What Apple Watchers Will Be Looking For Next Week

While the majority of people have heard the expression “always leave them wanting more,” most of them are unaware there is a minor controversy attached to the phrase — specifically about who first said it. About half the time, the phrase is credited to the infinitely quotable PT Barnum; the other half of the time, it’s attributed to the almost as equally quotable Walt Disney.

However, whichever of America’s two most famous showmen one ultimately attributes the thought to, there is little controversy over its meaning. While one might be tempted to “always give it there all,” the smart entertainer doesn’t. He almost gives it his all. The goal is to go out there and deliver a great performance — but not the greatest performance. A great performance draws consumers back; the greatest performance satisfies them, so much so that they may think that they never have to see it again.

The folks over at Apple certainly understand the value of good showmanship, and it is fair to say they’ve taken a few pages from the Disney/Barnum playbook when it comes to grabbing — and holding — an audience.

The Apple store is often described as “Disneyland” for Apple fanboys and fangirls — specifically in reference to its ability to make those inside it feel temporarily transported to a different (better and neater) reality.

And anyone who’s ever watched Apple’s various developer events and product launches would be hard-pressed not to sense a decidedly “three rings of tech” feel about them — right down to the CEO acting as the ringmaster.

And next week, if you live in San Francisco, the circus will be back in town in the form of the Apple annual event, announced via a Twitter post from CNBC.

Going in, we know we’ll be seeing the “tock” year version of the iPhone 6, as well as an Apple TV update. As always, the countdown is on, but some are wondering: Is the excitement really there?

“You can feel the difference, can’t you?” CNET’s Shara Tibken asked. “The excitement that once gripped you as hype built for the next Apple iPhone isn’t quite there anymore.”

Uh-oh.

Did Apple forget to leave its audience wanting more?

“What can they pull out of the iPhone bag to get people excited?” said Kantar Worldpanel Analyst Carolina Milanesi.”That’s what the big question is.”

And increasingly, the concern is that the answer to that question might just be “nothing.” The world’s most popular consumer brand is closing off one very successful year. So successful, in fact, that in the run-up to the next product line announcement, the world is starting to wonder if maybe, just maybe, Apple was a little too successful.

How Does A Company Over-Succeed?

There are many ways to quantify Apple’s successes in the last year with the iPhone.

There’s raw units sold — 74.6 million iPhone 6 and 6 Plus models sold (and counting).

There’s sales growth, which grew more than 30 percent in each of the past three quarters, compared with a year earlier.

Or there’s revenue derived from the product, which is estimated in the last 12 months to be $146.6 billion.

No matter which way you slice it, the iPhone in general and the iPhone 6 has been the Apple team’s MVP. The problem, according to analysts, is that the MVP is becoming too much of the team’s power, even though it can not possibly retain its relative strength much longer.

“It’s highly debatable whether there will be any iPhone growth next year,” Toni Sacconaghi, an analyst with Bernstein Research, told The Wall Street Journal. “The market realities will catch up with Apple.”

The iPhone’s remarkable growth is “mathematically unsustainable” and due for a sharp tumble, according to Sacconaghi. He forecasts that iPhone sales will pick up a conservative 3 percent to 237.6 million units in the fiscal year starting October.

And that drop makes sense, given that this year is a “tock” year — meaning that instead of a big redesign (like we saw this time last year), the new iPhone 6/6 Plus we see this year will look much like what we saw last year, albeit with some anticipated improvements to the camera, the software, Siri and possibly additional color options. Apple’s Force Touch tech, which can distinguish between a hard push and a light tap, has also gotten a lot of play as a coming upgrade.

But they won’t fundamentally be different products, and Apple’s last “tock” product release, the 5S, saw sub-10 percent growth.

Not A Deep Bench

While it is not quite fair to label Apple as the “iPhone Company” just yet, the iPhone is a very big part of the business, as it represents about two-thirds of Apple’s revenue stream. And last year’s iPhone sales set a very high bar for the firm to clear.

And as Apple learned this summer, not clearing the bar — even if it is set insanely high and they come really close — has real consequences. The iPhone sold slightly fewer models than forecasted (47 million instead of 50 million), and revenue didn’t grow quite as much as analysts were looking for (a scant 35 percent year to year). It saw its stock price drop overnight after those numbers were announced.

Since that earnings call, Apple’s revenue has been down 14 percent.

Apple doesn’t exactly have another product waiting in the wings to carry water for the iPhone if the “smartphone fatigue” being described in CNET is a real phenomenon.

IPad sales have been declining for some time, and there is an awful lot of debate about how the Apple Watch is doing. Mac computers continue to have their devotees, but they remain a small segment of the desktop/laptop buying marketplace.

Good or bad, the iPhone is Apple’s center-ring performer, and it’s not clear that where the iPhone is concerned the audience is necessarily been left wanting more.

But Then Again

Not everyone is quite so gloomy. Tim Cook, for example, isn’t that worried that there just aren’t enough people out there ready to feel the iPhone 6 love.

“We think the phone has a lot of legs to it. I mean, many, many, many years,” said Mr. Cook on a July conference call with analysts. Cook also noted that 27 percent of the Apple user base had upgraded and that the world is full of Android users to steal.

Many other analysts have observed that consumers generally upgrade their phones every 22 months — meaning there are many consumers who didn’t upgrade last year who are soon entering the market.

“While the hype may not be as high, the sales opportunity is just as high,” noted Patrick Moorhead, principal analyst at Moor Insights & Strategy.

That remains to be seen, as does the specific shape of what Apple’s new release will be.

But there won’t be much more about that to know until the second greatest show on Earth gets rolling on the 9th of September in San Francisco.

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