Credit PHOTOGRAPH BY DAVID PAUL MORRIS / BLOOMBERG / GETTY
In the future, when we look back on this first Wednesday of September, we might be bewildered that one of the biggest news stories of the day was Apple’s announcement that iPhones will no longer have headphone jacks. It was years ago that Steve Jobs, Apple’s founder and longtime C.E.O., started choreographing the company’s product-launch events as if they were Broadway productions. Back then, Apple’s revelations—the Macintosh, the iPod, the iPhone—were worthy of spectacle. But does the presentation of a phone that looks like the phones we’re already using, minus a 3.5-millimetre hole, merit such fanfare?
Apple, of course, wants us to think so. On Wednesday morning, the company’s C.E.O., Tim Cook, bounded onstage in a long-sleeved polo shirt and jeans, to thunderous applause, at San Francisco’s Bill Graham Civic Auditorium. When it came time to talk about the iPhone, he gave his audience a thumbs-up and told them that the device is not only “the industry gold standard” but also “a cultural phenomenon.” His voice cracking a little as he got ready to introduce the iPhone 7, he cried, “It’s the best iPhone that we have ever created!” When Phil Schiller, Apple’s marketing chief, came onstage to give us the details, he repeated Cook’s mantra—best iPhone ever!—and listed ten features that make this so, from a design in which you’ll plug your earbuds into the Lightning port instead of a headphone jack to what Schiller called a “new” version of the color black. “It looks very cool, very high-tech,” he said.
Cook and Schiller might have been trying to convince themselves of this. Apple remains the most valuable company in the world, but that status has lately begun to seem challenged. In April, Apple reported that its sales in the first quarter of 2016 had been lower than in the same period a year earlier—something that hadn’t happened in thirteen years. Then, in July, the same thing happened. People began wondering aloud: Was it possible that Apple just wasn’t as cool as it used to be? To Apple fanatics—of which there remain a great number—even the question was heretical. They put forth an alternative explanation: People must just be holding off on buying iPhones, an important source of Apple’s revenue, until the new model—the iPhone 7—comes out. Against this backdrop, it’s easier to understand why people are scrutinizing the iPhone 7 even though there’s not much special about it. Details about the phone itself, and the immediate reaction to it, should theoretically offer some guidance about whether we are seeing an end to Apple’s cultural dominance or just a slow moment in its product cycle.
The new iPhones aren’t that exciting. And yet, on Wednesday, the coverage was as intense as ever, if also tinged with skepticism. “The new color is called Jet Black and is much darker and richer than the Space Black of years past,” the Verge reported. “The phone is water and dust resistant! Finally, when you drop your phone in the toilet it won’t die!” the Wall Street Journal’s Joanna Stern live-blogged. She also acknowledged, “Cook said it was an all new design but it really is the old design in a new black material.” Apple’s stock price, during the announcement, didn’t budge.
The truth is that the iPhone’s continued success or failure might not have a whole lot to do with the particulars of the product itself—or what tech writers in Silicon Valley or New York think of it. The iPhone market in the U.S. and much of Europe is saturated. Most everyone who wants an iPhone already has one, and even as people upgrade to the new version, that won’t do a whole lot to increase sales in the fast-growth fashion to which Apple investors have become accustomed. The only way for Apple to significantly boost its revenue, at this point, is to get people to buy its products in countries where they aren’t already popular—most important, in the world’s most populous countries, China and India. These days, though, Chinese and Indians who are buying phones for the first time aren’t buying iPhones in particularly large numbers. Often this is framed as a matter of preference—people in China and India seem to prefer other phones—but it really has to do with economics: iPhones are expensive. Pricing for the iPhone 7 starts at six hundred and forty-nine dollars, and many middle-class Indians and Chinese just can’t afford them. Even the iPhone SE, a lower-cost, smaller, and more limited version of the device, is prohibitively expensive for a lot of people in those countries.
For years, Apple did increase its sales in China, especially after inking a deal with the carrier China Mobile, in late 2013; China is a big country with a growing economy, and there were at least enough wealthy consumers to provide Apple with several years of good sales. But this year Apple’s China sales have faltered as other manufacturers, like Huawei Technologies and Xiaomi, started to sell lower-priced phones that match many of the iPhone’s features. Geopolitical tensions might even be hurting Apple’s image in China: people there reportedly smashed their iPhones in anti-U.S. protests over the summer after an international tribunal ruled against China in a dispute over the South China Sea. “Apple has a China problem,” Eva Dou wrote in July, in the Wall Street Journal.
Apple is now looking more hopefully to India to help its sales—“I sort of view India as where China was seven to ten years ago,” Cook told analysts in April—but the Indian consumers that Apple wants to reach have even less disposable income than their counterparts in the Chinese middle class had a decade ago. In May, Cook visited India as the company redoubled its efforts there. It was, remarkably, not only his first visit to the country on behalf of Apple but also the first-ever official visit by any Apple C.E.O. (Steve Jobs famously spent time in an Indian ashram in the seventies, but that was before he founded Apple.) Even on that visit, though, Cook seemed ill-prepared to contend with the realities of introducing Apple to Indians. In an interview with the Hindu, one of India’s most prominent newspapers, Cook was asked, “Most of the billion people in India may not have heard about Apple. A few million would have heard and seen Apple products and only the minority few, who can afford it, would have actually used an Apple device. How would you as the CEO, explain what Apple is to this Indian audience?” Cook’s answer was a deeply unsatisfying platitude: “Apple is about making the best products, we only create products that enrich people’s lives and in doing that we change the world in a positive way.”
Apple’s struggles to sell devices in some of the world’s most important markets could help explain why, on Wednesday, Cook and his colleagues spent a significant amount of time talking about subjects other than devices. The first thing Cook did when he got onstage, even before he got to the iPhone, was to spend several minutes talking up Apple Music (“It just keeps getting better,” he said), and the App Store (“The growth is literally off the charts”). Apple isn’t giving up on devices by any means—the iPhone launch was clearly intended to be the highlight of the event, and the company is investing significantly in developing new hardware—but the company, for now, is increasingly reliant on what are known as services, like Apple Music and App Store purchases. This delicate pivot to services also comes with hazards. Apple Music has been lambasted by users as confusing and buggy; on Wednesday, Cook announced that the service now has seventeen million subscribers, up from fifteen million in June, but that number is still far short of Spotify’s thirty-nine million users. Still, it’s probably easier to convince people to pay some amount in the single or double digits to access a service than to get them to shell out more than six hundred dollars for a device. It may be telling that the announcement that most delighted this particular iPhone owner was that a new Mario game is being made available in the App Store for a yet-to-be undisclosed sum. I’m happy with my scuffed-up iPhone 5S and don’t expect to spend hundreds of dollars, anytime soon, to upgrade to the iPhone 7, new black or not. But a couple of bucks to play Mario whenever I want? I—and, presumably, any number of Apple-owning consumers all over the world—can handle that.
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