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Why the iPhone is well placed to weather the coronavirus storm – ZDNet


The coronavirus pandemic has hit all sectors hard, and the tech sector is no exception. However, Apple mega cash cow, the iPhone, might be very well placed to weather the storm.

The same cannot be said of Android.

Firstly, Apple is sitting on an enormous hoard of cash, reported at $192.8 billion as of the end of April this year. Having that war chest gives Apple considerable breathing room.

While Samsung’s cash pile of around $100 billion is also staggering, Samsung’s business model is more convoluted than Apple’s, and because one aspect of its business is manufacturing components, and one of its major customers is Apple, a chunk of Samsung’s revenue is tied to how well Apple is doing.

There’s also the issue of value. There’s no doubt that the smartphone market is powered by the upgrade cycle. There’s aren’t a lot of first-time smartphone buyers out there these days.

Upgrades are what drives the vast bulk of sales.

You might be thinking that all the uncertainty caused by coronavirus and the economy would dampen smartphone sales, and that this makes the sector vulnerable. However, a different way to look at this is that as people have been sheltering-in-place and practicing social distancing and isolation, for many, the smartphone has been a lifeline to the wider world. Also, as people shift from offices to working from home, the smartphone increases in importance.

Far from being a luxury item, smartphones are a necessity. People are not going to give up on them.

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So, what’s the difference between the iPhone and Android? Why is one well placed to weather the storms and the other less so?

First off, iPhones retain their value for a far longer period of time than Android handsets do. Partly this is down to a long update lifespan, partly down to being seen as a prestige item, and partly down to excellent long-term reliability.

It’s also down to the fact that if you’re in the iOS ecosystem, iPhone is your only choice. In the Android ecosystem, on the other hand, users can choose from a super-pricey Samsung Galaxy handset, or spend $60 on as handset that’s actually very good. There are options, and because updates are very variable in the Android world, there’s a greater churn of handsets.

One thing that the Android ecosystem offers users is mobility.

Apple would rather you buy a new handset every three, four, five, or even six years (iOS 14 should run on iPhones going back to 2015, giving them an exceptional lifespan) than be buying something every year.

Also, with the new updated iPhone SE, Apple has a high-spec ‘budget’ iPhone for those who need to upgrade but have a fairly limited budget (‘fairly limited’ in that it’s a couple of hundred dollars cheaper than the next iPhone in the line).

And this is a $399 purchase that will likely still be getting updates in five years.

Show me an Android handset that can offer that.

Bottom line, the Apple is facing a big challenge, but smaller players with punier cash war chests and who rely far more on a regular churn are going to find the coming months and years far more challenging. 



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