Internal Apple slides explain why it thinks iPhone growth is slowing

By , Apr 6, 2014

apple percent

Despite posting 50+ million iPhone sales last quarter, Apple’s stock slid some 6%. As impressive as the numbers were, they still fell short of Wall Street expectations and reaffirmed fears of slowing growth. Apple’s YoY (year-over-year) iPhone growth is now down to just single digits.

The question is why? And Apple has a pretty good idea of what the answer is. According to some internal documents brought to light by the ongoing Samsung trial, the company attributes the slowing in iPhone growth to consumer want for larger, cheaper handsets and other factors…

whatsgoingon

These slides are from an April 2013 meeting about Apple’s plans for 2014, submitted for evidence by Samsung and posted by Recode. Note in the slide directly above, Apple acknowledges that the strongest consumer demand is coming from less expensive and larger-screened handsets.

The other two factors listed here are also interesting. We’ve heard before that carriers aren’t very happy with the subsidy situation on iPhone, and Apple is known to be tough at the negotiation table. And how could the company not feel increasing pressure from competitors like Samsung?

donthave

So what does all of this mean? At the very least it confirms that Apple is well-aware of the latest consumer trends—bigger, cheaper handsets and is working on some sort of response. In fact, rumor has it that the company is preparing to launch not one, but two larger iPhones later this year.

Stay tuned to iDB this week for more coverage on the Apple-Samsung trial. We’re only a week into it and have already seen some fascinating things surface like this Steve Jobs email from 2010 that talks about Apple’s future TV plans, and this little anecdote of how Slide to Unlock came to be.

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  • rene

    theirs mistake, now for hard headed, loosing income

    • therealjjohnson

      *losing

    • Maxim∑

      any company with a brain worries about competition. Apple is fine, in fact Samsung and HTC had disappointing releases this year so this is probably the best time for Apple to really make big changes

      • Fr0sty

        Samsung had the disappointing release, the htc one m8 is actually a good phone, and I plan on getting it soon to replace my iPhone 5, but that’s just me. But I think we can all agree the galaxy s5 is a pile of s** t!

      • Dan

        I’m starting to think that goes for pretty much all Samsung products (I do like the Note series though).

    • Niclas

      Cody Lee. You are incorrect.
      “Apple’s YoY (year-over-year) iPhone growth is now down to just single digits.”
      To calculate the YoY, you need to add each quarter of a year. With 3 of 4 quarters, Q13 results in: 26% + 12% + 8% = 46%.

  • therealjjohnson

    Hence the reason behind the 5.5in iPhone.

  • Yujin

    I think apple is always slow to respond. They take their sweet damn time and then they wait for others to do it and then they refine, fine tune and release. That saves money on the me too approach that plagues the industry.

    I would love a 6 inch iphone but that make time. This year however apple will have something better, bigger and the cycle starts again, but this time the new battle will be on features and no more on screen sizes.

    • Carlos Gomes

      What examples do you have to support that they “wait for others to do it”? I think that they take their time to polish the feature/product, so they don’t end up messing up with stuff like Samsung did with their touch id thingy and their smart watch.

      Regarding the lack of a larger display, I agree with you, but there’s something tricky about it. The iPhone current width is the maximum they can go to have a “perfect” scale between the average human hand and a gadget. Having a larger display would ruin the whole ergonomic thing and that’s what Apple said when asked for a larger phone.
      But the consumer doesn’t care about that. Or they do, but they’re willing to sacrifice it in exchange for a better medium to watch videos on or play games.
      Also, what’s Apple gonna say when they unveil the larger iPhone? “Sorry guys, we were wrong about the ergonomic thing” or “Well, if this is really what you guys want…”

      • KingArt

        Why is one single size perfect? Aren’t there taller/shorter people? Aren’t there people with smaller or bigger hands?

        They should definitely keep the current phone size AND add another bigger iPhone with the same specs (larger screen and bigger battery). Just like what they have done perfectly with the iPad Mini & iPad Air

        Both can coexist in harmony.

      • Carlos Gomes

        Yes, I agree with you, that’s why I added the pseudo-apostrophes around the word.
        The current width is the best one to fit the larger number of hands and make the most people happy.

