This reporter trainee Ma Yan
After the two previous price cuts achieved immediate results, Apple seems to be more determined by this strategy.
On March 5th, Suning Mobile's official Weibo said that Suning Tesco and Suning Tesco's flagship store had taken the lead in lowering the price of iPhone XS products by up to 1,000 yuan.
After the price adjustment in March, the price of the iPhone XS 64G and 256G in the Tmall Suning Tesco flagship store was 1400 yuan lower than the official website, which was 7,299 yuan and 8699 yuan respectively; the iPhone8 64G was less than 4,000 yuan.
In addition, China Mobile's mobile phone flagship store has a 256G iPhone XS MAX mobile version on Tmall. It is only sold on Tmall online. The price is only 9,288 yuan, and the price has reached a new low.
Jingdong also said that in order to give back to consumers, some Apple products open promotions, including iPhone XS and iPhone XS Max price adjustment: iPhone XS Max official website price down 1700 yuan, iPhone XS Max vouchers as low as 7999 yuan, iPhone XS grabs $7,399 from the limited time special.
This is already the third time Apple has cut prices this year.
According to media reports, since the iPhone started the third round of price cuts at 5 pm on March 5, as of 12 o'clock on March 7th, the overall sales of iPhone in Tmall increased by 150%. Among them, iPhone XS Max sold the best, an increase of 230%.
Amazing price cuts
Apple cuts prices into "addiction"
“This shows that there is no other way for Apple to increase its sales in the future. The price reduction is the only way. "The first mobile phone research institute director Sun Yanxi said in an interview with the "Securities Daily" reporter.
In the past few years, Apple's mobile phone price cuts are a statement of the Arabian Nights, and at most the price reduction at the dealers, the official cooperation platform of official website, Jingdong, Suning is impossible. But recently, Apple changed its previous style and frequently lowered the iPhone price in the Chinese market.
In addition to direct price cuts, in order to boost iPhone sales in the Chinese market, Apple China official website also launched a new trade-in activities, in addition to supporting Apple products, but also support Huawei, OPPO, Samsung, vivo, Xiaomi and other brands Model. Last month, Apple China announced that it would extend the trade-in time for iPhone XS (including iPhone XS Max) and iPhone XR, and the deadline was extended from February 17 to March 25.
The root cause of Apple's frequent price cuts in breaking high-end images lies in its performance in the Chinese market.
Linda Sui, Director of Strategy Analytics, said that in the past 12 quarters, iPhone performance in China has declined year-on-year in eight of the past 12 quarters. The increasing price of the iPhone has made Apple a target, and it is on the verge of being pushed out of the Chinese market.
The decline in iPhone sales also affected Apple’s performance. Apple's first quarter results for 2019 showed that during the reporting period, the company achieved revenue of US$84.3 billion, down 4.5% year-on-year; net profit was US$19.965 billion, down 0.5% year-on-year. Net sales of the iPhone fell to $51.98 billion in the quarter, and revenues in Greater China plummeted 27% to $13.17 billion.
In anticipation of performance expectations, Apple CEO Cook said that the high price has kept users away from the iPhone, especially in the Greater China market, and the exchange rate issue has amplified some market differences. He also admitted that in the first quarter of 2019, iPhone revenue and user upgrades were worse than originally expected, “price is one of them”.
What followed was the unprecedented price cuts of Apple's iPhone products in the Chinese market. And this move, so that iPhone sales soared by 80% in 20 days.
And since the 5th of March on the 5th, the iPhone started the third round of price cuts, as of 12 o'clock on March 7th.
The iPhone’s overall sales in Tmall increased by 150%. Among them, iPhone XS Max sold the best, an increase of 230%.
However, according to the "Securities Daily" reporter observation, the sales increase caused by price cuts is more obvious in the mainstream e-commerce platform, but it is not effective in channel retailers. Some mobile phone owners told the "Securities Daily" reporter that Apple's own pricing is too high, even if the price is cut, the price is still not low, so the sales volume after the price cut is only slightly better.
No sales without price reduction
Apple enters a vicious circle?
It is worth noting that in terms of the profit share of the mobile phone industry, Apple's mobile phone has been far ahead of other brands. According to the market research organization Counterpoint's 2018 global smartphone brand profit distribution, Apple has captured 62% of the mobile phone market profit.
Now, Apple does not hesitate to increase the market performance by making a big profit.
In this regard, some analysts pointed out that for Apple, which has consistently pursued higher profit margins, price cuts mean lower profit margins. In a sense, Apple is gradually losing its pricing power and has to follow the trend. Accept market pricing.
At one time, with strong software and hardware innovation capabilities and brand appeal, the Apple brand is synonymous with “high-end” in the minds of users. But after more than 10 years, I lost the Apples of Steve Jobs, and there are no hard-won hardware and software products.
On the software side, Apple iOS has not made much progress, and its system is even facing the danger of collapse.
On the hardware side, since the iPhone 7, Apple has never had any product that can lead the mobile phone industry. In the past two years, in the innovation of screens, overall layout, screen technology and other aspects, the domestic mobile phones of the Android camp are in the forefront, and Apple is always in a slow half-shooting or even slow-paced rhythm.
Some analysts pointed out that at the just-concluded MWC2019 conference in Barcelona, Samsung, Huawei and other manufacturers became the focus of the industry in the world with the cool new features of 5G+ folding screen, while Apple was in the 5G and folding screens. It deepens its impression of “out of date” in the minds of consumers.
Sun Yanxi also said that Apple is the representative of innovation, only good products can win the market. In order to reduce the price to expand market share, in a sense, it is to drink and quench thirst. Apple's recent frequent price adjustment is actually a very big damage for the brand.
Industry observer Dong Jun also pointed out to the "Securities Daily" reporter that for Apple, price is the only lever that can shake the Chinese market, and is also the most powerful weapon. Although Cook does not want to use price cuts to win back to the market, the price cuts of these rounds of e-commerce platforms have already broken Apple's price system. In other words, the strategy of raising the price of the product has made Apple suffer in China, and the future new products are bound to enter a cycle of no sales. In the face of the Chinese market: how to balance profits and sales, the future will become Apple's biggest test.