First Click: iPhone sales are shrinking for the same reason that Pokémon Go is thriving

July 27th, 2016


Apple today finds itself in the unusual position of having not one, but two consecutive quarters of slumping iPhone sales. The company’s stock price, however, has gone in the opposite direction, rising in response to Apple outperforming direr expectations. Those traders aren’t crazy. They just understand a phenomenon that is reaching its apotheosis in 2016: smartphone saturation.

Looking at the Pokémon Go infatuation that has gripped the globe this summer, I’m reminded about the ubiquity and commodification of the smartphone. Whether it’s an iPhone or an Android device, the smart mobile phone has grown so widely available and accessible that it’s not at all weird or worrying to see clusters of kids walking around on Pokémon hunts with each having his or her own handset. Things didn’t use to be this way.

It wasn’t long ago that smartphones were a primary target and reason for muggings. Phones are still the most personally valuable thing that the majority of people carry around with them, but they’re no longer the sort of prized asset that would get a kid in trouble. The phone is a commodity now, like a pair of sneakers, and the iPhone is evidently not immune to this situation.

There will inevitably be questions raised about Apple’s future growth strategy, and those are apt — every public company must offer its investors a vision of rising profits — but they shouldn’t be solipsistically focused on the iPhone. The fact is that with a finite human population, of which only a fraction have the required income to buy an iPhone, Apple was inevitably going to meet a ceiling to iPhone sales. The interesting thing is that the ceiling is gradually coming down, as more and more people have adequate to good smartphones that can run games like Pokémon Go. The game might prompt people to go out and buy more portable batteries, but it won’t drive a whole new wave of smartphone upgrades. Odds are that nothing short of a killer VR app will stimulate the extraordinary growth that characterized the past few years in smartphones.

Apple’s future is less certain now than it has been for a long time, because the company must find the next great profit driver to augment, if not entirely replace, the iPhone. It was fine to depend on a single device for 60 percent of revenue when that device was the most sought-after gadget in the world, but now that everyone who can afford a smartphone has one, Apple’s need for diversification is more pressing.

Pokémon Go couldn’t have been the success it has become in any other year than this one. Without the ubiquity of smartphones, it’d have been a cute diversion for a select few. But with it, the game has created a whole new class of urban ramblers. It’s this fundamental change, this achievement of almost total smartphone market saturation, that distinguishes this year from the preceding ones.

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