If Apple wants to revive its sales, it must ensure the popularity of all four of its iPhones.

• Since 2020, one of the new iPhone models has consistently underperformed its siblings in sales each year.
• The iPhone 16 Plus is positioned in the center of the lineup this year.
• If Apple can prevent its new phones from cannibalizing one another, the company will have its best chance to see meaningful growth in iPhone sales since 2022.

When Steve Jobs returned to Apple in 1997, one of his initial actions was to streamline the company's product offerings. At that time, Apple's product lineup consisted of four computers: two laptops and two desktops, both available in professional and consumer versions.

At a product launch in 1998, Jobs stated that if we had four exceptional products, that would be sufficient.

In 2024, Apple's product lineup has expanded significantly, with the launch of four iPads, four MacBooks, two desktop Macs, one Vision Pro headset, two Apple Watch models, and three kinds of AirPods. However, the company has maintained a consistent approach to its iPhone offerings, with four models remaining the magic number.

Since 2020, the company has released four iPhones annually, including the iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max in September.

Since historically, Apple's iPhone sales have grown the most when the company expanded its lineup, the company introduced a four-phone lineup. If the four new phones released each year do not cannibalize one another, it will give the company its best chance to see meaningful growth in iPhone sales for the first time since 2022.

The company does not disclose sales figures for individual products, but overall iPhone sales for fiscal 2024 were $201.18 billion, which is a slight decrease compared to the previous year.

Unfortunately, not all iPhones are equally popular for Jobs' company.

Since 2020, one of the new iPhone models has underperformed its siblings in sales. This year, it's the iPhone 16 Plus, which is situated in the middle of the lineup. Priced at $899 in the U.S., it is more expensive than the entry-level iPhone 16 but less expensive than the iPhone 16 Pro and Pro Max, which boast superior screens.

DSCC, a research firm that specializes in the smartphone display industry, has observed a trend where the shares of the Pro and Pro Max phones have been increasing annually, while the Plus model has been declining. Specifically, the Plus model's share of total Apple screen orders dropped from about 21% in 2022 to 10% in 2023, according to DSCC's data on annual panel procurement through October. Although it recovered somewhat to 16% this year, it remains the lowest volume among DSCC's new iPhones.

Ross Young, founder of DSCC, stated that they are still facing difficulties with the fourth model.

In the third quarter, the iPhone 16 Plus accounted for 4% of overall iPhone sales in the U.S., while both the Pro and Pro Max each accounted for 6% of sales, according to survey findings by Consumer Intelligence Research Partners. Additionally, the regular 16 accounted for 4%, although early cycle iPhone sales are heavily weighted toward early adopters and the Pro models, according to CIRP.

The latest model sales in the third quarter were limited to a few weeks, but the 2024 findings align with last year's, with the 15 Plus accounting for 3% of total sales a month after its launch.

In the third quarter of 2024, the iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max were the top three best-selling individual smartphone models worldwide, according to Counterpoint's data. The iPhone 15 Plus did not make the top 10 list.

The Mini and Plus failures

Since the iPhone's introduction in 2007, the number of new models has increased significantly, with Apple continuing to sell older models as budget options.

In 2014, Apple launched the iPhone 6 Plus, marking the first time the iPhone was available in two sizes. This move resulted in three consecutive quarters of growth exceeding 27% in 2015. Following the release of the iPhone X in 2017, which increased the price of the premium phone and established a three-model lineup, Apple experienced three straight quarters of growth surpassing 15%.

Since the pandemic, iPhone sales have been basically flat after Apple moved to a four-phone lineup in 2020 and experienced a surge in growth, hitting 54% in one quarter.

In 2020, the iPhone Mini was the cheapest new iPhone model launched by the company, priced at $699.

In 2021, Apple maintained its strategy of keeping the same device size, hoping that the minority of consumers who had previously demanded smaller phones would switch to the device. However, this strategy did not work, and Apple no longer offers a 5.4-inch screen device.

In 2022, Apple changed its strategy and released the iPhone 14 Plus, which had the same chip and features as the entry-level iPhone 14 but a larger screen. This approach was successful, as Apple had done in 2014. According to DSCC, Apple increased its panel procurement for the iPhone 14 Plus to 21% of the total screens it ordered that cycle.

But the Plus strategy didn't work as well as it had before.

Is Air next?

In the future, Apple may alter its approach to discovering a successful fourth model for its 2025 iPhone lineup, while maintaining its current strategy of four iPhones.

An Air model could be introduced by Apple at the top of the lineup, with a lighter-weight device and a higher starting price, according to an August report by Bloomberg News.

Although Apple may charge more for the Air device, it may have to compromise on the camera feature due to its lighter weight and sleek design. According to DSCC's Young, the screen size of the Air is predicted to be 6.55 inches, falling between the Pro and Pro Max models' screen sizes.

Apple could consider launching a new high-end phone, as sales of Max models have consistently surpassed those of lower-end models, indicating a greater demand for premium and feature-rich phones at the top of their product line.

In October, Apple announced that the iPhone 16 and iPhone 16 Plus were in sufficient stock to meet demand, but the iPhone 16 Pro and iPhone 16 Pro Max were still in short supply.

In China, the 16 Pro and Pro Max models of iPhone 16 showed a 44% increase in sales compared to the previous year's high-end models.

Model preferences also vary across regions, Counterpoint analyst Varun Mishra told CNBC.

"The Pro series is doing well in China because consumers there prefer Pro models. In India, the Pro series is strong due to a lower launch price compared to last year, which was made possible through local manufacturing."

Apple has previously released thinner, lighter versions of its existing products to increase prices and push the boundaries of its engineering. The MacBook Air, introduced in 2008, was marketed as being thin enough to fit in an envelope. Initially priced at $1,799, it has since become Apple's entry-level laptop.

In 2013, the company released an iPad Air, which had a thinner design, although it was not the flagship new iPad model that year. Now, Apple uses the iPad Air as the middle option in its iPad lineup.

If Apple moves from Plus to Air, it could increase iPhone sales, especially if the new model is priced higher than other iPhones. This could help Apple increase its profit margin and maintain the trend of higher average iPhone selling prices. Additionally, it could draw the attention of early adopters and fans to a single high-end iPhone model.

Young stated that they would attempt something new next year.

BofA's Wamsi Mohan suggests that the iPhone 16 upgrade could be a multiyear cycle.