It’s become a late-summer ritual: Lines of consumers snaked around Apple Inc.’s retail stores on a Friday in New York, San Francisco and all points in between on the first day a new iPhone is available.
In the days leading up to Friday’s big retail launch, it seemed Apple AAPL, -1.46% was at an inflection point that threatens its carefully calibrated Apple iPhone Hype formula. The heavily-promoted iPhone launch event — as has been the case the past few years — was panned as incremental news that could easily have been disclosed in a press release. Some tech pundits even suggested that Apple — gasp! — discontinue its early September iPhonefest.
Recent iPhone sales worldwide reflect the sentiment, especially as tensions escalate over the impact a trade war with China will have on Apple hardware products. Apple has lost significant market share the past year to smartphone rivals Huawei Technologies and Xiaomi Corp. 1810, +1.20% , makers of cheaper and feature-packed handsets that dominate the market in China, the world’s largest for smartphones. Indeed, queues at Apple’s Beijing and Shanghai stores on Friday combined were a few dozen, compared to hundreds in previous years, according to a Reuters report.
Yet there was Apple Chief Executive Tim Cook at the renovated Fifth Avenue store in Manhattan on Friday, basking in loud applause as pumped-up customers waved their newly purchased iPhone 11 models this Friday. News organizations, including MarketWatch, slavishly reported the festivities a day after Apple was named the country’s most relevant brand for the fifth year in a row in the annual Brand Relevance Index from Prophet.
“Demand looks strong out of the gates for Apple as the lines at its flagship NYC store were up 70% today compared to what we saw last year,” Wedbush Securities analyst Dan Ives said in an effusive note Friday.
Apple has acknowledged its flagship product is losing steam through its product strategy and several high-profile management changes. For the first time in nearly seven years, iPhone sales accounted for less than half of its quarterly revenue, according to its third-quarter earnings report released Aug. 1. Sales of iPhone were $25.99 billion, down sharply from a year ago, when iPhone revenue totaled $29.47 billion. In the same quarter a year earlier, iPhone comprised 63% of total revenue.
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Cook has made no secret Apple is shifting its revenue-growth reliance to software and services. Its previous big event in March focused on the Apple TV+ streaming service, and Apple shared news of its pricing ($4.99 per month) last week. The company has also parted company in recent months with three principal figures closely associated with iPhone: Steve Dowling, head of communications; design boss Jony Ive; and retail chief Angela Ahrendts. Apple, in essence, has air-brushed part of iPhone history.
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But you can’t argue with marketing success. Even as Cook reshapes his executive team and Apple pivots strongly to content, one thing is unlikely to change. As long as reporters show up en masse at Apple product events, consumers line up at Apple Stores in the U.S., and Cook receives a hero’s welcome on retail day — and it is dutifully covered — Apple won’t mess with a cliched albeit effective PR strategy.
Apple shares are down 0.5% in trading Friday, putting its market value at slightly shy of $1 trillion.
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