Apple's "stubborn" promotion

"Even though times are hard, we still can't lose face." This sentence is particularly suitable for apples this winter.

Recently, Apple's official website launched a "trade-in" activity, where consumers can choose to exchange their idle smartphones for a certain discount when purchasing new iPhone XR, iPhone XS and other models, similar to the replacement policy when purchasing traditional cars. However, this time Apple's "trade-in" policy is not limited to iPhone replacement, other brands of Android models can also participate.

In addition, the amount of this iPhone trade-in event has been greatly increased compared to before. The current trade-in price for iPhone XR starts at 4,399 yuan, and the price for iPhone XS starts at 6,599 yuan. This means that in this trade-in event, users' old phones can be exchanged for up to 2,100 yuan, which is an increase of nearly 50% compared to the same period last year.

Although Apple did not directly put out slogans about price reduction promotions, such trade-in activities are actually price reduction promotions in a sense. Apple hopes to stimulate the market performance of the new iPhone in this way.

Disguised price cuts and advertising pushes, Apple is a bit anxious this winter

In addition to the "trade-in", Apple has also promoted new iPhones to users through pop-up windows when users update their systems, encouraging old users to trade in their old iPhones for new ones. Although pop-up push notifications can more accurately push information to the target user group, such actions will undoubtedly make users feel disgusted. Such direct push notifications would never appear in Apple's previous system updates.

In addition to the price discounts on the hardware side, Apple has also recently launched a new round of promotional activities with the Shanghai Metro in terms of Apple Pay payment at the software level. The purpose is naturally to stimulate users to use Apple Pay, while also trying to increase user stickiness by increasing Internet service scenarios.

Behind this series of actions lies the weak market performance of the new iPhone and the pressure brought by high inventory.

According to the latest data from third-party statistics agency Counterpoint, Apple's share of the Chinese smartphone market fell from 10% in the same period last year to 9% in the third quarter of 2018, and its overall shipments fell by 17%. In addition, the new iPhone did not save Apple from its gradual weakness, and due to the market's disappointment with its innovation, the new iPhone's performance in the global market was not ideal.

Among them, the "cheap version" iPhone XR, which Apple has high hopes for, seems to be the hardest hit. According to the latest research data released by CIRP, a foreign market research organization, as of November this year, the overall sales of the new iPhone XR are lower than those of the iPhone 8 series in the same period last year. In terms of specific data, in November alone, the sales of iPhone XR accounted for 32% of the total iPhone sales. In the same period last year, the sales of the iPhone 8 series accounted for 39%.

Affected by this, Apple's stock price has been falling since the beginning of October this year. As of December 28, Apple's market value has fallen to 740.994 billion US dollars, compared with the highest point on October 3 this year, it has evaporated more than 390 billion US dollars, equivalent to the loss of Alibaba. For this reason, the "famous" Apple analyst Ming-Chi Kuo also lowered his iPhone shipment forecast by 30%.

In this regard, Sun Yongjie, a well-known communications industry expert, told Dongdong Notes: "Apple's trade-in is actually a promotional method. The performance of new iPhones in the global market this year is not very good. The price has been further increased without much overall innovation. Especially after Apple announced that it would no longer disclose the specific sales volume of iPhones, it seriously hit the outside world's confidence. In addition, this year's competitors like Huawei have been too aggressive, which may not have been anticipated by Apple before."

At the same time, Sun Yongjie believes that this trade-in promotion method can not only stimulate the sales of new iPhones, but also bring a certain number of new users to Apple. Because if the exchange includes an Android model, it is equivalent to directly adding a new iPhone user. And if it is an old iPhone user, while promoting product sales, Apple can also refurbish the old iPhone and then sell it. After all, the sales of Apple's official second-hand official products are still good.

Apple, which has always been a benchmark for supply chain control in the industry, seems to be facing tremendous pressure in terms of inventory due to the failure of its new phones.

Sun Yanbiao, director of the First Mobile Research Institute, revealed to Dongdong Notes: "On October 25 this year, the iPhone XR was officially launched in China. In one week, the sales volume of iPhone XR in the domestic market was 100,000 units. The sales volume in November was less than 600,000 units. This performance is even worse than the more expensive iPhone XS MAX."

