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Apple's Upgrade Dilemma

Apple has been taking a beating on Wall Street in part due to scepticism over future growth of iPhone and iPad sales. With the market becoming saturated with iPhone and, to some extent, iPad users, Apple will soon need to rely upon upgrades rather than new customers to fuel sales. Apple’s problem is that their products are so good, people aren’t upgrading fast enough.

Many people assume that people upgrade their iPhone at least every two years, at the end of their contracts. However, anecdotally, it seems that people are upgrading their iPhones and iPads in longer cycles. For example, I see significantly more iPhone 4/4S models than iPhone 5 models. In fact, I see more 3G/3GS models than iPhone 5 models. My wife loves her iPad 2 (almost two years old) and sees no need to buy an iPad 3, 4 or mini. She likely won’t be in the market for a new iPad for another couple of years. I have several friends perfectly content with their first generation iPads.

This isn’t necessarily a bad thing. It means that Apple has been producing high-quality products that consumers love to use and keep. These people will likely replace them with new Apple products eventually. But eventually doesn’t generate sales now.

What’s the solution? The best solution is to create new products that are significant upgrades to older products. This gives people the most incentive to upgrade. It’s also the most difficult solution. Displays can only be so retina, processors can only get so fast, and 16GB is already plenty of storage for most people.

A poor solution would be to prematurely stop supporting older products, which seems to be the game played by Android phone manufacturers. It would be disappointing to see Apple artificially limit software upgrades to older devices simply to encourage people to buy the latest model. However, it won’t be long until it becomes an attractive option to increase sales. Let’s hope Apple avoids the temptation.

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Virtual Pants is a column that provides commentary and unique insight on the latest technology news. You will find viewpoints there that aren’t expressed by others in the tech blogosphere.


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