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Tuesday, January 10, 2017

What Goes with Apple in 2017?

Sandbridge Virginia 1460370 Hundreds of millions of people all over the world carry an iPhone. Only a fraction of them replace their iPhones most years. Every two or three years more people sell their old iPhone or give it to a relative in need. This is a normal turnover cycle, very familiar to mobile phone vendors. For many solid reasons and one or two speculative causes, the 2017 iPhone cycle will be significantly different.

To begin with, the full impact of the Samsung Galaxy Note 7 debacle will be seen. A significant percentage of loyal Samsung phone users experienced doubt about their device choice in 2016. Even if they didn’t purchase the ill-fated phablet, they had concerns about their supplier. Samsung also initially mishandled the process of recalling and replacing the devices. Nobody likes being stuck in limbo in regards to their primary communication tool.

Corporate Phone Users

Admittedly, the consumer market buys the lion’s share of smartphones. However corporations, governments and smaller businesses buy an incredible number of phones for their employees. Every field support technician, trainer, sales rep, marketing person, and executive carries a company phone, typically in addition to their personal devices. Many business people now carry a tablet too.

Having once shipped out thousands of smartphones in my fulfillment role to corporate users, I know what large corporations expect in a mobile device. They need security, they need reliability and they need their executives, sales teams and field employees to be confident with the device issued to them. They do need to keep costs down, so they don’t replace phones often and they recycle used phones sacked employees turn back in. Corporate managers are also acutely aware of liability, for their firms and the products they use. Nobody but lawyers like lawsuits.

Samsung failed the corporate buyer test in 2016. Executives holding a Galaxy Note 7 couldn’t take it on a flight. This is huge, who wants to be the business exec that causes an emergency landing? Loyal Samsung customers began to wonder if their phones would suddenly catch fire in their pockets (actually most fires started while the devices were charging). Finally, they were forced to return the devices. Samsung even had telcos shut off the remaining units. This loss of confidence in a manufacturer is not short-lived.

Apple Store Louvre France 15122100

When it comes time to replace older Samsung phones and tablets, business and government buyers typically must stick to IT department requirements. Chief Technology Officers (CTO) have long realized the trend towards phablets. Serving as a phone and a tablet, larger models eliminate a line, and another device to get damaged, lost or stolen. Any major IT department that is not prepared to manage iPhone 7s users today is seriously out of touch with current trends.

Blackberry Is Over

Blackberry devices were still in-use, mostly by finance and insurance industry executives in 2015. Significant investments in infrastructure like Blackberry servers and support staff kept the out-dated phones out there into 2016. 2017 is the year the Blackberry phone is finally laid to rest by corporate and government users.

Blackberry Bold iPhone.jpg

Business app development for Apple’s operating system, iOS, is lead by IBM but also involves many smaller app developers. All the popular apps like Timesheet Mobile, Google Apps, and others work just fine on iPhones and iPads.

The Blackberry retirement, along with the loss of confidence in Samsung equipment, will inevitably lead to greater corporate and government iPhone adoption in 2017 and beyond.

Reliability & Security & ?

Statistics show very few iPhone users switch to a different model. The same is not true for Android device users. They will try an LG or Pixel or Samsung phone, just to avoid marching in the same formation as those "iPhone people." But this is an out-dated mindset. Today people need a phone that is easy to use, reliable and gets a signal anywhere they go. The actual brand is practically hidden behind cases these days. 

Expiring corporate devices, phablets that catch fire and security are all concrete business reasons to switch to an iPhone. 

Bharat

We cannot begin to know if Apple corporate stores will open in India in 2017. Apple already has some corporate facilities in India and their suppliers are preparing to take advantage of affordable assembly lines. The necessary suppliers for smartphone production are already established in India. Foxconn, the Taiwan-based assembler for Apple and other manufacturers, is being welcomed by the government in Delhi. 

Wanna Buy a Used Phone?

What happens to old iPhones? They are refurbished and sold and resold at lower and lower prices until the device no longer works. The used smartphone market is huge, in the billions of dollars. iPhones hold resale value well above used Android models. People who buy used phones would rather buy a high-quality used phone than risk purchasing a dud.

Walk down the retail margs in any major Indian city and tell me you don’t see Apple logos and iPhones on display. While the average Indian consumer may not be able to buy a new iPhone, refurbished models are also imported and sell well in places like Chandi Chouk. India, Africa and South America all represent huge markets with tremendous potential for any firm, especially one with the highest brand recognition in the world. 2017 will be the year the Apple ecosystem really takes root in these markets.

Eight is Enough

Millions of people in China also carry an iPhone, despite the proliferation of cheaper models. In addition to all the above reasons, they can afford to spend more for iPhones as personal or fashion statements, just like some affluent people in other nations do. Business people need to look in-touch with current trends.

The 10th Anniversary of the iPhone just went past. But that’s not why so many iPhone users in China will upgrade. This new phone will be the iPhone 8. And if you don’t already know this, many, many people in China as well as Asians living elsewhere, revere the number 8. They like numbers that include 8, especially those that end in 8. This is a fact. You may not be superstitious yourself, but other people are.  This seemingly little notion will impact iPhone 8 sales in a considerable way in 2017 and 2018.

App Store, CarPlay and AirPods

Finally, the Apple App Store recently set all-time sales records. App Sales appear to be the fastest growing segment for the team from Cupertino. This means App Developers made more money than ever before. 

They can't restock the wireless earbuds, knowns as AirPods, fast enough.

I don't see the need for a device that sits at home on the kitchen counter and orders products as soon as your child asks for it. Not yet. I see Apple letting Amazon and the others work out those issues while unit sales are low.

200 car models are now compatible with Apple CarPlay. This is no short-term trend. Apple hardly needs a car of their own, plus all the headaches that come with vehicle manufacturing. But you can rest assured an Apple-branded car will be built by a major manufacturer in the near future. It is enough for now to have those easily recognized icons glowing on so many dashboards.

The wind is gathering in Apple sales, though they may not be full at the moment.  Apple reports fiscal 1st Quarter 2017 results later this month. Their shares have done well since the beginning of the year.


Note:  The author holds shares long in Apple Inc., its suppliers and vendors and has for decades. He is not employed in any way by those entities nor any securities or financial firms. 

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