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Apple's price cuts increased by 80% in the short-term sales.

February 11, 2019 00:41
Author: Ma Yan

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Before and after the release of the first quarter of the fiscal year 2019,appleThe company has changed frequently.

First, before the release of the earnings report, Apple’s sales strategy in China showed an unprecedented large-scale price cut promotion. Then on February 5th, Apple announced that its current retail director Angela Ahrendts (Angela Allenz) will leave in April this year.

Major e-commerce platforms

Have lowered the price of the iPhone

Although the price of Apple's official website has not changed much, the different Mac models on all major platforms in January have opened the price reduction mode. And Apple officials are also carrying out a series of redemption and staging strategies.

The sudden price cuts of Apple products are unpredictable. After all, Apple’s impression is that it will only slightly lower the price in the early stage of launching new products. However, the price cuts in the Chinese market are staggering, and the maximum discount for some models has reached 1,700 yuan. .

The reason for Apple's price cuts is very clear. The iPhone's poor sales performance in Greater China has become an important factor in Apple's revenue decline.

On January 30, Apple released its first quarterly financial report for FY 2019, saying that due to the weak sales of iPhone China, Apple's Greater China revenue fell 27% year-on-year. Apple CEO Cook said in an interview with the media that in order to alleviate the user's anxiety about high selling prices, he decided to implement the iPhone price reduction policy in some specific countries, that is, Apple will no longer focus on the dollar price, but in each Local marketcurrencyDetermine the iPhone price.

In fact, in 2019, Apple China has quietly tried to lower the selling price. First, it has borrowed subsidies from various channels such as e-commerce and operators, and then issued coupons through the official channel of Tmall flagship store.

InJingdongOn the platform, the price of iPhone 8 and iPhone 8 Plus dropped by 600 yuan and 800 yuan respectively, which is 1,100 yuan and 1,200 yuan respectively compared with the current official website price of 5099 yuan and 5999 yuan.

  Suning Online MarketThe iPhone XR 128GB version is only 5799 yuan, which is 1200 yuan cheaper than the official website of Apple's official website. At the same time, Suning Tesco is also on the iPhone XR redemption activity, using iPhone 7P for iPhone XR, the price is as low as 3,500 yuan. You can start XR.

The price of iPhone XR and iPhone 8/8P in Tmall Suning's flagship store has been lowered to 5,549 yuan, 3,899 yuan and 4,788 yuan respectively, which is 1200 yuan lower than Apple's official website. At the same time, Tmall mobile phones will subsidize popular models such as iPhone XS and iPhone XS MAX during the New Year's Day. The new iPhone will drop 1,500 yuan.

InFight a lotThe price of popular models such as iPhone XR, iPhone XS and iPhone XS max reached a historical low of 5099 yuan, 7299 yuan and 8099 yuan respectively. Among them, iPhone XS Max is priced at a minimum of 8099 yuan, and Apple's official website quoted 9599 yuan a difference of 1,500 yuan.


Apple gives up the luxury strategy

Previously, Apple has strong control over various channels in terms of pricing. This time, the price cuts on third-party retail platforms are generally considered to be Apple’s “incentive” channel sales strategy. And this basically means that Apple's attempt to pull the brand to the luxury level failed.

Then, on February 5th, Apple announced that its current retail director Angela Ahrendts (Angela Allenz) will leave in April this year.

Angela Ahrendts was dug up in 2014 from Apple's position as CEO of Burberry. The entry of Angela Ahrendts is seen as an attempt by Apple to further embrace the fashion circle and to heighten its brand tonality in a way that is both extravagant and even luxury. The most intuitive effect of this strategy is that the price of Apple products has gradually increased, and in the end it is very directly reflected in product sales.

As Apple detailed in the earnings conference call, iPhone sales have shrunk in the second half of 2018, largely due to changes in the Chinese market.

According to Strategy Analytics, iPhone shipments in China totaled 34.2 million units in 2018, a 22% decrease from 2017 – the iPhone sold 36.7 million units in China in 2017.

In November 2018, Apple announced that it will no longer announce the number of equipment sales, but only announced revenue and profit figures. In addition, Apple also lowered its quarterly revenue forecast at the beginning of this year.

