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Hell no, Apple shouldn't go slow on iPhone tempo

Gregg Keizer | June 8, 2016
But company may find it hard to break out of its current two-year cadence, say analysts

Apple would be making a mistake slowing down the cadence of major upgrades to its iPhone, said a pair of analysts today, who argued that the company should instead try to speed up the pace.

Their comments were sparked by a Nikkei Asian Review report last week that asserted Apple was shifting to a three-year interval between significant iPhone upgrades. The business paper's proof was thin: That the upcoming iPhone 7 will "look almost identical to the current iPhone 6."

If accurate, Apple would abandon its two-year rhythm that debuted a form factor change in even years, followed by nearly identical models that retained the exterior look in odd years, designated with an "S" appended to the label.

For example, Apple rolled out the iPhone 6 and 6 Plus in 2014, then introduced the iPhone 6S and 6S Plus last year.

"That tempo served Apple very well," said Jan Dawson, chief analyst at Jackdaw Research. "If they lengthened that, it would make even fewer reasons for customers to upgrade. Apple needs to do whatever it can to stimulate sales."

"It would be a mistake to do anything less than every two years," echoed Patrick Moorhead, principal analyst at Moor Insights & Strategy. "Instead, Apple should be thinking 'How do I increase the cadence to give people more reason to upgrade their iPhones?'"

Questions about the iPhone's even-odd strategy -- which has been in place since 2009 when the iPhone 3GS followed 2008's iPhone 3G -- surfaced after Apple's April earnings call with Wall Street, when it reported the first year-over-year revenue decline in 13 years as iPhone sales slumped 16%.

Some immediately urged Apple to speed things up as a response to the iPhone downturn, assuming that the more frequently new models appeared, the more likely it would be for customers to lust after that new shiny. Others only hinted at the recommendation.

"I do question how much longer Apple can afford to stick with the 'S' strategy," wrote independent analyst Ben Thompson on Stratechery on April 27 (subscription required). "One could argue the 'S' lines are introducing a holiday quarter-like dynamic into Apple's earnings but on a two-year basis."

The every-two-year-we-change-things approach was based on solid ground, said Dawson and Moorhead, who cited economies of scale from sticking with the same screen size and amortizing each case design and tooling over 24-mouth stretches, part of the reason Apple has been able to book billions in profit. But it was also crafted during a time when the smartphone market was much different than today.

"The two-year carrier contract was standard," said Dawson, "and so for most people there was a change in form factor and an advance in hardware every two years. That made for fairly compelling steps up."


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