- The global smartphone market has stopped growing.
- Today, 50% of all smartphones sold on the Planet Earth cost less than $US200.
- But Apple is boxed-in to the high-end of the market. Its phones cost at least three times that.
- For iPhone 8 to be a success, Apple must do something it has only ever done once before: Grow sales faster than the market as a whole and take market share from other companies.
Everyone is hoping that Apple’s next iPhone — “iPhone 8,” allegedly — will be awesome. But it’s not until you see these charts from analyst Sherri Scribner and her team at Deutsche Bank that you realise just how high the mountain Apple must climb with the upcoming launch, scheduled for September.
For iPhone 8 to be regarded as a success, Apple must do something it has only ever done once before: Grow its sales faster than the market as a whole and take market share from other companies.
Historically, Apple’s phones have only ever sold to about 15% of all users globally. They are expensive, and Apple has creamed off the high-end users and the profits that go with them.
That has not been a problem — until the last year or so. When the market was growing Apple got 15% of that growth and grew with the market. Now, however, the market has stopped growing. Everyone who wants a phone now has one. So Apple has a different sales problem in front of it than the one it is used to.
These charts illustrate how Apple is boxed-in at a price-point in the market that may make iPhone 8 look like a failure.
Half of all phones sold are priced at $US200 or less, globally. About 85% of all phones are under $US500.
Apple has kept the average selling price (ASP) of iPhone between $US600 and $US700. But in the market as a whole, the average price is now under $US300 and falling. The rumour is that the new iPhone might cost more than $US1,000.
As time goes by, iPhones look less and less like value for money.
None of this would be a problem if Apple could grow iPhone sales. But recently, the “installed base” of users is hardly growing, according to Deutsche Bank.
And now the global market for phones as a whole has stopped growing.
This is Apple’s biggest problem: Any company that wants to grow sales must grow market share.
But growth in Apple’s phone sales has always underperformed the market as a whole, with the exception of the iPhone 6 cycle.
For iPhone 8 to be regarded as a success, it must actually add new iPhone sales — something Apple hasn’t meaningfully done since 2015.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.