A Not-Rant Ahead of Tomorrow’s Apple Event (Premium)

If you were able to join my wife and me during our morning reading—we read the news for about an hour over coffee before heading out for a 40-minute walk—you would likely find our discussions about that news to be quite boring. We’re both writers, and voracious readers, and we’re both critical of the quality of the writing we see.

Much of what we discuss is based on headlines, as you might imagine. But occasionally, one of us—OK, it’s usually me—will find an entire article full of problems. And you do not want to get me started on a rant: a recent story about the “health myths experts wish you ignored” (or whatever) set off a fairly one-sided discussion one morning that lasted through the entire duration of our walk. In my defense, I’ve been obsessing over this topic in recent months, and my wife does write about it professionally.

But perhaps I have a rant that you will find interesting. Well, not a rant, really. A discussion.

As I’m sure you know—the entire Internet, it seems, is obsessing over this—Apple will announce its iPhone 15 family of smartphones tomorrow, September 12. As is so often the case, there will likely be few if any surprises because of all the leaks. Granted, the contradictory nature of many of those leaks over time doesn’t stop anyone from publishing them, no matter how early or poorly sourced. But as we get closer to this event, I feel like we have a handle on what’s going to happen, as always.

With one major exception, most of the Apple rumors we’re treated to these days come up out of, and are published within, the world of blogs that have “apple” or “mac” in their names. (The one exception is Bloomberg, which hired Mark Gurman, one of the most successful leakers of our era. You can read his spoiler-filled overview of what to expect tomorrow here.) And for the most part, the big mainstream publications, like The New York Times, stay out of the speculation business and report only on what happens as it happens.

It wasn’t always this way. In the horrible era of the late 1990s and early 2000s, Apple compromised journalists at the New York Times and The Wall Street Journal, leading to misinformation campaigns in which the two acted as a fifth column of sorts to undermine the needs of their readers and promote their favorite company instead. This drove me nuts at the time, and I was happy when each, in turn, was let go or stepped down.

Anyway, I read the Tech section in the Times and Post every day, and in the Journal some days. (I subscribe to all three publications now.) They are not particularly helpful to me personally, for the most part, but I’ve always felt it was important and instructive to understand how these mainstream publications communicate what’s happening in my industry, given their audiences’ non-technical nature. And we should all be open to any opportunity to learn, no matter the source. No one knows everything.

Sometimes I’m pleasantly surprised.

Today, for example, The New York Times led with Google’s antitrust case, which gets underway tomorrow. There were three articles at the top of the app’s home page on the iPad, one of which was an analysis piece by Steve Lohr comparing this trial to Microsoft’s historic antitrust trial 25 years ago. I wrote my own take on this comparison, In the Footsteps of Giants (Premium), last week, but found his write-up interesting and educational, and was impressed to see this publication giving this topic, which I think is important, such weight.

Unfortunately, the Times also felt the need to publish an Apple puff piece ahead of tomorrow’s iPhone event brought my mind racing back to that horrible era from two decades ago. In fact, it was so one-sided that I scrolled back up to see who had written it. Fortunately, it wasn’t a propaganda goblin from the past. It was … Tripp Mickle. Who?

The name was familiar, and I initially had the vague fear that it was the same Times columnist I had to call out in Liar (Premium) because of his ridiculous initial pronouncements and then 180-degree rejection of the AI capabilities in Bing chat. Fortunately, it was not—that was Kevin Roose—and so I searched my own site next. And there it was: Mickle had written the book After Steve: How Apple Became a Trillion-Dollar Company and Lost its Soul, which I reviewed, enjoyed, and found to be well-researched.

But I also recall being confused by the author’s name at that time, as I usually at least recognize most names in this industry. And when I looked him up back then, I found that he had written for the Journal. Which explained it: because of the horribly one-side Apple reporting over a decade, I had let my Journal subscription lapse, as it was just too aggravating. (I have since resubscribed.)

Long story short, I don’t know too much about this guy. But I know he writes for the Times now. And though that’s been true since at least last year, this article was the first time I’d noticed his byline.

This article is called As Smartphone Industry Sputters, the iPhone Expands Its Dominance. And I have concerns.

The premise is that, yes, the smartphone industry is suffering a sales decline right now, but Apple has been able to increase its share of that market using specific strategies and do so despite being “one of the industry’s priciest devices.”

This is a great topic and one that is relevant to me and, I think, to many of you. And there is a lot of data one might use to support any number of claims one might wish to make about it, whether it’s literal usage/market share, Apple’s various strategies and their competitive effects, and even its pricing model. But an objective overview of this topic would include data that contradicts some assumptions, too. And it would certainly not introduce anecdotal stories that don’t in any way prove broader trends.

