As we know Apple has more than 50% of the revenue contributing from iPhone sales. I checked with OpenAI and LLM describes the same answer as below.
Dependence on iPhone Sales:
• A significant portion of Apple’s revenue comes from iPhone sales. Any slowdown in smartphone demand or competition could negatively impact the company’s financial performance.
• The company’s reliance on a few key products makes it vulnerable to shifts in consumer preferences.
Thus I asked a follow-up question about what the main reasons behind this problem.
High Smartphone Penetration:
• In developed markets like the U.S., Europe, and parts of Asia, most consumers already own smartphones, often high-quality ones that do not need frequent replacement. This saturation limits the number of new customers Apple can attract.
2. Extended Upgrade Cycles:
• As iPhones have become more advanced, durable, and capable, users are holding onto their devices for longer periods. The improvements in new models are often seen as incremental, not enough to compel immediate upgrades. This trend directly reduces the frequency of purchases, slowing overall sales growth.
3. Economic Impacts on Spending:
• Even though this is tied to economic pressures, the saturation exacerbates the impact of economic downturns. When consumers are less compelled to upgrade due to satisfactory performance from their existing devices, economic downturns make them even more cautious with discretionary spending.
4. Limited Room for Growth in Emerging Markets:
• While emerging markets offer some opportunities, the premium pricing of iPhones limits their appeal in price-sensitive regions. Even in these markets, smartphone penetration is rapidly increasing, leading to similar challenges over time.
In this article, we will first focus on “High Smartphone Penetration”. We will find out whether the problem exists based on the fundamentals.
First of all, we observe the entire revenue. It looks saturated after 2021 and it makes sense since iPhone 13 was launched at the moment and people keep saying that iPhone 13, 14, and 15 are quite similar. Thus customers have no incentives to purchase a new model. The phenomena are the same in either the annual chart or quarterly chart.
