Consumers hanging up on the smartphone economy

The frightening part of what happened to Apple’s stock Thursday is how much the U.S. economy depends on the cultists of Apple, who religiously have bought products that are overpriced even though the updates are hardly so impressive that people should shell out ridiculous amounts of money for them.

Finally, even those in the cult have had enough.

Apple’s profits have fallen, sparking the realization that the U.S. economy is a house of cards, built on consumers buying stuff they don’t really need. Eventually, they realize they don’t need the stuff.

The thing is: It was the Chinese consumers who said it, the Boston Globe’s tech writer Hiawatha Bray writes today. We should’ve seen it coming.

But in his letter announcing his firm’s poor showing, Apple chief executive Tim Cook says the blowback to “nosebleed pricing” [ed.note: in the words of industry analyst Tim Bajarin] is happening in “developed markets” too. That’s us.

Shira Ovide, the Bloomberg tech writer, says Apple ignored reality. We’re at peak iPhone.

When Apple sales started falling in China in 2016, Apple executives gave every excuse in the book, including slower economic growth in the country. Sound familiar? Some of those excuses were valid then. Others weren’t.

Apple belatedly acknowledged it was caught off guard by a hangover effect following blockbuster sales of the 2014 iPhone 6 model in China and elsewhere in the world. In interviews over the years, Cook sought to accentuate the positive about business in China, notably by saying one or more iPhones were the most popular smartphones in China.

Cook’s comments papered over the reality that Apple not long ago was the top-selling smartphone maker in China and slipped to fifth in the second quarter of 2018

Apple remains one of the most innovative companies, but it needs, as one industry analyst put it, a “big hit.” Gussying up an old product won’t cut it anymore.

Related: Forget the iPhone shortfall; Apple’s all about services now (Wired)