Consumers shifting to older iPhones

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Analysts on Wall Street are worried that Apple may have passed its peak in attracting consumers to the latest, newest iPhone offering.  Traditionally releasing a new iteration of the popular smart phone every year, the iPhone has become the phone of choice for many of the nation’s tech-savvy and fashion conscious.  Now, however, that trend may be changing as more and more are purchasing older, less costly last-generation phones instead.

The shift towards cheaper phones has begun to nibble at Apple’s profit margins, as these older phones are often sold by stores and providers at deeply discounted prices as Apple sells off its remaining old-generation inventory at bargain basement prices to promote its latest and greatest.  Currently, many service providers like AT&T and Verizon are giving away the iPhone 4 for free or nearly so with a contract signing or renewal.  Compared to the $199+ iPhone 5 (with contract), that becomes a no-brainer for many consumers intent on keeping costs low and who seem to see little to entice them with the newest Apple offering.

Apple, of course, downplays the significance of this and points to its “black hole ecosystem” – a tendency of new Apple customers to remain Apple consumers, coming back again and again as brand loyalty remains high for the company.

Further, Apple’s self-released sales figures show continual growth.  The company sold 4 million of the iPhone 4S in 2011 in its first three days whereas the iPhone 5 sold five million in that same amount of time last September.  Further, prices for the new iPhone 5 have dropped earlier than with older models on their release, indicating that Apple may be seeing the sales slump and working to mitigate it.

Finally, the growing trend of buying older phones also means that Apple’s other profitable venue, apps, are suffering as those who purchase older, less capable phones tend to also buy fewer apps for them.


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