But this is not an objective article. And it’s making me wonder now about my assessment of After Steve.

The iPhone has “defied gravity,” he writes. “At an age in which most consumer devices have lost some of their appeal to users, Apple has increased its share of smartphone sales over less expensive rivals.” Then he gets more specific: “Over the past five years, the iPhone has increased its percentage of total smartphones sold around the world while expanding its share of sales in four of the world’s largest regions: China, Japan, Europe, and India … Over the past two years, sales of Android smartphones have plummeted, but the iPhone has suffered only modest declines because it’s been winning new customers.”

We cover smartphone sales a little less diligently than we do PC sales, but we do cover this topic. And what I see is that smartphone sales fell 9.6 percent in 2020 to 1.32 billion units in 2020, rose 5 percent year-over-year (YOY) in 2021 to 1.39 billion units, and (according to IDC only) declined 11.3 percent in 2022 to 1.2 billion units. And this year, the scaling back has continued. Smartphone sales fell 14.6 percent in Q1 2023 (again, IDC only), I see, but I guess we didn’t report on Q2. No matter, IDC says that smartphone sales fell 7.8 percent in that quarter.

I get my market share data from IDC and Gartner when possible because they are well-respected and experienced, and I resort to using StatCounter for usage share numbers now because there are no other high-quality choices. But there is an apparently infinite number of other research organizations out there that I believe few have ever heard of. And Mickle universally uses that data instead. So I was curious to match the claims with the sources I trust.

So let’s start with the basics: numbers and timeframes.

“Sales of Android smartphones have plummeted … over the past two years.”

Android phone makers sold an estimated 1.11 billion smartphones in 2020, 1.15 billion handsets in 2021, and then 0.98 billion units in 2022. So sales of Android phones fell 11.7 percent in that time period. Is that a “plummet? It’s definitely a shortfall.

“Over the past five years, the iPhone has increased its percentage of total smartphones sold around the world” and “the iPhone has suffered only modest declines.”

I don’t have numbers for the full five years, but Apple sold an estimated 203 million iPhones in 2020, 237.45 million in 2021, and 226 million in 2022. Don’t be fooled by the shortfall between 2021 and 2022, however, as the rest of the industry fell even harder. So in that timeframe, Apple raised its market share—literally, the percentage of total smartphones sold—by 1.5 percentage points to 18.3 percent market share despite selling fewer iPhones YOY. Compared to 2020, the gain is even bigger, almost 5 percentage points. So Mickle is correct here, at least when looking at three years of data, though the iPhone’s declines were, at least so far, a one-time event.

“The gains have helped it claim about a fifth of the world’s smartphone sales, up from a low of 13 percent in 2019”

As noted, Apple had 18.3 percent of the market by the end of 2022. Yes, that’s “about a fifth,” of course. But Apple’s market share in 2020 was also 18.3 percent, also about a fifth. So its marketshare percentage was flat over this three-year period.

“[The iPhone has suffered only modest declines] despite being the industry’s priciest device.”

Um. What?

The most expensive iPhone 14 Pro (Max) starts at $1099 and maxes out at $1599 when equipped with 1 TB of storage.

The most expensive Samsung Galaxy S23 (the Ultra) starts at $1199, but this comes with double the storage of the cheapest high-end iPhone. (A comparable upgrade from Apple puts the base price at $1199, the same price as the Samsung.) And a maxed-out S23 Ultra, with 1 TB of storage like the iPhone, is a bit more expensive, at $1619.99.

Worse, Samsung sells an even more expensive smartphone, the Galaxy Z Fold5. This folding smartphone starts at $1799—so the base unit is more expensive than any iPhone, no matter the configuration—and a maxed-out version with 1 TB of storage costs $2159.

Put simply, the iPhone is not the industry’s priciest device.

But then we get to the looser claims.

“The iPhone has suffered only modest declines because it’s been winning new customers.”

The “why” of the iPhone’s continued success is worth discussing and debating, and I was of course curious to see which examples he used to prove this point. Interested and then disappointed. They are:

“Apple has overcome price sensitivity.”

Apple’s upgrade model is apparently uniquely like that of the U.S. car industry among smartphone makers, Mickle claims because they “last for years and can be resold to offset the purchase of a new one.” But this is true of all smartphones, especially the flagship models that compete directly with Apple’s products.

It is objectively true that iPhones hold their value better than any Android phone. And the gap gets bigger over time, so those who hold on to a phone for 3-4 years or more will see much better resale values with iPhone.

