this video is brought to you by imprint last month the IDC reported that apple had shipped just over 50 million iPhones in the first quarter of 2024 a 10% Decline year- on-year and nearly 2 million less than analysts expected this is despite some pretty steep discounts in its Chinese stores and an uptick in The Wider smartphone market which actually experienced its best growth in years with total smartphone sales Rising nearly 8% year on-ear while the iPhone is still the world's bestselling phone not to mention by Far and Away the most profitable the underwhelming numbers have
got some analysts wondering whether this could be if not the end then the beginning of the end of the iPhone era so in this video we're going to have a look at why the iPhone is in trouble and why this is pretty bad news for Apple more [Music] generally your call has been forwarded to an automatic voice message system so let's get straight into it as we see it there were two reasons for the iPhone's recent struggles the first reason is what the IDC described as a lengthened replacement cycle which is basically a corporate way
of saying that people don't replace their old iPhones as much as they used to which obviously means fewer sales this is down to a variety of things including the cost of living crisis and the fact that iPhones today are more durable than they used to be for context from the iPhone 7 onwards iPhones have been water and dust resistant with the the iPhone 11 and its successors able to withstand a maximum depth of 6 M for up to 30 minutes this is obviously well a good thing for consumers but it does mean fewer sales however
and perhaps more worryingly from Apple's perspective it's also because well people just aren't as desperate to have the newest iPhone as they used to be new iPhone models aren't generally that different from previous models back in the day up until arguably the iPhone x every new iPhone involved some ground breaking new technology and felt like a Leap Forward from the previous iteration this is no longer the case the main change in the iPhone 15 for instance is that it has a USBC charger which it should be said was forced on Apple by the EU and
no more mute button now this might change if smartphones start to incorporate more Aid driven features which will require greater computing power and therefore newer phones but as things stand consumers aren't rushing to get the latest iPhone like they used to the second reason for the iPhone's wo is China for the past few years China has accounted for something like 20% of all iPhone sales but so far in 20124 sales are down by nearly 40% despite some aggressive price cuts in January at the same time Chinese manufacturer sales have surged Huawei for instance saw its
sales Spike nearly 70% year onye in the first quarter and two other Chinese companies Vivo and honor outsold Apple for the first time in years part of this is a story about economic nationalism in China which has been roused by beijing's escalating trade war with the us as Soo American Trade tensions have increased Chinese consumers have become increasingly likely to buy Chinese to support Chinese companies helping Chinese companies Leap Frog Apple this also speaks to Apple's wider dependence on China Apple has spent the last 20 years or so developing its Supply chains in China and
only 8 years ago Tim Cook signed a secretive deal to invest more than $275 billion in China's economy and Workforce in retrospect however Apple's massive bet on China looks a little naive both because the risk and scope of us-led trade restrictions on China are constantly increasing but also because the CCP have apparently leveraged this dependence to coerce Apple into advancing certain political ends during the 2019 Hong Kong protests for instance Apple banned an app used by protesters to track police movements days after approving it since then tens of thousands of other apps including one for
foreign media Outlets gay dating services and encrypted messaging apps have all quietly disappeared from Apple's Chinese app store and in 2021 Apple quietly gave up control of its Guang data center to the CCP anyway those are the two things holding back the iPhone at the moment China and the quote lengthened replacement cycle but on top of this there's also another reason to be skeptical about the iPhone's fortunes going forward and that's the return of antitrust for context antitrust laws are essentially anti-monopoly laws that try to guarantee competition within markets for the good of consumers antitrust
sort of fell out of fashion in the 2000s and 2010s in part because neoliberals saw it as a form of unnecessary interference in the private Market but it's enjoyed a bit of a comeback recently and it's one of the few points of bipartisan agreement in Congress at the moment Apple has tried to Stave off more substantial antitrust regulations by making semi voluntary concessions to Regulators in late 2023 for instance Apple promised to make its messaging systems more compatible with Android devices to appease the EU but last month the Department of Justice announced that it would
be opening a formal investigation into apple and specifically its monopolistic practices around the iPhone in their 88 page lawsuit the doj accus apple of disrupting multi-use apps limiting the functionality of third-party SmartWatches and digital wallets and suppressing the quality of messaging between iPhone and competing devices all in service of maintaining its allegedly illegal smartphone Monopoly at a press conference announcing the lawsuit doj Deputy attorney general Lisa Monaco made a pointed comparison to the PC market in the 9s which was monopolized by Microsoft until the doj stepped in allowing Apple to thrive this has been a
long time coming regulators and developers alike have been complaining about the App Store shape-shifting rules and restrictions for years now and the doj have apparently been considering an investigation into Apple since 2020 just the fact that the iPhone has a profit margin more than double that of other smartphones is suspicious after all how else do you get to those sorts of margins without a monopoly now obviously it would be premature to announce the death of the iPhone right now it's still the bestselling phone in the world and doj investigations usually take years if not decades
so the wall Garden Apple has built around the iPhone is unlikely to come tumbling down anytime soon nonetheless there are some signs of weakness and in the tech World these things happen fast in 2007 the year Apple launched the iPhone Nokia had 900 million users and its market dominance was so apparently impenetrable that Forbes ran a cover story asking can anyone catch the cell phone King only a few years later Nokia had been replaced by the iPhone which became the world's bestselling phone and the foundation of Apple's meteoric rise maintaining power in situations like this
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