      • http://facebook.com/kurtlewisart Kurt

        Do you not realize Apple tricked you? That commercial that showed a thumb hitting all four corners had cut out the part where they adjusted the phone in his hand.you can’t hit all four corners with only moving you thumb. I can hit all four corners of my Note 3 if you let me pull the same crap Apple did. On my 4S I can’t hit all corners unless I adjust the phone and that is on a phone more than two inches smaller. Think different. Don’t be a sheep

      • Rowan09

        I have small hands and I can actually hit all four corners without moving my hand around. It’s obvious everyone will not be able to accomplish this but it’s not a lie. Unless you have huge hands you will not be able to accomplish this on the Note 2. I am ready for a 4.7″+ iPhone though.

      • http://facebook.com/kurtlewisart Kurt

        It’s impossible. Make a video. You can’t.

        Also, the video shows the iphone didnt move at all. But his grip did change. But the perception was you can holding the phone and only move your thumb. which is a lie

      • Rowan09

        It’s not that precise, it’s a stretch. The point they were making is its a one hand phone and it is.

      • http://facebook.com/kurtlewisart Kurt

        It’s definitely a one handed phone and comfortable to use as a one handed phone. My Note 3 isn’t.

        My problem was the trickery used in the advertisement. A slow movement from each corner to show it is so easy to hit all four corners. But they cut away and later come back to hit the other corners after they adjusted his hand. It’s fine as the phone is a one handed phone but it’s not fine in a sense as so many people say it’s “perfect scale of a human hand and a gadget” and that comes from the bs commercial. Most people don’t pay attention to how companies and especially news and media try to trick you

      • Carlos Gomes

        I actually can do that, but I see your point.
        But why the name calling?

      • BozzyB

        No. Most people buy different phones. See article.

      • Carlos Gomes

        I know that people do and that’s cool. What are you talking about?

      • KingArt

        I have had many iPhones, switched to Note 2 & Galaxy S4 and now back to Iphone 5S.

        There is no need for arguments. The beauty of peace is to give people choices and respect each other’s choices and the world will be a better place =)

      • Ashish Maheshwari

        But have only 2 sizes, not more. that too with the same resolution. we obviously dont want fragmentation in apps and a confusing product line like samsung. they release like a zillion phones in an year :|

        a slightly bigger iphone with same resolution would result in a somewhat lower PPI (like 280-300) instead of the current 326 PPI but i think that wont make any noticeable difference to viewers as 280-300 PPI is also good.

        PS – i wonder why some manufacturers push the PPI to like 350-450. that doesnt make any sense and puts pressure on GPU and therefore battery. correct me if i m wrong.

      • KingArt

        Totally agree. Too many resolution will cause fragmentation in apps like on android resulting in fugly apps. I think 4 resolutions would be enough. iPhone 5 size/iPhone Big size/iPad Mini & iPad Air.

        There are compromises as u cannot simply scale things up to fit on iPhone Big. But it will be a highly valuable one.

      • ✪ aidan harris ✪

        I think Apple will say something like this…

        “We still know better than you but if you think you’re somehow better than us and don’t mind giving yourself RSI due to an unergonomic phone then now you can with the new iPhone 6″

      • BozzyB

        That’s why other companies have also a mini version of their bigger devices.
        To sum this up after observing the tech evolution of apple and others over the last years: It seems that all arguments apple is coming up with are excuses not to use more advanced hardware or include new features in the software. The reason for that is to save money by reducing development time and costs for e.g. the small display or the low res camera while the profit rises. The documents make clear that they are aware of it. Nevertheless they kept on releasing equivalent phones and OS for years because there where people who just don’t care what they buy and just judge quality or function by the price because they are not willing to deal with technical details.
        Also, one other problem occurred with the iPad was its new screen resolution and ratio. It was necessary to build separate apps for that because the OS was not designed for different screen sizes. Of course apple wants to avoid this to be repeated in the future.
        Also it sthe s like the OS worked fine initially with one piece of hardware. Since new features have to be added and hardware like displays need to be changed it is more a patched up product because it was it is too closed and not made to be changed dramatically.
        The document supports the iphone history that Apples intension is not to innovate and change but to keep things simple and unchanged as long as they can. This way, of course, they profit the most.

      • Rowan09

        Your theory is just false. The 5s is one of the best phones on the market which outperforms almost every phone released last year. The camera is also one of the best cameras on a mobile device. Apple sells more phones than any other company, a majority of Samsung’s sales are from dumb smartphones not the premium lines. It’s just obvious that all things will slow after a while but Apple is still increasing sales year after year. The biggest reason is not screen resolution, camera quality or battery, people just can’t afford to get a new phone all the time and it’s sometimes not necessary. The S3-S5 are upgrades that S3 owners probably won’t make until the S6 or S7 and that’s because smartphones are hitting a wall. All new phones either has a bigger screen, tweaked OS, larger battery, better camera, better processor, or screen resolution, all these things are evolutions not revolutions.

