Why Business Insider readers aren’t going to upgrade to the new iPhones – and what Apple can do to win them over (AAPL)
Category : entrepreneur
Thirty-nine percent of the 15,531 Business Insider readers who responded to an on-site survey fielded by Business Insider Intelligence said they plan to buy one of Apple’s three newly announced iPhones this year. Because this survey was fielded on Business Insider articles about Apple, respondents are likely interested in Apple.
And Business Insider readers tend to be younger, male, tech-savvy, and mostly US-based. That means that the demand from respondents is likely much higher than the general population. For context, Apple introduced three new iPhones at its annual September event yesterday: the $999 iPhone 11 Pro, the larger $1,099 iPhone 11 Pro Max, and a lower-cost alternative iPhone 11, which starts at $699.
Our data provides an initial look at sentiment among a large segment of potential iPhone buyers — and the outlook on this year’s devices is relatively positive among our respondents. That 39% of respondents intend to purchase one of the new devices this year is promising in light of the average iPhone replacement cycle: consumers upgrade their iPhones after four years, up from three in 2018, per 9to5Mac.
In other words, we’d expect only about 25% of iPhone users to upgrade their phones in a given year. That’s despite the fact that Apple announced few major upgrades at the event, which we view as an instance of them treading water ahead of more substantial updates in the years to come.
If Apple introduces attractive new features in the near future, it could address key concerns among those who don’t plan to buy a new iPhone this year — here’s what our respondents cited as top barriers to purchase:
- Their current phone satisfies their needs. The largest share of respondents (28%) said that the single biggest factor behind their decision to not buy a new iPhone is that their current phone is good enough. In general, the technological gap between iPhone generations is closing, meaning older models are capable of providing about the same utility as newer smartphones. And because our respondents tend to be affluent, early adopters of tech, it’s likely that many already own a recent generation iPhone that is not meaningfully different than the newest offerings.
- The new iPhones lack outstanding features that our respondents like. Over one-fifth (22%) of respondents noted a lack of outstanding new features as the single biggest factor motivating their decision not to buy a new iPhone. Unlike in years past when Apple announced features like AR or FaceTime, the tech giant did not introduce any revolutionary new features for its phones this year. Considering that our respondents tend to be early adopters of technology, it’s possible those not planning to buy a new iPhone are holding out for more cutting-edge features in the coming years, like 5G connectivity. In fact, 8% of respondents stated that the lack of 5G support in the new iPhones is the single biggest factor driving them not to buy a new iPhone.
- The price points are too high. Fifteen percent of respondents said the single biggest factor behind their decision to not buy the new iPhone this year is that the new iPhone price points are out of their range. Apple’s budget phone starts at $699, and iPhone prices are rising overall: The iPhone’s average selling price (ASP) hit $803 in Q1 2019, up 10% from the same time in the prior year, per CIRP. In comparison, the Android ASP is estimated to jump 6% annually to just $269 in 2019, according to IDC. These respondents might view the high — and rising — price tag as unjustified given the lack of major technological upgrades to this year’s model.
Given what we know now, it’s likely Apple’s expected iPhone launches over the next few years address at least some of the top reasons our respondents cited for not purchasing a new iPhone this year. Rumors continue to swirl that Apple’s upcoming iPhone devices will receive an overhaul: Apple will reportedly announce a 5G-powered iPhone at the 2020 September event, and should unveil a foldable device by 2021.
If Apple follows through with these launches, the company will be well-positioned to not only continue attracting iPhone loyalists — like the 20% of our respondents planning to buy one of the new iPhones explicitly because they want to have the newest model — but to also win over respondents unenthused by the devices announced this year.
Apple’s planned introduction of 5G connectivity and a new, foldable form factor will increase the technological gap between iPhone generations. In terms of foldable, for example, the devices expand screen real estate to offer improved experiences for video, shopping, and gaming, and could also enable the use of multiple apps on the screen at once.
By affording consumers a new generation of devices with distinct capabilities and designs that better justify the high price points, Apple can likely convince a meaningful share of these respondents to upgrade in the coming years. And for those respondents who simply can’t afford the phones at their current price tags, regardless of what features are added, Apple is reportedly planning to launch an updated version of its cheaper iPhone SE in the Spring.
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