Here are three reasons I think it will exceed expectations.
5G doesn’t matter yet
It really doesn’t.
[ Further reading: The wireless road warrior’s essential guide ]
Outside of a handful of cities, no one has access to it.
People aren’t yet relaxed about the health implications of it.
Huge quantities of infrastructure need to be installed to support it.
The services designed to fully exploit it don’t exist (yet).
The revolution may be televised, but the mobile broadband to carry it hasn’t been deployed.
The real truth is: If you get a 5G smartphone this year, you’ll be spending most of your time using 4G. This will begin to change rapidly in 2021 as rollout of the networks accelerates across 2020. But it’s far from global. And the iPhone is a global product.
What this means is that while tech-heads enthuse about the need for 5G, and slam Apple for not (yet) offering it, consumers (the majority of whom lack access to it), won’t really give more than 0.001 hoots (0.001h).
Or maybe 0.0001h.
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Why would network capacity they can’t get for services that don’t exist dampen sales for a product over 90% of existing users are already satisfied with?
5G doesn’t matter yet. One day it will. But not yet.
The network effect
The most widely read story I wrote this year seems to have been one about Apple Card. I predicted the card would redefine right and wrong in fintech. Many readers seemed interested in that notion.
That’s a big deal.
You see, what this means is simple: People are interested in Apple Card.
Critics have said the card doesn’t offer the best deal in credit cards.
I’m not certain every credit card comparison I’ve glossed pays attention to the fact Apple Card has no fees, but the one thing I think those critics miss is that Apple Card is a product - and an Apple product, at that.
At it's very simplest, it means that like any other Apple product, it’s liable for upgrades.
Apple already signalled this when it announced that purchases made from Uber and Uber Eats would attract the 3% Daily Cash payment until now limited to purchases from Apple.
It made a promise that:
“Apple Card will continue to add more popular merchants and apps in the coming months.”
In other words, Apple is going to work with merchants and apps to offer Daily Cash for purchases made using Apple Card.
Think about what the merchants get out of this. iPhone users are renowned as being the most active and engaged tech users as well as also being among the world’s wealthiest consumers.
That's a demographic most merchants really want to reach.
I think this means there’s a whole bunch of reasons “popular merchants and apps” will want to offer cash back for sales to them. Offering Daily Cash is probably cheaper than advertising to one of the world's best target consumer groups.
I don't see why any merchant would want to decline the chance to offer people a discount deal via an Apple-approved Message to Apple Card users. (They may even pay for the chance to do so.)
Meanwhile, what’s one of the first things those recently credit-checked and highly motivated existing iPhone users are going to want to earn some Daily Cash on?
How’s about a new iPhone?
Did you know there was a new one coming? <</sarcasm>>
If the devices cost the same as last year, that Daily Cash back bung will pay for three months Apple Music, assuming Apple doesn’t just throw a 12-month free subscription to its services into the box with future iPhones. (Which, given it owns the content, it could).
Speaking of upgrade season…
Did you spend any time checking the iOS 13 support chart?
If so, you’d know that the new OS doesn’t support the most popular iPhone model Apple ever sold: iPhone 6. The company shipped 220 million of them, and while tens of millions of these are now circulating across the second-user markets (nearly all of them running iOS 12), we also know that many are still in use.
That means there’s a high probability tens of millions of existing iPhone 6 users will be thinking about biting the fiscal bullet and purchasing a new iPhone.
Many of these may simply shift up a gear to iPhone 7 or 8, many more will decide to invest in the next-generation model. Some poor souls will in the future regret moving to Android and I wish them a safe and prosperous journey back to iOS when they inevitably see sense.
In the absence of a research team, it’s impossible to calculate the numbers involved here, but I think it’s a reasonable conjecture to imagine a few tens of millions of iPhone users will choose to upgrade from v.6 to a new model this year.
That’s people on top of normal customer churn.
After all, these are customers who share Apple’s 90+% iPhone customer satisfaction and already know they’ve been able to use a smartphone for half a decade and hardly ever felt the age limits of what their (probably running IOS 12) devices could accomplish.
I don’t think there’s any other platform that still supports smartphones that are even over three years old with a current operating system. (The iPhone 6 shipped in 2014.) What does that kind of built-in-obsolescence do to the environment?
'...All hail the new shiny...'
So, we have a network effect, a need to upgrade, happy customers and expectation of a move to 5G starting in 2020. And we have a new shiny in the form of an iPhone with triple-lens cameras, improved AR capabilities and a nice raft of services to help keep the product relevant and interesting.
A package that's boosted by 3% cash back to loyal customers who choose to pay with Apple Card. (Not to mention easy and zero-interest payment terms if they decide to purchase the product over 12 or more months using that card.)
I’ve a feeling iPhone 11 sales may turn out just fine. And It looks like I am not alone.
Who else is with me?
P.S. AirPod sales will probably see some benefit, too – even more so next year when iOS pretty much no longer supports an iPhone with a headphone jack...