Apple has found itself in something of a pickle. Amid a 15% decline in iPhones sales during last year’s holiday quarter, and a 30% decline in iPhone shipments in the first quarter of 2019, Apple’s iPhone business isn’t looking too hot.
Will the 5G iPhone, expected to appear in 2020, help turn around Apple’s phone sales? Probably not.
Analysts seem to agree Apple’s iPhone problem is part price, part product. Smartphone prices on both iOS and Android have steadily climbed in recent years, as the technology embedded in the devices has advanced. That’s resulted in a market-wide decline in smartphone sales, which has become particularly obvious this year.
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But, Apple has been hit especially hard. The company slipped into the No. 3 spot in phone shipments during Q1 2019, behind Huawei. That decline highlights the other big obstacle Apple is facing with its smartphone business.
“The iPhones are getting very same-y,” Iain Gillott, founder and president of iGR, told FierceWireless. “An iPhone 8 is pretty good. An iPhone 10 is better, but it’s not twice as good. It’s probably 20% better.” In other words, not different enough to spend another $1,000 on. Apple has an iPhone differentiation problem.
That problem will only compound come September. The first 5G-capable smartphones are now hitting the market, and the hype around mobile 5G has veritably reached its peak. Samsung was the first to market with a 5G smartphone. Huawei, LG and others are slated to follow suit with their own 5G offerings.
Apple is expected to unveil three new iPhones at its annual fall conference later this year, and none of them will be 5G-capable. The timing isn’t especially ideal for Apple. While we’re not sure how well 5G phones will sell at a time when only a handful of areas across the U.S. have access to actual 5G networks, it’s clear that most handset makers are marketing 5G as the big differentiator this year to sell their new smartphone models.
Apple’s 5G iPhone is expected to arrive in the fall of 2020. Arguably that’s better timing for a 5G phone. While it will take years before 5G networks become widely available across the U.S., 5G deployments will have expanded significantly enough to warrant customers to make the upgrade.
But, how likely are Apple fans, in the meantime, to line up for the next non-5G iPhone? Not likely, Gillott said, because consumer behavior around phone upgrades—with the help of device management plans—has largely been divorced from the phone release cycles.
“Back in the olden days, when a new iPhone came out, we all used to go line up and get one,” Gillott, a self-described Apple user, said. “But I don’t do that anymore, because I’m on a two-year plan.”
“The days of shiny new phones are gone,” he said. “It’s a matter of when you are ready for a phone, what choices are out there. The impetus to go buy one just because it’s new has really diminished a lot in the U.S.”
That behavior change effectively means two things for Apple: One, the company won’t be missing out on launching a 5G iPhone a year after its competitors; and two, the addition of 5G technology in an iPhone won’t likely spur a huge flux of new sales for the company.
“Is 5G enough of an impetus to upgrade? The answer is no,” in the short term, Gillott said, because there simply isn’t enough network coverage to warrant it. “Now, next time I’m ready for an upgrade, and there’s a 5G phone available, am I gonna turn it down? Probably not, because it will future proof me.”
While Apple can get by without a 5G phone in 2019, the next question for the company is whether it can even meet its 2020 launch target. Apple signed a multi-year chipset supply agreement with Qualcomm when it reached a surprising settlement with the company earlier this year, and began tests using Qualcomm’s current 5G modems.
But according to an in-depth report from CNET, Qualcomm will need to customize those modems for Apple to use, and that takes about 18 months from a “dead stop.” That would put the modems ready for Apple in October 2020, one month after its annual September handset launch, and would mean the 5G iPhone may not debut until 2021.