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Apple’s Earnings Stumble Could Improve the iPhone

For years, the excitement the smartphone generated seemed unstoppable. Apple keynotes, which were really just glorified product announcements, felt like concerts or sporting events. So much of ordinary life took place on these rectangles—work, photos, socialization, dating, play, entertainment. And the technology that facilitated those conduits for that intimate contact with the wider world evolved so fast and so deliberately, it felt electric.

And then it didn’t anymore. Smartphones domesticated and became ordinary and necessary accoutrements of everyday life. People still love them, but they are also exhausted by them. By their grip on time and attention, but also on their wallets. Who needs a new iPhone every year or two? Increasingly, nobody does. And that’s both a victory for Apple, which has made the smartphone the single, most important change in 21st-century life, and a huge problem for a company expected to amass ever-greater profits from their sales.

But perhaps the solution to that problem isn’t to sell more iPhones, or even to replace those sales with something new. Maybe it’s time Apple made smartphone life better, rather than just unceasing.

Every year, some people need a new car. But taken together, car sales in America have remained steady since 1970, declining a bit in the 2000s and experiencing a bigger dip after the after the Great Recession.

That’s because cars won. They became a part of American daily life, for better and worse. That could change if cities suddenly invest in transit and walkability, or if new services like ride-on scooters and autonomous cars change personal transit. But until then, a car is just a car. You use it to get around. You buy a new one (or a new, used one) when your old one breaks down or no longer suits your needs.

What you don’t do is buy a new one every year or two. Even on a lease. A car is often a necessity, but that doesn’t make auto manufacturers high-growth companies producing record-breaking profits year after year, like Apple and Google and Facebook. Instead, at their best, those businesses are blue-chips—large companies with reliable track records for success, whose financial performance tracks a generally reliable market. Insurance companies, banks, airlines, consumer packaged goods, automakers—and, now, perhaps, smartphone manufacturers. As the Wall Street Journal writer Christopher Mims put it last year, phones are like cars now: “there is absolutely no reason to upgrade unless your old one no longer does what you need.”

Critics have warned that Apple needed new innovations to account for the inevitable plateau in its smartphone business. But that need makes a couple big assumptions. First, that companies like Apple should sustain high growth rather than transitioning from novelty to stability. And second, that a company like Apple is even capable of multiple hits as big as the iPhone.

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