Where have Apple fans gone? Will they come back?

Revenue contribution from Greater China fell to its lowest level since 2014.

Although Apple CEO Cook had already warned in a letter to investors at the beginning of the year that "weak business in Greater China is the most important reason for Apple's revenue decline," there is no doubt that Apple's financial report is the real "hammer."

In the first quarter of fiscal year 2019, iPhone revenue fell 14.9% year-on-year, marking the largest decline in 10 consecutive quarters.

Why is the iPhone suddenly not selling well? One reason is that local operators in some countries have reduced subsidies for Apple products, and the iPhone battery replacement program has extended users' phone replacement cycle; another more cruel reason is probably the relentless pressure from competitors and mistakes in their own pricing strategies, while exchange rate fluctuations have also brought about a strong dollar, exacerbating the price problem.

The scene of people queuing up all night outside Apple stores is no longer there. Now Apple has launched the best discount since entering the Chinese market on its official Chinese website - iPhone XR starts at 4,399 yuan, and iPhone XS starts at only 6,599 yuan. But it seems that it still cannot quickly win back the hearts of Chinese Apple fans.

"Where have all the Apple fans gone?" This question doesn't need to be answered.

In fact, Apple's sales have been stagnant for three years, and the truth was revealed when the price strategy could no longer be effective. There are many reasons behind this: the real Apple fans are still there, the second-hand Apple market is still hot, Apple phones are still the most valuable, Apple fans don't seem to be as rich as we think, and although domestic mobile phone brands represented by Huawei have become the winners of Apple, the Chinese mobile phone industry as a whole has also encountered difficulties...

True Apple fans are still here

"Who says Apple is no longer good? It's still 10,000 times better than Android!"

Many stories of Apple fans who still buy Apple products cannot escape the word "sentiment" -

In 2011, Li Qing was still a student, using an old Samsung slider phone. His family received an iPad 2 as a gift, which was the first Apple product in Li Qing's life. Accustomed to old keypad and slider phones, a tablet with a huge screen that could execute commands flawlessly just by sliding and tapping with fingers was a huge shock to Li Qing at the time.

At that time, playing Fruit Ninja, Talking Tom, and Angry Birds on the big screen was the greatest pleasure of owning an iPad. It was a real game console. Li Qing always brought his iPad with him wherever he went.

After entering high school, Li Qing got an iPhone 4S. This phone accompanied him throughout his high school years. Playing games in the classroom, hiding in bed late at night to watch dramas and listen to music, those years became the most beautiful memories in the heart of this student who studied hard.

After graduating from high school, he bought an iPhone 5S gold version. However, it was stolen not long after he entered college. Then, when the iPhone 6 was released in China, he bought an iPhone 6 (ultra-low configuration version). He also bought an iPod Shuffle and iPad Air, which he used mainly for watching videos and playing games.

The big event in 2015 was the release of iOS9 and iPad Pro by Apple. I remember when they first came out, Apple Pencil was out of stock everywhere. Li Qing ran around and finally grabbed a few of the few remaining pens at the newly opened China World Trade Center Apple Store.

In 2016, influenced by 3D Touch (Apple's new generation of multi-touch technology, iPhone 6S), Li Qing also bought an iPhone 6S. In 2017, Li Qing replaced his huge iPad Pro 12.9-inch with a small 10.5-inch one, and bought a MacBook Pro 2017. For Li Qing, using two computers every day, playing games while writing papers seriously, is very comfortable.

Now, iPhoneX is his main phone.

Another Apple fan is a collector-level fan.

On June 8, 2010, Jobs was still around. When he saw Jobs standing at the iPhone 4 launch conference, gesticulating and talking endlessly about the power of the Apple system and some unexpected black technologies, Xiao He had an idea in his mind that he would try the iOS system even if he had to sell everything he had, buy an iPhone 4, become an Apple fan, and keep up with the trend.

At that time, Xiao He had just graduated from high school and reached an agreement with his father to help with the family business during the summer vacation, and he could get a high salary of 2,500 yuan a month (Xiao He helped for two months). After receiving this hard-earned 5,000 yuan, Xiao He asked his cousin to take him to the mobile phone store to buy an iPhone without saying a word.

Xiao He entered college with an iPhone, and people around him looked at him with admiration. After using the iOS system, Xiao He never tried other brands of mobile phones.

