Foreign media: Size and function are important for iPhone to sell well

Foreign media analysis said that the market demand for Apple's iPhone was lower than expected, but the iPhone 7 Plus launched last fall performed well, which shows that consumers are willing to pay for the iPhone's excellent new features and also leaves room for Apple to raise the price of the 10th anniversary version of the iPhone. The following is the article summary:

As iPhone sales generally hit a low point, Apple has found a hint of inspiration to solve its current predicament: consumers are willing to pay for better features.

When Apple released the iPhone 7 last fall, its iPhone 7 Plus model, in addition to a larger display, also added some new hardware that was not included in the standard version for the first time, and of course the price of this phone was higher.

The iPhone 7 Plus starts at $769, up from $649 for the standard version, and features a dual-camera setup that promises better photography, better battery life, and more RAM.

The strategy appears to be working. Investment analysis firm Cowen & Co. estimates that the iPhone 7 Plus accounted for about 40% of the 58.5 million iPhone 7 series phones sold in Apple's first fiscal quarter of 2017 (the fourth quarter of 2016). In contrast, the iPhone 6 Plus accounted for only 23% of the iPhone 6 series phones sold in the same period last year.

This has increased the average selling price of iPhone to $693 in the first quarter of fiscal 2017, compared with $691 in the same period last year. Apple will announce its first quarter results for fiscal 2017 next Tuesday. Although analysts say that market demand for iPhones is weaker than expected, the increase in the average selling price of iPhones will increase the company's revenue by 2%.

Overall, analysts say the iPhone 7 faces a tougher situation than its predecessors. Consumers are replacing their phones more often, and the gap between the iPhone and other cheap phones is less clear than before. In China, local manufacturers are gradually eroding market share. Further complicating the situation is the fact that Apple is expected to launch a new product with more new features on the 10th anniversary of the iPhone, which has left many consumers holding back.

Analysts expect Apple to sell about 78 million iPhones in the first quarter of fiscal 2017, up 4% from the same period last year. This also marks the first time that iPhone sales have not achieved double-digit growth in the fourth quarter of each year. In the fourth quarter of 2014, iPhone 6 sales increased by 46%, while in the fourth quarter of 2012, iPhone 5 achieved 29% growth.

Stagnating iPhone sales growth further underscores some analysts’ concerns about Apple’s future. The iPhone accounts for about three-quarters of Apple’s gross profit, and falling iPhone sales last fiscal year caused the company’s annual profit to fall 14%. In fiscal 2016, Apple missed its internal revenue targets for the first time in at least seven years, leading to the first pay cut for CEO Tim Cook since he took over in 2011.

"iPhone users want a cooler new iPhone," said Tim Arcuri, an analyst at Cowen & Co. Arcuri said consumers want more from the iPhone, but the basic iPhone 7 doesn't satisfy them.

But the relative success of the iPhone 7 Plus, which analysts say combines a better camera, more RAM and water resistance to make it the most successful of Apple's pricier phones, underscores consumers' appetite for new features.

Arcuri expects Apple to sell 24 million iPhone 7 Plus units, up 55% from the 15.5 million iPhone 6s Plus units sold in the same period last year. Arcuri said the iPhone 7 Plus has increased the average selling price more than in the past.

The preference for the iPhone 7 Plus is particularly evident in the Chinese market. According to market research firm Creative Strategies, Chinese consumers tend to prefer the larger screen of the iPhone 7 Plus. In the fourth quarter of last year, about 52% of iPhone consumers in China bought an iPhone 7 Plus, while about 40% bought an iPhone 6s Plus in the same period of 2015.

The news is encouraging for Apple as iPhone sales in China fell 10% year-on-year in the fourth quarter of last year, according to UBS.

Creative Strategies said similar changes were also found in the United States, Apple's largest market, where the proportion of iPhone 7 Plus purchases rose to 47%, while the proportion of iPhone 6s Plus purchases in the same period last year was about 35%.

As the technological gap between cheap phones and iPhones becomes smaller and smaller, this trend is indeed something Apple should be happy about.

Creative Strategies analyst Ben Bajarin pointed out that the market recognizes Apple's efforts and is even willing to pay for its high price.

This lays a solid foundation for Apple to release the 10th anniversary version of the iPhone later this year. Arcuri said this proves that Apple still has considerable room to increase the price of its future products.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.