      • BozzyB

        I can’t support your arguments and a lot of customers either. What you mention is just not the point. The hardware is just not up to date – regarding camera resolution or display size etc. That’s what people don’t want and apple needs or wait years to react. That’s the point here.

      • Rowan09

        How is the hardware not up to date if it’s better than almost any other phone? This size talk is also very subjective because the iPhone is best selling and most popular phone in the world. Do some people want a bigger screen sure, but phablets are not the best selling phones even for Samsung. Apple increased the screen size since the 5, so you wanted them to increase it on the 5s as well?

      • Carlos Gomes

        You might be misinterpreting the document completely. It pretty much states that there’s a demand for larger phones and cheaper phones.

        Apple already said why they didn’t want to ship larger devices, but let’s consider that you’re correct when you say that the reason is more money:

        Apple is aware that it could be selling more units (aka making more money) if they had a larger device, but
        they don’t produce such device because they make an extra profit by using a smaller display.

        Can you notice how this doesn’t make any sense? What you’re saying is that Apple is losing money because they want to and at the same time you’re saying that profits its all they care about.
        Sure, a larger display would hurt the profit margin a bit, but the extra units sold would compensate that “loss”.

  • Donovan

    I just want to use one hand controlling my phone.. I don’t want stuff like Note3 sizes. :(

    • KingArt

      Absolutely! The two sizes can co-exist.

  • At

    I could see the 4.7″ phone the “premium” model and another 5.5″ 5C type, lower cost model coming.

    • http://facebook.com/kurtlewisart Kurt

      I hope it the other way round. And most likely it will be. Better hardware to push more pixels. And the 5.5″ will have a much better battery life than the 4.7″

    • Ashish Maheshwari

      4.5-4.7″ seems right.. but 5.5″? no man.. that is too much. that doesnt fit nicely in the pocket too :p

  • jack

    I doubt hard that this is legit

  • Jonathan Rosga

    iOS 7

  • Ted Forbes

    Apple please give us the revolutionary battery or something to power our handsets for days. We need to be untethered from the wall more often.

    Yeah, not larger screens but options leading to larger screens. That means keep 3.5, 4.0 just add a few larger and let people decide. Later cut off whatever don’t make sense.

    Do it now, but give us power!

    • http://facebook.com/kurtlewisart Kurt

      Swappable battery would be nice. Have the design like the 4S but no screws holding the back housing. It doesn’t need the screws. When you want to swap out the battery just push up then pull off.

      I know it’s just a dream but it would work very well

      • Ashish Maheshwari

        try a portable battery charger, one of those small cylindrical things.

      • http://facebook.com/kurtlewisart Kurt

        I have had a number of those when I used my iPhone as my main phone. I don’t like you have to wait for it to charge. I love on my note 3 just to pop in a new battery and I’m all good to go. I have an external battery charger too. But I never really use it since the battery lasts multiple days. I expect the same great battery life in the 5.5″ iPhone. Can’t wait :)

    • Donovan

      Exactly, this guy gets my point!
      I love the 3.5″ I can work with the 4″ but damn it I do not want bigger phones. Bigger is not equel to better.

  • Victor

    What’s going on, Apple, is I won’t buy a brand new non-jailbreakable iPhone running iOS 7.1. So I’m sticking with my 4S for now.

    Add that to the list.

    • alaska99801

      Jailbreakers are a very small minority in Apple customer base. You can even move to a different brand and they wont miss you.
      You guys are just like the vocal android fans that think that everyone wants to tinker with everything. 99.9% of people just want their phone to work.

      • Victor

        I didn’t say at any moment jailbreakers were not a minority. Was just expressing my frustation.

      • Umut Bilgiç

        lol wtf omg wut u talkin bout lol

      • ModernSpartan

        he’s right, us jailbreakers are the huge minority. Apple wouldn’t care if we left

      • ModernSpartan

        got a point there dude.

  • Great Scott

    All I want is root access to my device. Once Apple takes that away I’m switching to Android.

    • nonchalont

      I agree with you. If I can have root access then I’ll stay with Apple. If not, then i’m jumping to Android.

