USAToday Column

December 3, 2015
Can Apple continue to shine?

By Bob O'Donnell

FOSTER CITY, Calif. — It’s Apple's biggest quarter of the year, and so far, so good. Well, sort of.

Reports from Black Friday and Cyber Monday sales suggest several Apple products were among the top-selling electronics products during this key shopping season, including the iPad Mini and the iPad Air 2. There were even some suggestions that Apple Watch was selling reasonably well.

But every silver lining comes with a few clouds.

Most noticeably, Apple and its retail partners used fairly significant discounts across a wide range of products to drive some of these sales. In past years, Apple has been pretty stingy about offering any kind of discounts, especially on newer products. But this year you could even find hundred-dollar price breaks (or credits) on the 7-month old Apple Watch. Older iPads, like the apparently hot-selling Mini and Air 2, had similar, if not even higher, discounts on a percentage basis.

Of course, the iPad, like the rest of the tablet industry, is facing a tough 2015, particularly in the U.S., so it wasn’t terribly surprising to see bigger price discounts on them. Even with all those efforts, however, the latest tablet forecast from IDC is predicting an 8% drop in worldwide tablet sales this year.

Apple’s large-screen iPad Pro, while very interesting to some “prosumers” and business users, is likely to remain more of a niche product than become a mainstream hit. Similarly, the Apple Watch — regardless of what the holiday shopping season numbers turn out to be — has clearly not become a mainstream hit. Yes, it has some dedicated fans, and the release of Watch OS 2 should enable the creation of faster, more compelling apps. But several quick glances into Apple retail stores over the holiday weekend confirmed the same thing I’ve noticed for some time: The stores themselves may be busy, but there’s almost nobody looking at the watches.

Apple’s efforts to position the Apple Watch as a high-end fashion accessory also seem to have fizzled. The fact that you can buy essentially the same device at Target that you can at a high-end luxury or watch store (other than in a different metal, of course) is a pretty strong testament to that.

The new iPhone 6S and 6S Plus are doing well, but that’s, in part, because Apple’s picking up the remaining stragglers who still haven’t made the move to a large-screen phone. Once everyone does, and we’re getting pretty close, that incentive starts to go away.

Of course, as if on cue, we’re now starting to hear the first rumors about next year’s iPhone 7. But instead of starting out with positives, the latest is that the new version will lose the standard headphone jack, making all traditional wired headphones, Square readers and lots of other devices that use that jack out-of-date. If the rumor does prove to be true, it’s likely because of Apple’s desire to make the next generation iPhone thinner, rendering it difficult for a traditional 3.5-mm jack to fit.

The reason Apple may feel compelled to make this controversial move is to try and drive some kind of innovation into a product category that’s become very mature. Like Samsung before it, now that Apple has a range of larger-screen smartphones, it’s going to find it difficult to drive the kind of meaningful changes that will encourage users to upgrade on a faster basis.

Instead, all signs point to smartphone lifetimes actually starting to lengthen. For a company that’s become so dependent on smartphone sales, that could be a big problem.

Given Apple’s current product set and the general trends in the market, the company will likely have another record quarter to end this calendar year. But how they evolve next year isn’t nearly as clear.

Follow USA TODAY tech columnist Bob O'Donnell @bobodtech.

Here's a link to the original column: http://www.usatoday.com/story/tech/columnist/2015/12/03/can-apple-continue-shine/76736578/