But it’s important to remember that Apple’s upgrade deals—whether they’re for customers with previous iPhones or for those switching—are generally not as good as the in-house deals that Samsung and Google offer when promoting new phones. Anyone with a one- or two-year-old flagship will do well when upgrading, and that’s especially true when you stick with the same hardware maker. And all three companies sometimes have crazy deals for switchers at various times too.

“Customers are more likely to buy another iPhone than switch to Google’s Android operating system”

The reverse is also true. Literally.

And that’s proven by figures that Mickle supplies in this same article: 94 percent of iPhone users are “likely to buy another iPhone,” while 91 percent of Android phone users are likely to stick with Android. At least according to “Consumer Intelligence Research Partners, a technology research firm,” that is. Those numbers are almost identical, and I’m curious why they’re presented here as they don’t prove that point.

Or this point:

“New buyers illustrate how Apple is gaining customers. The gap between the two major operating systems is tilted in Apple’s favor. About 94 percent of iPhone customers are likely to buy another iPhone, while 91 percent of Android customers are likely to buy another Android, according to Consumer Intelligence Research Partners, a technology research firm.”

This isn’t a gap, it’s a sliver. The difference between 94 percent and 91 percent is 3 percentage points. Put another way, 91 is 97 percent of 94. These numbers are nearly identical. And should be concerning to anyone who believes that Apple users are more loyal than Android users by a wide margin.

Also, this is where usage share factors in. Meaning, the total number of people out in the world using these smartphone platforms. According to StatCounter, Android today has almost 71.5 percent usage share, compared to 28.53 percent usage share for the iPhone. I realize this doesn’t describe the market of people who may or will upgrade this year, but 91 percent of a big number is bigger than 94 percent of a smaller number.

(And since Mickle is using a five-year time frame elsewhere, it’s worth pointing out that Android usage share was 79.55 percent five years ago, compared to 20.45 percent for the iPhone. So the share of Android users out in the world has fallen 8 percent points in this time period, while the share of iPhone users has indeed gone up, by exactly the same amount. This speaks to the impact switchers have had, for sure, an 8 percent shift over five years. But not the “why.”)

“In the United States, the iPhone’s popularity is expected to widen in the years ahead.”

He never says why so we can’t even address this one.

Also, I love passive sentences with phrases like “is expected.” Mistakes were made!

“Nearly 90 percent of teenagers in the United States own an iPhone, according to Piper Sandler, an investment bank.”

Elsewhere in this article, Mickle correctly points out that the U.S. is Apple’s most successful market, and that it crossed the 50 percent market share mark here sometime in the past year. With 90 percent of teenagers allegedly owning an iPhone, upgrades are a certainty over some period of time. But it’s unclear where future growth will come from. 90 percent of U.S. teenagers are almost all U.S. teenagers.

Mickel’s attempt to explain the iPhone’s popularity is laughable in that it involves a single anecdotal story. It’s this: the stigma associated with the green boxes used for non-iPhone users in Apple’s messaging app was so bad “that when it came time for Dave Storrs’s 14-year-old son to get his first smartphone, the teenager told his father that he wanted an iPhone or no phone at all.”

On one level, this is fine, as any teenager could tell you the green box story. (Though I would argue that this unnecessarily compromised experience of Apple’s doing is an example of enshittification, where it makes the product worse for users to advance its own aims.) No, the issues I have here lie elsewhere.

For example, the article never establishes what percentage of the iPhone user base teenagers in the U.S. occupy, so it’s unclear how important this part of the market is. It also never attempts to find anyone who actually graduated from higher education to see whether they still feel that teenager’s immature need to fit in. But it goes off the rails for an entirely different reason. The Mr. Storr quoted above also miraculously forms the basis for Mickel’s other story about the “why” of the iPhone’s popularity. And this one is absurd.

You see, Mr. Storr was an Android user. Not just a user, but a fan: he “took pride” in the series of Android phones he used over a decade-long span, and in being an “Android renegade” (itself an interesting term given that platform’s continued dominance over the iPhone worldwide from a units sold perspective).

But then everything changed.

“His family gave him a $99 pair of Apple’s wireless AirPod earbuds,” Mickel writes without once wondering what kind of heartless jerks would give an Android user such a thing when better alternatives exist that are more compatible with his phone. “Each time he wanted to use the AirPods on his Android phone, he had to manually sync them. The laborious process inspired him to buy an iPhone 13, which connects the AirPods instantaneously.”

LOL. I mean, wow.

So let me get this straight. This typical Android user solved a $99 earbuds problem by spending what was probably $1000 on a different type of phone and upending years of experiences and purchases. Why didn’t he just return the earbuds and get another pair that would be better suited for Android and anything else he may use? And he must have been switching between the Android phone and some other device(s); otherwise, he’d never need to “manually sync them” again and again A problem he wouldn’t have with non-Apple earbuds, regardless. Mickel left so much out of this story.

