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Sorry haters, the iPhone isn’t going anywhere

Published Feb 1st, 2017 9:07AM EST
iPhone 7 Sales
Image: Shutterstock

After three consecutive quarters of declining iPhone sales, Apple’s earnings report yesterday assured investors that the iPhone isn’t going anywhere just yet. During the recent holiday quarter, Apple sold 78.3 million iPhones, setting an all-time quarterly record in the process. What’s more, iPhone sales increased by a modest 5% compared to the year-ago quarter. In short, the perpetual narrative that we’ve reached ‘peak iPhone’ — or that the ‘age of Apple is over’ — was once again put to rest.

What makes Apple’s iPhone sales last quarter all the more impressive is that the iPhone 7 was largely characterized as an underwhelming and boring upgrade. For some, the iPhone 7 was even proof positive that Apple had seemingly forgotten how to innovate.

This narrative was partially the result of analysts and pundits placing too much emphasis on the fact that the iPhone 7 didn’t sport a fresh new industrial design. This incredibly narrow analysis of the iPhone 7 completely ignored the myriad of reasons why the iPhone 7 was, in fact, a much more compelling and popular upgrade than the iPhone 6s was the previous year. I suppose that it was much easier to poke fun at the iPhone 7’s missing headphone jack than it was to ascertain why folks might actually be interested in Apple’s new iPhone.

The reasons to be optimistic about the iPhone’s future are not in short supply.

During Apple’s earnings conference call yesterday, Tim Cook said that demand for Apple’s more margin-friendly iPhone 7 Plus completely caught the company off guard. In fact, Cook said that iPhone 7 Plus supply was constrained for the entire quarter and that Apple wasn’t able to reach a supply-demand balance until January. In other words, iPhone sales last quarter could have easily been even higher.

All the more encouraging is that Apple saw increased iPhone demand across all corners of the globe. Whereas iPhone growth in some quarters can exclusively be attributed to growth in a populous country like China, Cook made a point of emphasizing that iPhone sales increased in a number of varied markets, including the U.S., Australia and Japan.

The iPhone 7’s soaring popularity last quarter also undermines two arguments often levied by analysts quick to argue that the iPhone’s best days are behind it. Specifically, these analysts contend that because the smartphone market has been completely commoditized, current iPhone owners aren’t excited to upgrade and current Android users have no reason to make the switch over to iOS. Funny enough, Cook yesterday said that Apple last quarter saw the largest uptick of iPhone upgraders and Android switchers in history.

With the iPhone 8 looming on the horizon, Apple’s iPhone sales figures last quarter are extremely promising. The popularity of the iPhone 7 Plus, anchored by its advanced dual-camera system, clearly illustrates that iPhone owners are more than happy to fork over cash for a new device with compelling new features.

That said, with rumors that Apple’s flagship 2017 iPhone model will feature a curved OLED display with advanced new sensors, it stands to reason that the upcoming refresh will trigger the biggest iPhone upgrade cycle in history.  Additionally, reputed Apple analyst Ming-Chi Kuo believes that the iPhone 8 may incorporate new augmented reality features that are a good 3-5 years ahead of the competition.

Put differently, if the iPhone 7 helped restore growth to Apple’s smartphone line this past quarter, just imagine what the iPhone 8 will do once it hits store shelves this coming September. The iPhone obviously can’t keep growing in perpetuity, but there’s clearly quite a bit of runway left for Apple’s venerable smartphone to enjoy before sales begin trending downward permanently.

Yoni Heisler Contributor

Yoni Heisler has been writing about Apple and the tech industry at large for over 15 years. A life long Mac user and Apple expert, his writing has appeared in Edible Apple, Network World, MacLife, Macworld UK, and TUAW. When not analyzing the latest happenings with Apple, Yoni enjoys catching Improv shows in Chicago, playing soccer, and cultivating new TV show addictions.