      • ✪ aidan harris ✪

        I’m going to do you a big favour and save you waiting and just say you’re better off ordering an Android phone now since guess what? Root access just isn’t going to happen. Security is something Apple takes seriously and giving root access to their phones out-of-the-box would jeopardise that…

      • Marcus Gomita

        I think they’re saying if there is no more jailbreak then they will move to Android.

      • ModernSpartan

        basically

  • MacGuru17

    To me, 5″ seems to be the sweet spot; I think Apple will compromise on their “perfect” size thing and settle for that. Two sizes seems a bit unlikely in my opinion, unless of course the smaller size is one of the existing 4″ devices sold at a lower price. I can’t see them making anything near the size of a Galaxy Note 3; Apple will let those who want such an, in my opinion, obtuse device to buy it from Samsung.

  • Arsanny Lintang

    Off topic: hey guys, i have this problem with my iPhone 5, i downloaded this tweak, and after i installed it, it won’t show all the stock apps and it got stuck. If i leave it for 2 mins, it starts to re-spring by itself. now i can’t uninstall the tweak because i can’t access cydia :( please help me i don’t want to restore to 7.1 :((

    • alaska99801

      That shows you to mess up with a product that works. You, by trying to be a tinkerer just made it worse. You lose, the rest of us, win. LOL!

      • Arsanny Lintang

        show did i mess it up? i followed every steps perfectly and it just happened to me, and tell me how did I made worse? Now you’re saying that following instruction is bad?

      • Rowan09

        Just use semi-restore to restore your phone and keep your jailbreak.

    • Niclas

      Go to safe-mode by holding vol-up during boot, enter cydia then uninstall the tweak.

      • Arsanny Lintang

        thanks anyway, i already restored my iPhone to 7.1 :'(

      • Niclas

        Ouch…

  • ✪ aidan harris ✪

    lol at the “Spending “obscene” amounts of money on advertising and/or carrier/channel to gain traction”

    This is exactly what Samsung has done. These days I see their logo / adverts everywhere not that it’s going to make me anymore likely to buy one of their products…

    • http://facebook.com/kurtlewisart Kurt

      Advertising and Hollywood propaganda doesn’t work on you. It works on people who don’t critically think. People who accept what is shown to them. Unfortunately that’s the majority of people.

      • Marcus Gomita

        Yeah, I think often tech advertisements are more efficient on people that are not good with technology…

  • alaska99801

    What can you expect from an article and a writer that says that Apple YoY growth is sown to single digits? Hard to believe they cant read charts.
    Yes it is slowing down fools, but not to single digits.
    In those charts FY13 with only three quarters is showing a 48% increase. Sure, its not as good as 2009 107% but, how many more iphones are out there? You cant grow beyond the population!
    Fools!

  • n0ahcruz3

    Well duh! That what i been saying YOY growth is going down. Expect ipads to go down as well yoy. Phablets is the way to go. If i got a phablet i will not buy a tablet saves alot of money.

    • http://facebook.com/kurtlewisart Kurt

      Exactly. Phablets let you carry one device. If I used my 4S as my main phone I would want to buy and carry an iPad mini. But since I have a phablet I carry only that and use my iPad Air at home. Since I do that I really want a larger tablet. My next tablet will probably a windows 8 pro tablet that is 13+ inches since I use my iPad 1 and Air for work. A longer tablet would be nice

    • Rowan09

      Phablets aren’t selling like hot cakes either so your theory is wrong. A 5″ phone will not replace my tablet because the screen is still too small for a tablet. The more iPhones out in the market the less sales each year. Apple can’t outperform population.

      • n0ahcruz3

        I see a lot of phablets especially emerging markets. And some asian market. How do i know cause im asian i travel a lot in asian countries.

      • Rowan09

        I understand, but most of the Samsung phones being sold are not phablets and they are by far the biggest phablet seller. Most of the Samsung phones sold are subpar $200-$300 phones.

  • Rowan09

    Price matters but one of the biggest reasons in my opinion is the carriers. I remember when I had AT&T with the first iPhone and I was able to upgrade to the 3G when it came out. People now have to wait to upgrade for the full subsidize price or join the next program, etc.

  • Qasim

    If apple somehow manages to pull out a super battery, they’ll probably be set for tge foreseeable future.

  • Frank Lopez

    I dropped my iPhone 5s fopr the note and my life changed. That note with the spen features drastically changed my productivity. Now in meetings i use my note 3 instead of my macbook air.

  • Katashi07

    Come on guys.. All I want is the performance of the phone not the screen size.. Because after all I love Apple software system~