6 was tock and iPhone 6S was supposed to be a tick and it turned out to be a tick! Tock models come with visual (mostly massive) changes, bringing in new features and technology. Tick models on the other hand come with ‘internal’ changes like faster CPU, better camera module etc. The good thing is that this ‘tick’ is better than the previous instances. Force Touch, 4K video recording, better front and rear cameras are great features.

One can ask, how did Apple manage to stay alive if they generate buzz once every two years? In the world of Android, going two years without a major change will be deadly. If you have doubts, ask Samsung and HTC and Sony. The competition in Android market is immense and innovation has to be at the peak. If you cannot innovate, you better release a dirt cheap smartphone with specs that beat the next price slab and sell them in batches using the fancy terms like ‘invites’, ‘flash sales’. Once the phone is sold, the OEMs do not get money. That is why we see release it – sell it – shut it kind of attitude in Android world. Android commands more than 80% of global market share. That is divided into huge chunks and to be frank, even the biggest pie here does not generate much money.

Apple was the first to bring the concept of ‘ecosystem’ and those who got into the iOS ecosystem 7 years ago stayed in, especially those who purchased lot of applications. It is not that they want to come out but cannot. The quality of iOS applications, the regular iOS updates made many stick to iOS and continue purchasing more and more applications. This had created a strong user base for Apple. Given that there is no other OEM that makes iOS devices, they have stayed with Apple. Compare this with Android where buyers jump between OEMs every year because apps that they purchase will work on Android devices from other brands.

Apple’s iPhone lineup commands some 20% marketshare across the globe. They have their own OS and their own application store. 30% of revenues from the Appstore goes to Apple. Huge chunk of ad revenue from iOS goes to Apple.

In short

• Apple has more ‘loyal’ users who are tied-in to the ecosystem than any of the Android OEMs
• Apple enjoys revenue generated by ads on iOS and app sales for iOS devices (after developer payouts). They don’t have to pay anyone for services or OS.
• Apple enjoys far higher ‘average selling price’ for iPhones. Most Android OEMs generate peanuts per device in profits.
• Apple takes staggering 92% of profits that smartphone industry generated. There are nearly 1000 companies that manufacture smartphones.
• Even Lenovo, who is selling crazy number of phones in Asia registered lossesin 1Q2015 for smartphone division.
• Apple makes far less number of models per year compared to Android OEMs and this makes their distribution network more streamlines, manufacturing efficient and they have far less e-junk to throw away due to lack of sales. This also lets Apple push OS updates much faster and make the OS more efficient. No wonder why iOS 9 runs butter smooth on a dual core, 1GB smartphone.

All these factors give Apple a distinct advantage over other OEMs. They can have one explosive year followed by one dormant year. This is the reason why they take their time in adding new features to the devices. This is the reason why the features that comes to Android devices in current year are  seen in iOS devices after few years. When the iPhone 6S and 6S Plus come out to shelves, buyers will throng to the stores to purchase. And those who feel that the new ones are not worth the money will instead buy the existing models (6, 6 plus) as these models will be sold at lower price. Whatever model is purchased, in the end, Apple turns out to be the winner and unfortunately, it is going to stay this way in smartphone industry for few more years.