Xiao He has been using iOS since college, not because of its good-looking appearance or to keep up with the trend, but because he is so used to iOS that he would not be able to switch to Android.

From 3GS to X, Xiao He buys an Apple phone every year. Xiao He said that this is a kind of expectation and yearning for life for Apple fans. Just like some people collect action figures, some collect SLRs, some collect famous watches, and some collect luxury cars. He likes to collect Apple.

For sentiment, for the brand, for the product experience, and because they are used to the iOS system...these are the reasons why Apple fans continue to buy Apple products.

And according to Canalys data, although Apple’s mobile phone shipments fell by 13% year-on-year, its market share has not changed and is still around 9%.

According to data released by Xianyu, a second-hand goods trading platform under Alibaba, in July 2018, among the 10 mobile phones with the best value retention rates, the top three are iPhones (iPhoneX 73%, iPhone 8 Plus 61%, iPhone 8 62%).

The first-hand items are no longer selling well, but the second-hand items are still very popular.

Another indisputable fact is that Apple phone users change phones less frequently than Android phone users. According to the third quarter 2018 data report released by MobData Research Institute, Apple fans' loyalty ranks first.

Compared with Android phones, iPhone hardware provides a longer "comfortable use period". Usually, an Apple phone can at least guarantee smooth operation after upgrading to a new system within two years. For Android, it is somewhat difficult to achieve this.

Where have the fruit fans gone?

Despite this, the number of Apple fans is still decreasing.

In his letter to investors, Cook spent a lot of time "blaming" the overall economic environment in emerging markets, and said that the shrinking smartphone market in Greater China was one of the main factors leading to lower-than-expected iPhone sales.

Indeed, since the second half of 2018, China's mobile phone market has seen a "double decline in volume and price". According to the GfK report, as of the third quarter of 2018, the sales volume of China's mobile phone market fell by 18% year-on-year, and the sales revenue fell by 9% year-on-year. GfK has lowered its 2018 China mobile phone market index and adjusted its annual retail sales forecast to 422 million units, a year-on-year decrease of 9.5%.

But it's just not incremental.

In terms of existing users, Apple users are also losing users to other brands.

Data from MobData Research Institute shows that in the third quarter of last year, 5.2% of male Apple fans and 10.4% of female Apple fans were diverted to Huawei; 4.8% of male Apple fans and 8% of female Apple fans were diverted to OPPO.

Behind this loss lies the rise of Chinese domestic mobile phone brands and the lack of cost-effectiveness of Apple.

Apple products have always been positioned as products for the high-end user market. The average order value of some advertisements placed on Apple users is significantly higher than that on Android users. However, no one is a "sucker". After disassembling and calculating, market organization IHS Markit found that the material cost of iPhone Xs Max is only US$20 more expensive than that of iPhoneX, but the selling price is US$100 higher.

Apple clearly targets its users as the super-rich - "There are many similarities between Apple and luxury companies, such as consumers buying not only technology and functions, but also the ideas behind the brand." HSBC analyst Erwan Rambourg wrote in a report.

In 2014, Cook poached Ahrendts, then CEO of Burberry, and appointed him as senior vice president of Apple's retail and online business. Even when the price of iPhone XS Max hit a new high, Cook kept emphasizing: "We have always believed that if you provide a lot of innovation and value, some people will be willing to pay for it."

Until the cruel data from the market showed that Apple’s “luxury strategy” had failed.

Even more cruel data is that last year MobData released a survey result: compared with users of other domestic mobile phone brands such as Huawei or Xiaomi, most of China's Apple iPhone users are "invisible poor" and their economic conditions are not as good as they seem.

The agency said that most iPhone users are generally poorly educated, financially strapped and have almost no valuable assets. Among them are many unmarried women aged between 18 and 34, most of whom have high school diplomas and a monthly income of less than 3,000 yuan, and are classified as "invisible poor."

We also saw reports in some social news such as "Girl spent 8,000 yuan on an installment plan to buy an iPhone, fell into online loans and owed 1.05 million yuan." Other data, which was not sourced and verified, said that 47% of people in China bought iPhones on installment plans.

In other words, the incremental growth is gone and the stock is gone.

As for Apple's new hope for service business, Greater China may not be able to enjoy it. Moreover, if iPhone sales continue to decline, or even affect the activation of iPhone devices, the growth space of Apple's service will be very worrying.

Apple fans have left, they may come back, or they may not.