Apple’s big iPhone gamble for 2017 was the iPhone 8 and iPhone 8 Plus would maintain the momentum seen in previous iPhone launches as the iPhone X brought new technology to the smartphone space. Between them they would arrest the falling sales of the iPhone and put Tim Cook and his team back in the driving seat of defining the mobile space.
Unfortunately as data piles up, the first part of that gamble - the iPhone 8 and 8 Plus maintaining market share - has failed.
With one month of sales, it is possible to analyse the uptake of the iPhone 8 family. Using data from its mobile engagement platform network, Boston-based Localytics can track the relative adoption levels of the handsets as users upgrade and install apps.
The news is mixed to poor in my opinion. While the iPhone 8 Plus is following a similar adoption curve to last year’s iPhone 7 Plus phablet with a 1.4 percent market share, the iPhone 8’s one percent market share compares badly to the iPhone 7 (3.6 percent) and the iPhone 6S (3.4%) at a similar point in their life cycles.
With only a combined market share of 2.35% after one month, the iPhone 8 models are the worst performing iPhones of the last several years. The previously lowest adoption after one month was for the iPhone 6S models, which had still secured 4.3% of the total market after one month.
These details follow on and corroborates last week’s report from Reuters. That report noted sales reports from a number of US and Canadian carriers of a drop in third-quarter sales and highlighting the poorly performing iPhone 8 and iPhone 8 Plus as a key factor:
The chief executive of Rogers Communication, Canada’s largest mobile network, on Thursday said appetite for the iPhone 8 and 8 Plus, which went on sale in September, had been “anemic,” the latest sign of weak sales for those phones ahead of the Nov. 3 launch of the pricier iPhone X.
There is a simple counter to this point, and it is the iPhone X. The theory goes that the weaker sales of the iPhone 8 and iPhone 8 Plus will be countered by stronger sales of the iPhone X, with the final numbers balancing out to offer a similar level of Q4 sales as in previous years (David Phelan takes this argument on board here at Forbes).
In a perfect world, Apple would have launched all three devices in the regular September window and consumers would have been able to choose from the three devices. But it is not a perfect world.
The two weaker devices have already been released, production delays are reducing the available stock of the iPhone X, and the expectation is that sufficient stock levels to sate demand will not be available until Q2 2018. That’s going to weaken Apple’s financials for Q4 2017 and Q1 2018, and I’d expect the falling iPhone sales reported in the full-year results to continue to fall.
The iPhone 8 was an iteration on the design first seen in the iPhone 6 in 2014. Apple has managed to push the iterative approach twice before with the 6S and the 7, but it failed to manage this for a third time.
Tim Cook’s decisions around the launch event programming has seriously compromised the launch of the iPhone 8 family. The usual long and hard sell of a new iPhone to convince the faithful to buy was skipped over for the eights in favour of spending more time on the future of the iPhone in the X. Minutes after the iPhone 8 and 8 Plus models were launched by Apple, they were undercut… by Apple.
To paraphrase the launch. Here’s the iPhone 8, which does everything the last model did but we’ve made it slightly shinier and updated the chips - pause - And here’s the future of the iPhone that everyone will want - pause - but you’ll have to wait until 2018 to have a realistic chance of buying it.
Well played, Apple. Well played.
Now read more about how Apple has been caught in the innovators dilemma…
