The iPhone Stockholm Syndrome

It’s been said that the iPhone is the most successful consumer device ever. It dominates the tech world as a bellwether of not only new technologies, but of Apple’s ability to sell this device, at increasing prices, to millions of people. Even though Apple is not the largest manufacturer of smartphones, their device dominates the minds of people interested in technology.

But after ten years, it’s fair to say that the smartphone has become commoditized. The feature set of this device is essentially limited, and there aren’t many new bells and whistles that can be added. So smartphone manufacturers focus on two areas: the camera, since many smartphone owners buy a phone in part to have a good or better camera, and details, including things like security features (Touch ID and Face ID), displays, water resistance, and more. None of these latter features are “killer” features, they are all incremental enhancements. Gone is the day when a new device added, say, the ability to play videos, or faster network access. All the essential features are there. (To be fair, the new iPhone adds augmented reality, but this technology is still too young for this to be a killer feature.)

But this means that new smartphones – and in particular iPhones – have to somehow convince users to spend more and more money. For a certain class of people, the look and feel of the device may be enough to sway them. John Gruber, writing about the iPhone X on Daring Fireball, points out that:

Stainless steel looks and feels so much more luxurious than aluminum.

The key word there is “luxurious.” Apple, after creating the modern smartphone, and seeing that it cannot dominate the industry in sales, has released the iPhone X at a higher price than its other devices to target people who can afford to pay more. It’s a risky strategy. Sure, they’re going to sell a lot of these phones now; there will always be people willing to buy luxury goods. (Though apparently not many of them bought the ludicrous solid gold Apple Watch Edition.) But what about when the economy goes sour? Things have been going fairly well since the last financial crises, but there’s always another one around the corner.

Apple risks becoming a luxury brand. You could argue that they already are, with computers and tablets priced well above the competition, but if you use their devices, you know that they are worth what you pay. They work better, last longer, and retain better resale value. (I just sold a two-and-a-half year old MacBook for a bit more than half what I paid for it.) With a fancier phone, however, or rather a pocket computer, a device that most people in advanced economies own, it is harder. This is a banal device, with even the cheapest phone able to perform most tasks that people need. And most people don’t resell these; they wear them out. (Though in the US, Apple’s trade-in program is changing this a bit.)

Since the announcement of the iPhone X, as a “second” iPhone line, I have been thinking that Apple would keep the “number” iPhone for another generation – iPhone 9 and 9 plus – and release the iPhone X2, before moving all iPhones to the “X” line. They would be able to refine the new interface used to control the iPhone (see the Daring Fireball article linked above for more on the difference in iOS of the iPhone X), and slowly phase it in. But at $200-$300 more than the “number” iPhone, plus a steeper cost for AppleCare, this is a luxury item.

Apple long touted itself as a company making computers for everyone. Not in the early years, when a desktop computer cost the equivalent of the new iMac Pro, but when Steve Jobs returned and developed the iMac. Over the years, the company has always managed to cater for everyone from students to “pros.” But with the iPhone X, the company is counting on people following them because they are convinced that a more expensive, more “luxurious” iPhone is better, even essential. This is a risky choice.