No matter, Mr. Storr is effusive about the switch.

“After years of using a free Android phone, he now pays $11 a month for the iPhone,” Mickel continues. “But he says that he’ll never go back to Android because he likes that he can wear AirPods and take phone calls while walking his Catahoula leopard dog, Teddy. ‘It’s just convenient’, he said.”

Aw. He has a very specific kind of dog! Also, #airpodforthewin.

“New buyers like Mr. Storrs illustrate how Apple is gaining customers.”

This story does not illustrate anything other than how stupid this guy is and/or how poorly the story was told, given all the missing details. It is just … a story. An anecdote.

But then there are the carriers. Of course, the carriers factor into this. (And why didn’t Mr. Storr have a carrier story?)

Here, I will be brief.

“Apple and wireless carriers began more aggressively promoting monthly payment plans. The plans have reduced the cost of a new iPhone to less than $40 a month from the $800 to $1,200 that customers had to pay upfront.”

This phenomenon applies to all phones, and not just iPhones. It’s never mentioned.

“’The phone market is like the housing market,’ said Cliff Maldonado of BayStreet Research, a smartphone research firm. ‘You get equity, and pay over time’.”

The phone market is nothing like the housing market. Not when you’re paying for it, and not when you sell it. For most people in the U.S., a phone is a $1,000 purchase spread out over 2 or 3 years of monthly payments with no interest. The average home price in the U.S. right now is over $410,000, most people pay for that over 30 years, the average money mortgage was $1768 at the end of 2022, and the average interest rate right now is 7.99 percent. This is like comparing a bicycle to a 747 because both are forms of transportation.

A house is an asset, and we are certainly living in a time when houses are appreciating in a value nicely, and so many people do treat homes like an investment. But when it comes to buying and selling, the phone market is more like the car market (which is ironic since Mickel tried to make that comparison, but incorrectly, earlier in the article). That is, the product loses value the second you take it home and it continues to lose value the entire time you own it. At trade-in time, more expensive products, like luxury cars, tend to hold their value better.

But there is one more thing.

One of the biggest stories this year is that everything is getting more expensive. And we see that acutely in personal technology, whether we’re talking about the prices of devices or the cost of monthly subscriptions. And so Apple will be raising prices with the next iPhone.

“The new flagship iPhones that Apple is set to unveil this week will feature speedier processors, more sophisticated cameras, and titanium rather than stainless steel cases, according to supply chain analysts. The changes are expected to come with a $100 to $200 price increase, bringing the [starting price] of an iPhone Pro to $1,100 and the Pro Max to $1,200.

This isn’t news to me, but I’m not surprised. Not happy. But not surprised.

But analysts predict that iPhone loyalists will shrug off higher prices. The increases would be less than $5 a month for people on monthly plans and even less for those who trade in old iPhones.

A couple of points here.

First, this math applies to non-Apple flagship smartphone upgraders too. Like so much else in this article, this fact is not specific to the iPhone.

And second, Apple’s user base has shown itself to be unusually willing to open up the purse strings and throw money at the company again and again. I’m curious if there’s an upper limit to this, but let’s look at this a bit differently. Given how important smartphones are to everyone, a $1,000 to $1,500 iPhone is inarguably a better deal than a $1,500 MacBook laptop for most people, if only because of how much more use it will get on average. Perhaps we’re thinking about this product wrong.

“The economy is doing pretty well, and everything costs more,” said Michael Levin, a co-founder of Consumer Intelligence Research Partners. “People are desensitized to increases right now.”

Ouch.

My experience is that people are, in fact, highly sensitized to this year’s price increases—I wrote about this recently in Subscription Sticker Shock: Streaming Video, Music, Storage, and More (Premium)—and that many are taking a hard look at their expenses and eliminating services and other monthly costs whose price increases now make them less essential. I certainly am: we’ve already cut Max, Disney+, and ESPN+, and have downgraded our monthly Netflix plan to save money.

This doesn’t mean the iPhone isn’t somewhat resilient to this effect given Apple’s loyal user base. But I will point out something else Mickle does not: one of the most persistent rumors of the past month is that Apple has cut iPhone 15 production specifically because of “demand concerns” (and, yes, supply constraints). Some iPhone users, at least, must be price-sensitive.

And that’s my issue with that quote: in seeking to prop up Apple, it’s insensitive to the real people who spend real money on products who are naturally upset that that money is not going as far as it used to. It’s insulting.

And soon, we’ll find out if it’s true.