In terms of global markets, Apple's shipments in the fourth quarter of 2018 (natural quarters) were also the biggest decliners in the head brand. IDC's latest statistics show that in the fourth quarter of 2018 (natural quarter), Samsung became the global quarterly champion with 70.4 million units of shipments, with a market share of 18.7% and Apple's shipments of 68.4 million units (estimated data). Second, the market share is 18.2%. Both brands' shipments have declined, with Samsung down 5.5% over the same period, while Apple's decline was as high as 11.5% over the same period.

MarketResearchThe agency, Canalys, pointed out that the ultra-high-end pricing strategy of the new iPhone is the main reason for Apple's overall decline in shipments.

Due to the decline in Apple's market position in China, the company's revenue and profits have declined for the first time since the iPhone was launched in 2007.

Station in Canalis ShanghaiAnalystJia Mo pointed out that Apple's challenges in the Chinese market are multifaceted. The growing power of competitors is not their biggest problem; the reduction in shipments of next-generation iPhones due to the substantial increase in selling prices is also a risk that Apple can foresee and bear. However, as Apple gives higher expectations to its service business development, in China, Apple urgently needs to find ways to maintain the iOS hardware market stock, otherwise this business will be overcast in China's future market development.

US investment bank Wedbush analyst Daniel Ives also mentioned in the latest report that there are two main reasons why Apple should sell iPhones in the Chinese market. First of all, the Chinese smartphone market is highly competitive. Second, consumers ultimately need to own the iPhone, so that Apple can achieve all the advantages of its service revenue growth.

Price cuts stimulate short-term sales growth

Or near joy

As it turns out, the price cut is really a potent drug.

According to media reports, after 20 days of price cuts in China, iPhone sales have increased by nearly 80%.

From January 11th, Apple began to cut prices to January 30, the iPhone sales on Suning Appliance platform increased by 83%, of which iPhone 8 and iPhone XR are the most popular models.

The Tmall data shows that since the iPhone started to cut prices on January 13th, as of January 29, iPhone sales have increased by 76% in the past two months.

Some analysts believe that the reason why Apple's mobile phone sales will achieve such rapid growth is that the price reduction of Apple's mobile phone is large enough. This is most evident in the iPhone XR. The aircraft was sold for more than three months, and the highest price cut has reached more than 1,700 yuan, which is rare.

The above-mentioned US investment bank analysts also said in the report that Apple's iPhone will continue to cut prices sharply in the Chinese market to ensure sufficient competitiveness.

However, Apple’s unprecedented price cuts, in the eyes of the outside world, may be near-worry. Although the short-term stimulated the growth of sales, some analysts believe that the price cut is very harmful to Apple's price system and brand.

In an interview with a reporter from Securities Daily, Sun Yanxi, dean of the First Mobile Research Institute, said that Apple is a representative of innovation and only good products can win the market. Price reduction to expand market share, in a sense, is to drink and quench thirst, Apple's recent frequent price adjustment, is actually a very big damage to Apple's brand.

Some analysts pointed out that on the one hand, Apple broke the price system that was once constructed. For Apple, which consistently pursues higher profit margins, price cuts mean lower profit margins. The decline in profit margins, in a sense, Apple is gradually losing the pricing power of products, and thus has to follow the market price.

On the other hand, Apple, which has always been known for its “preservation”, has actually cut prices, which is undoubtedly a blow to user loyalty.

However, in the current situation, Apple's price cuts are indeed helpless.

Daniel Ives stressed that price cuts are a necessary strategy for Apple, which is related to Apple's user base and is a prerequisite for the continued growth of Apple's service business in the next 10 years. He also stressed that in the Chinese market, Apple faces Huawei. And the serious challenge of Xiaomi, Apple needs to ensure that users will not be lost in the next few quarters.

According to IDC data, Huawei's share of the global smartphone market in 2018, Huawei and Apple are only 0.2 percentage points lower, catching up with the situation is very fierce.

"Apple needs to re-examine its iPhone's China strategy, especially the need to adapt to the changes in the purchasing behavior of domestic high-end users to adopt a more market-oriented (GTM) approach to local consumers, thereby enhancing the recognition of Apple's mobile phone continues to be high-end. The Chinese market will be more and more important for the strategic position of all Apple products, which is an irreversible trend." Jia Mo believes.

(Article source: Securities Daily)

                (Editor: DF392)

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