Do I NEED a new phone? Nahhh
iPhones. Who doesn’t have one? This past year, Apple has reached an astounding 1 trillion in value.
Yet this past summer, Apple had told suppliers to manufacture 20% fewer components for its
upcoming iPhones. More specifically, CNN News has explicitly remarked that Apple had told suppliers
to prepare for 80 million instead of the initial 100 million iPhone 8, iPhone 8 Plus, and iPhone X
phones. Now why might this be the case? We can contribute this in part, to the decrease in demand.
In trying to reach the equivalence point of the supply and demand, the decrease in demand has
prompted Apple to make an educated prediction and thus lower the amount of product supplied.
Yet this past summer, Apple had told suppliers to manufacture 20% fewer components for its
upcoming iPhones. More specifically, CNN News has explicitly remarked that Apple had told suppliers
to prepare for 80 million instead of the initial 100 million iPhone 8, iPhone 8 Plus, and iPhone X
phones. Now why might this be the case? We can contribute this in part, to the decrease in demand.
In trying to reach the equivalence point of the supply and demand, the decrease in demand has
prompted Apple to make an educated prediction and thus lower the amount of product supplied.
The decrease in the demand of iPhones may be attributed by a numerous amount of factors.
One of the most prominent factors, however, may be the cost of these new products which
are around $1,000. Consumers may view continuing to use their slower, current or old iPhones
in comparison to purchasing the newer, faster, and more expensive iPhones comparatively with
a lower opportunity cost. Price may not be the only reason, but is a large factor when considering
consuming products such as iPhones. This infers that as price increases total revenue decreases,
and thus iPhones can be considered elastic.
One of the most prominent factors, however, may be the cost of these new products which
are around $1,000. Consumers may view continuing to use their slower, current or old iPhones
in comparison to purchasing the newer, faster, and more expensive iPhones comparatively with
a lower opportunity cost. Price may not be the only reason, but is a large factor when considering
consuming products such as iPhones. This infers that as price increases total revenue decreases,
and thus iPhones can be considered elastic.
However, not only did this decrease in demand affect its producers, it has also affected its consumers.
Remember something about Apple slowing down the battery of iPhones to supposedly preserve them
without consumer consent? Yup, that happened. iPhone users have long believed that Apple had
artificially slowed down older products in hopes of driving new sales. However, Apple continues to insist
that that is not the case, as they have only been “aggressively managing” iPhones to maximize the
lifespan of the iPhone batteries.
Remember something about Apple slowing down the battery of iPhones to supposedly preserve them
without consumer consent? Yup, that happened. iPhone users have long believed that Apple had
artificially slowed down older products in hopes of driving new sales. However, Apple continues to insist
that that is not the case, as they have only been “aggressively managing” iPhones to maximize the
lifespan of the iPhone batteries.
To conclude, the decline of iPhone sales is elastic and may be caused in part by the lower opportunity
cost of continuing the use of an old iPhone in comparison to purchasing a more expensive and newer
iPhone. This decline in demand for product has caused supply to also decrease, possibly affecting the
consumption of iPhones.
cost of continuing the use of an old iPhone in comparison to purchasing a more expensive and newer
iPhone. This decline in demand for product has caused supply to also decrease, possibly affecting the
consumption of iPhones.
I really enjoyed reading this post and gained insight on the reason behind a decrease in demand of Apple products. Looking into the topic further, I learned about more factors behind this decrease. One has been that internationally, there are other competitors that the global market is looking towards. These markets hold a larger share of Apple's revenue and as other competitors bring products that are cheaper and local, the demand for iPhones has decreased. Furthermore, Apple is economically unstable currently because there are questions about where the company is going in the future. More specifically, in regards to services that extend beyond products. This ambiguous future has lead to an unstable economics future, coupled with the decrease in demand has set Apple in a place where market shares continuously go down.
ReplyDeleteSource : https://www.bbc.com/news/business-46281768
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DeleteApple is actually a very small share of the market to begin with. Computers and phones are mostly windows and android respectably. However, we are the silicon valley and we have Tesla and Apple. Amazing design and functionality comes at a premium and that premium blocks off a lot of the world. Furthermore, Apple is losing the beauty of having what everyone sees as a prodigy and genius; Steve Jobs. Calling back to my former analogy... imagine Tesla without Elon Musk.
ReplyDeleteThis is a really interesting topic that I think most of us can relate to as we debate whether or not to get a new phone, and as the price increases, I assume less people will be quick to upgrade. With the increase in price, Apple makes more money off of less phones sold, but only if the sales stay relatively even. Some people may switch to android while others hold off on getting a new phone, and I wonder how much apple can raise the price before there is a significant drop in their sales.
ReplyDeleteWhile Apples was once the king of phones with the greatest market share by far, they have lost lots of ground to Chinese companies such as Huawei because of the decreasing demand for smartphones. Apple is a brand name, and when demand decreases, they are the first ones to be affected. Furthermore, with Chinese phones being so cheap, people are hesitant to spend much more on a brand name that is double the cost without many tangible benefits. Because of this, Apple has lost lots of market share, which is a trend that will only continue in the future.
ReplyDeleteThat is an interesting point to add onto the topic. I would also like to add the fact the recent models of iPhones does not have meaningful new features. In-comparison to the older models, the added feature is just for the user's connivence and does not affect the basic function of an iPhone. The decreasing demanding in addition to the decreased opportunity cost makes the new generation of iPhone very replaceable.
DeleteThank you for sharing your opinion on Apple's decline sale. I agree with what the Seung's point of view that Apple indeed is a brand name when it started to establish its brand and create the uniqueness starting 1980s, as shown in one of my previous posts on the Apple's advertisement. However, at first, when Apple created the products to the level that other companies cannot reach, the demand of the Apple's was inelastic because consumers were insensitive to the price change because they were under the impression that using Apple products were cool. As time moves forward, there are more brands emerged that may have a better idea than Apple and have a reasonable price. As a result, consumers started to find alternative models of iPhone because they become more sensitive to the price change. Thus the demand of the iPhone grows elastic. I think in the future Apple should continue to be innovative in their design as they were when they started and make their products more affordable to more consumers so that other companies would not turn the market model become pure competition.
ReplyDelete