At the same time, Sun Yanbiao said: "Before the launch, Apple had great confidence in the 'cheap' iPhone XR, but the actual market performance obviously did not meet Apple's expectations. Apple is also very sensitive in this regard, so we saw that one week after the iPhone XR went on sale, Apple sent a signal to the supply chain to cut orders. However, at this time, the first batch of orders before the phone was launched had already been produced. Currently, iPhone sales in the Chinese market account for one-third of the global market share. If we calculate this way, the global sales of iPhone XR in November will be no more than 1.8 million units."

Sun Yanbiao emphasized that due to Apple's confidence in the iPhone XR, the first batch of orders were at least tens of millions. However, judging from the current market performance, Apple is obviously unable to digest such a large amount of inventory in a short period of time. "Therefore, Apple's inventory pressure is very large at this stage, which is also one of the reasons for its vigorous promotion."

Profits first, Cook chooses to walk a tightrope

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As a professional manager, Cook has always been criticized by the outside world for not truly continuing Jobs' innovative spirit. He is just a successful businessman.

Indeed, compared to the product level, Cook and Apple's ultimate goal in the current competitive situation is to effectively increase profit margins while not losing users. Because when Apple decided not to announce sales, the capital market has already taken profit margins as an important assessment point for Apple's future development. Although analysts still focus mainly on sales, as the helmsman of the company, Cook seems to pay more attention to investors.

The most favorable response to the capital market is a beautiful financial report. The Double 11 holiday period is the peak shopping period, so Apple is trying to use the holiday shopping peak period to contribute to its next financial report.

But Qualcomm, its old rival, does not seem to want to let Apple feel comfortable. On December 10, Qualcomm announced that the Fuzhou Intermediate People's Court in China had issued a preliminary injunction prohibiting Apple from importing and selling seven iPhone models from iPhone 6S to iPhone X in the Chinese market because the court believed that Apple had infringed two of Qualcomm's software patents.

In response, Apple did not enforce the ruling. According to media reports, Qualcomm's lawyer said that the Chinese court's ruling had been sent by special mail, and Qualcomm confirmed receipt on December 7, but Apple's three subsidiaries refused to sign the court's ruling, resulting in the ruling being returned and the temporary sales ban not taking effect immediately. Currently, the court has sent the ruling again, and Qualcomm has also stated that it has submitted an application to the Chinese court for compulsory execution (ban on sales) of the iPhone.

At the same time, following the domestic court's announcement of a ban on the sale of some Apple models, on the 20th of this month, according to a report by the US NBC Financial Channel, the Munich District Court in Germany granted Qualcomm an injunction against Apple that day, prohibiting the latter from selling some iPhones in Germany that use Intel chips and parts from another supplier, Qorvo.

It is worth noting that the German court issued a permanent injunction, which means that if Apple cannot refute the injunction through legal means, the relevant Apple models that infringe the patent will never be able to enter the German market. In response, Apple issued a statement saying that it was disappointed with the German court's decision and would appeal. However, during the appeal process, the company will not sell iPhone 7 and iPhone 8 in 15 retail stores in Germany.

The same patent infringement, the same penalty, and different handling methods have also caused Apple to be questioned.

Perhaps Apple's "deadbeat" behavior is to ensure the company's revenue and profits. During the peak sales season at the end of the year, Apple cannot allow a sales ban to occur in China, an absolutely important market. Therefore, it would rather take the risk and refuse to sign the court's ruling to ensure the normal sales of its products.

In this regard, Sun Yongjie said: "In the short term, Apple's sales in the domestic market should continue to be normal. However, in this relatively sensitive period, negative news like this about Apple will definitely be infinitely magnified, which will have a very bad impact on Apple's brand. The issue of brand image is still a long-term issue, and it may be affected for a long time to come."

【Conclusion】

The market and consumers have always been very honest. Price reduction is undoubtedly the simplest and crudest way to promote sales. Apple's aggressive promotion may increase product sales in the short term, but promotions are always short-lived. In the final analysis, it is not because of the high price of Apple products that "dissuade" loyal Apple fans, but because of the lack of product innovation.

There is no longer the surprise and screams that every new product brought during the Jobs era. At this year's iPhone launch conference, when the new iPhone was presented to users, the applause from the audience was perhaps the best proof of the disappointment of Apple fans. Promotions can only stimulate for a while. If Apple wants to regain the throne of the world's largest market value, it will need more convincing innovation and transcendence in the future.