Why is Apple customers' appetite for its products insatiable?

The Apple chief executive, Tim Cook, is expected to unveil new phones and software next week. Photograph: Richard Drew/AP
“Siri, give us a hint,” said Apple’s invitation to its media event next Wednesday. But few needed a hint to know that the chief executive, Tim Cook, will unveil new phones and iPhone software, plus a greatly improved Apple TV set-top box controlled via Siri, Apple’s voice-activated system.

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Nor did experts need a hint to know that the new phones will look almost identical to last year’s larger-screened iPhone 6 and 6 Plus, and probably be called the 6S and 6S Plus. Apple works in two-year ‘ticktock’ cycles, and last year’s bigger screens were the more dramatic tick.

Supply chain leaks suggest the latest models might have a feature called Force Touch – already used in some Mac computers and on its watch – that allows the device to sense and respond to the degree of pressure from a touching finger.

But what Siri can’t answer is how does Apple do it? How does the world’s most valuable company get people to keep on buying, and will the bandwagon ever stop rolling?

Unlike rivals such as Samsung, Sony, HTC and LG, Apple is consistently able not only to persuade loyal existing owners to buy new models but also attract those who previously used rival designs. In the second quarter of the year, while its biggest rivals saw year-on-year falls in handset sales, with disappointing performances from their flagship models, Apple experienced a 35% jump.

And although average smartphone prices are dropping, Apple’s remain the most expensive. While the rest of the industry is seeing decelerating growth – expected by market intelligence firm IDC to be 10% this year, down from 27.5% in 2014 – Apple has grown faster for three successive quarters.

Most expect that growth to continue through the rest of the year. Ben Wood, mobile analyst for research company CCS Insight, said: “Apple has the world at its feet. Even with only incremental, evolutionary improvements to the camera, processor and screen, it will be enough – the Apple machine keeps rolling on.”

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Wood is not convinced Force Touch will be included – though Chinese rival Huawei this week beat Apple to the punch, showing a new phone with the same technology that was able to weigh an orange by its pressure on the screen. “We can’t be sure it will make an appearance,” said Wood. “The rumour mill gets completely out of hand. This time last year, people were saying the new iPhone would have crystal sapphire displays; that didn’t happen. A radical redesign like Force Touch isn’t necessary.” Huawei offered super scratch-resistant sapphire screens last year, too, but soon discontinued them.

Some think the newer iPhones will not drive anything like the same growth as bigger screens did last year. John Butler, a senior analyst for Bloomberg Intelligence, said this week: “Apple will face tough sales comparisons in the next year, given the strength of the last upgrade cycle”. He thinks that is “a challenge that may prove too difficult to overcome.”

IDC even suggested iPhone sales would be marginally lower next year. It would be the first time there has been a year-on-year drop.

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With the iPhone generating 60% of Apple’s revenues, and perhaps more of its profits, that could seriously harm the $620bn (£410bn) Californian company. The possibility of economic slowdown in China also weighs heavily: it is one of Apple’s fastest-growing markets. Cook was prompted to email a reassuring outlook to the American TV business analyst, Jim Cramer, when the Chinese and US stock markets went into meltdown last month.

However, Carolina Milanesi, chief of research at Kantar ComTech, the consumer information company, thinks the future looks far less bleak. The key point is that Apple will dro the price of last year’s bigger-screened phones, encouraging those who have not upgraded to them to do so.

In the past 12 months, 32% of US iPhone owners upgraded; that was higher than in 2013-14 when it was just 22%, suggesting the larger-screened iPhone 6 was more attractive than its smaller cousins, the iPhone 5S and 5C.

In China, larger screens mean accelerating sales, and there remain plenty of iPhone users in the US and China who have yet to buy. And that is before you count the users defecting from rival brands, who made up nearly a quarter of iPhone sales in Europe in the past three months, according to Kantar data.

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Wood likens Apple’s popularity to what he calls “Nokia myopia”. He said: “In the 1990s people would walk into the phone shop and ask for a Nokia because it fitted into their lives, they knew what they were getting. That’s kind of what Apple has achieved.”

Mention of Nokia might make some at Apple shiver, for the Finnish giant’s fall from grace as the world’s largest mobile phone maker was as sudden as it was complete – driven by the introduction of the iPhone and then multiple smartphones powered by Google’s Android software.

The parallel might not strike too much fear into the hearts of Apple executives. Smartphone software now envelops its users much more completely. “Apple adds layers and layers to keep people in there; it used to be music, then apps, now it’s health apps, and most recently there’s [streaming service] Apple Music. We’re even seeing evidence that people who leave for Android tend to come back.”

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Apple has said it will offer Apple Music on Android – though the motive there, as with the iPod years ago, may be to create a “halo effect” to attract Android users to switch to the iPhone.

“I really see the iPhone as the Hotel California of smartphones,” said Wood. “once you’re in, it is very difficult to leave.”

Apple TV
Besides new phones, Apple is expected to significantly upgrade its Apple TV set-top box, which has barely changed since it went on sale in March 2012. The key difference in the new one, expected to cost about $149, will be voice-activated searching (using Siri) and control across multiple sources of content such as Netflix and iTunes, plus the App Store allied to a motion-sensitive controller, rather like Nintendo’s Wii.

The changes look timely, if not overdue. Apple TV is outsold by challengers including Amazon and Google, according to market research firm Parks Associates. Amazon’s Fire TV set-top box already has a voice-controlled interface, and Google’s Chromecast plug-in stick can be used to ‘cast’ content directly from a computer or phone to the TV. But there is plenty of room for growth, as only 20% of US households with broadband have a streaming device, the report found.

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The refreshed Apple TV could also add the capability to play games and other apps. With gaming already a huge pursuit on smartphones, the prospect of it on a TV is exciting to iPhone developers, who for years have been wishing for a new Apple platform for apps.

Dave Verwer, an independent developer of iPhone and iPad software, said: “Having the App Store on a TV-sized device is not just about consuming media. It’s about it being a games console, education platform, video conferencing system and so much more. As an app developer, that’s a very exciting opportunity.”

If the new model is as small as the existing one, it could be attached to the back of displays, Verwer noted. “That pushes it firmly into business and retail usage as well.”