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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

But as the smartphone market matured, carriers began dispensing with the subsidies they offered at the end of each two-year contract, instead selling devices at full price but spreading out the payments over 24 months. After the phone is paid off, a consumer's carrier bill drops, encouraging many to simply keep what they have. Under the older schemes, the subsidy was invisibly baked into the bill; but the bill didn't decline after two years.

"There are no big missing features in today's smartphones," said Dawson, who characterized older devices as "perfectly viable." That, in turn, means that buyers no longer have such strong incentives to upgrade as when, for instance, Apple expanded the screen size (first in 2012, then again in 2014) or supported faster carrier speeds (2008).

Dawson and Moorhead believed that to slow down the tempo of change would be a mistake, but were unsure if Apple would -- or could -- quicken the pace.

"It would be extremely difficult to change [to a faster cadence]," said Dawson. "There are enormous ramp-ups of production to come up with 60 [million] to 100 million by the fourth quarter. You can't turn on a dime when you have a supply chain as large as Apple's."

For his part, Moorhead implied that Apple would have trouble shortening the interval between new models because it would stretch engineering resources. The set schedule -- as opposed to a ship-when-ready model -- was a big motivator to Apple internally.

"There's a genius to Apple's two-year cadence," Moorhead said. "The internal message to engineering and procurement and marketing is that you have a deadline. The [next model] must be done, there is no option."

But Apple has options, ways to alleviate the pressure of constantly coming up with new designs.

"Change for change's sake is not necessarily a good thing," said Dawson. "Apple could say, 'We've arrived at a classic design, with a shape and sizes that make sense to a lot of people.'"

In Dawson's scenario, Apple would promote an unchanging exterior design -- and the three form factors it now offers -- but highlight the internal, performance-based improvements added every two years, or even every year. He ticked off such enhancements as an improved camera, a dual-lens camera, or the removal of the Home button to lengthen the display space.

And for those who buy the newest to strut just that fact -- the conspicuous-consumer pool of customers -- Apple could offer more colors, as it recently did with the pink (dubbed "rose gold" by Apple) iPhones.

"Apple has to keep moving to get people to keep paying the premium price," said Moorhead. "It's not wise to slow down your innovation as the market matures. It just creates a self-fulfilling prophecy. But it has to be innovation that motivates customers to upgrade."


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