Can Apple's iPhone empire continue to grow? Ahead of next week's press conference where the iPhone 6S and iPhone 6S Plus are expected to be announced with pre-orders commencing by the end of the week, can Tim Cook and his team keep the records tumbling? Can the iPhone 6S and 6S Plus outsell previous models to be 'the most successful iPhone ever'? Can there be any more users out there who have been waiting until this very moment to get their first iPhone? Or have we passed peak iPhone and it is all downhill from here on in?
I believe that the iPhone 6S family will outsell previous models, and that there will be countless millions more new iPhone users joining Apple's ecosystem because of these upcoming handsets. I think that Apple will retain far more of its existing users than other smartphone manufacturers. And I believe that the changing nature of the mobile phone market may not reflect the success of the iPhone in market share numbers.
Starting with the latter, the slow migration of users from dumbphones and featurephones to smartphones (where they ignore the smart) is driving the increasing volume of smartphones. That growth is predominately at the lower end of the market, in budget models that sell as part of 'pay as you go' plans, and models which can be priced as free thanks to network subsidies.
Much of that growth is having a positive impact on the OS powering these handsets, namely Android. That flood of handsets means that even if Apple increases sales of its smartphone handsets, the volume game could see its market share can go down, even with the most spectacular sales figures. When the numbers come in and Apple loses share to Android, that's not going to be an immediate sign of Apple's demise. It simply reiterates the fact that there is growth in a market where Apple does not fight.
While analysts will continue to push the idea of a cheap iPhone, the closest Apple will offer to that is a two-year old model in the lower tier that can be sold as if it was free thanks to a high network subsidy. The perception of Apple as a luxury brand, and the iPhone as an object of passion and lust is more important than moving into the low-end market.
If you want to watch for a key number, then look at the iPhone 5S sales. The majority of users who purchased the iPhone 5S when it was new will be coming up on the end of a two-year contract. The iPhone 6S is designed for these users (not last year's iPhone 6 owners). Given the incredibly high customer satisfaction scores that Apple has, I would assume that the cast majority of iPhone 5S users are ready to upgrade. Given the iPhone 5S sold far more than the iPhone 5, there's a bigger pool of returning users for the iPhone 6S to exploit than the iPhone 6 and 6 Plus ever had.
While Western markets are saturated, reducing churn away from your platform to maintain sales is one factor. Another is to bring on board users who are dissatisfied with their current smartphones. I would point out the Samsung Galaxy S6 and S6 Edge sales here, which are lower than Samsung's expectations. Those users could simply be sticking with their older handsets, but at some point they are going to look for a new handset. If all the positive buzz and noises about success are highlighting the new iPhone, that makes converting them to iOS a little bit easier
As always, markets that still have room to grow are key territories, and this means the BRIC countries will receive a lot of attention from Apple. While China is approaching the saturation point that mimics Europe and North America, Apple is widely established as a luxury brand in the country. It may not be as dominant as it is in the West, but the expansion of the physical Apple Stores, as well as a renewed focus on personal colour branding (and the rise of gold as a color option) has seen Apple take much of the high-specs high-revenue market in China. China is approaching the tipping point of growth vs churn, but I'm confident Apple has the bases covered.
Other countries still in the explosive growth stage require a different approach, but one that Apple is familiar with. Apple has moved with the times and kept marketing messages constantly changing (when was the last time you saw 'I'm a Mac' in the real world, for example) and tailored to local tastes. As for the idea that the BRIC countries can only be won over with cheap handsets so Apple needs to deliver an iPhone for the lower end of the market, haven't we been down that road before to no avail?
Apple iPhone 6 Plus (image: Ewan Spence)
No matter the huge retail numbers for the iPhone 6 and iPhone 6 Plus, there is a larger market ready to accept the iPhone 6S and iPhone 6S Plus when they are revealed on September 9th. There are more existing iPhone users looking to upgrade, there are more customers on rival platforms looking to switch to an alternative high-end handset. And Apple is cultivating a love of the luxury in new territories that will bring users into the ecosystem for many years to come.
The potential for the iPhone is greater now than it has ever been.
(Now read why everyone is going to hate your new iPhone 6S...)
