Cook: This iPhone is the worst I've ever had

Ten years after the iPhone was launched and six years after Jobs passed away, things have changed. Today, the iPhone still leads the global smartphone market, but for some reason, many fans still miss the Jobs era and often talk about the classic iPhone 4.

The end of the year is approaching. As one of Apple's most important markets in the world, Chinese consumers are looking forward to the Spring Festival in two weeks. The long holiday market may be the busiest time for Apple's Chinese channels. Or maybe it won't be too busy...

According to Nikkei Asian Review, Apple has informed its suppliers that it will reduce its iPhone X production target by half (to around 20 million units) for the first quarter of 2018. Subsequently, some relevant suppliers revealed to the outside world that the order volume of iPhone X has indeed decreased and has not reached 20 million units.

Influenced by this news, Apple's stock price fell 1.9% on the same day.

In fact, the news about the iPhone X order cuts had been circulating as early as a week ago, and there was even news that the iPhone X had been discontinued. During this week, Apple's stock price also fell all the way, and Apple's market value shrank by $45 billion in less than a week.

I don't want to buy the cheap ones, but the ones I want to buy are too expensive

Apple has undoubtedly worked very hard in 2017. The company, which has always been aloof, released three new products at once, including the much-anticipated 10th anniversary "commemorative edition". However, hard work does not mean success. From the iPhone 8 series falling below the issue price on the first day of listing to the recent iPhone X order cuts, all of them reveal a sense of market fatigue. At least from the current point of view, Apple's performance in the market is not as dazzling as in previous years.

Of course, judging by Apple's current market sales, it is still the leader in the smartphone market. However, this scene is vaguely similar to that of MOTO and Nokia back then.

In 2003, Nokia's epoch-making classic model 1100 was launched, and a year later it set a record of 200 million units sold worldwide. Ten years later, in 2013, Microsoft acquired Nokia's mobile phone business for $7.2 billion. Rise and fall is always the law of development of things, but many people don't want this to happen to Apple.

In fact, the iPhone has been around for ten years and will always encounter some barriers. However, Apple was clearly not prepared for the market performance of the iPhone 8 series last year. After all, even if your ID design is excellent, if there is no major change for four consecutive years, consumers will feel aesthetic fatigue. Compared with previous generations of iPhone products, the "flop" of the iPhone 8 series is not surprising as it did not bring a significant improvement in user experience.

Especially during the same period, Apple also “hastily” released an overly recognizable iPhone X, which exacerbated the decline of the iPhone 8. Perhaps Apple did not expect the “miserable situation” of falling below the issue price on the first day of sales. Or perhaps, they knew it would be a disaster, but they just didn’t expect it to be this bad.

Compared with the failed iPhone 8, the highly anticipated iPhone X performed much better, but this hastily prepared hit had hidden dangers when it was hot selling. Let's first look at its popularity. According to a report released by research company Canalys: In the fourth quarter of 2017, iPhone X shipped 29 million units worldwide, making it the smartphone brand with the largest shipments in the quarter. Among them, 7 million units were shipped in the Chinese market, accounting for 24.13% of the global market.

The sales of a single model are close to 30 million units, which is a good result for Apple's ten-year-long iPhone product line. However, the hot sales of iPhone X still caused pessimism among industry veterans, especially in the financial sector. Wall Street elites are obviously not optimistic about Apple's future market performance.

A month ago, Wall Street investment bank Nomura Instinet downgraded Apple's stock rating from "buy" to "neutral" because the iPhone cycle that has driven Apple's stock price up is nearing its end. This move has cast a shadow on the Christmas atmosphere at Apple's headquarters. On the 17th of this month, another Wall Street analysis agency Longbow Research did the same thing and predicted that Apple's iPhone shipments in fiscal 2018 will be lower than expected. Then, Atlantic Securities downgraded Apple's stock rating from "overweight" to "neutral" last Monday. The second rating downgrade in a week has already explained a lot of problems.

James Cordwell, an analyst at Atlantic Securities, said in a report to clients that there are signs that iPhone demand has begun to weaken, limiting the potential for future iPhone cycles. He also said that the smartphone's core position in consumer technology has been challenged.

In addition to Wall Street investment institutions, Apple has also been "besieged" by many investment banks.

Last Tuesday, the famous investment bank JPMorgan Chase also commented on the rumors: Due to the impact of the high-end smartphone market "clearly entering a plateau period", Apple has reduced the number of orders for the flagship iPhone X this quarter. Nancy Chang, an analyst in the field of technology and semiconductors at JPMorgan Chase, said that the peak of iPhone X shipments will fade faster than expected. "Because the high-end smartphone market has clearly entered a plateau period this year, we believe that the weak trend of iPhone X in the market will continue throughout the first half of the year."

It is worth noting that, unlike the previous securities agencies, Morgan Stanley did not downgrade Apple's stock rating after releasing the report, but downgraded the stock ratings of several Apple suppliers.

At the same time, European banking giant Deutsche Bank also said that although the "expected trading" of consumer demand for iPhoneX and the strength of the entire stock market have pushed up Apple's stock price in the short term, so that its stock price does not reflect the lower-than-expected status of the iPhone, it is expected that as iPhone sales data declines in the next few quarters, Apple's stock price will fall accordingly.

Deutsche Bank predicts that the production of iPhone X in the first quarter of 2018 may be only 25 million units, mainly because the high price of iPhone X has limited the growth of demand. The high price not only makes it difficult to be widely used, but also prolongs the replacement cycle of consumers. It can be said that the current market cycle of iPhoneX is in the "refresh" stage, not the super cycle stage, because the new features of the device are not enough to drive non-early buyers to take the initiative to "buy".

Not long ago, the famous "unofficial professional Apple prediction emperor" Guo Mingchi (KGI Securities analyst) also made a prediction: "iPhone X will come to an end this summer and become the shortest-lived iPhone in history."

Although the words of this prophet may sound harsh, judging from historical data, the accuracy of his predictions is much higher than that of the King of Football, Pele.

Indeed, although the iPhone X has made revolutionary changes this year, its high price and product defects have also restricted its rapid expansion in the market. For ordinary people, when buying a new iPhone that starts at $1,000 abroad and costs nearly 10,000 yuan in China, they will definitely not be as happy as before when they spent 5,000+ yuan. In more mature foreign markets, consumers' blind impulse has long been greatly reduced.

Especially after Apple was sued recently for the "speed reduction incident" and iPhone X had many defects such as screen and camera, Apple should have clearly felt the coming of this crisis.

Of course, there are still some market demands that can continue to support Apple's "arrogance". For example, many people are reluctant to admit it, but they all know that a considerable number of domestic users who buy iPhone X now do so for face. This can be seen from the performance of the Chinese market after the launch of new iPhones in recent years, and the fact that it accounted for a quarter of iPhone X sales last quarter. If anyone doubts this, they might as well take a look at VERTU's exaggerated performance in the Chinese market.

However, Apple's dream of a trillion-dollar market value cannot be supported by "face projects" alone. Faced with the current market embarrassment of "cheap but not willing to buy, too expensive if you want to buy", those Android-based competitors may have seen market opportunities.

Why Android competitors saw the opportunity

Profit is the most important thing for any business, especially for domestic smartphone brands.

For a long time, domestic mobile phone manufacturers have been both successful and unsuccessful because of their cost-performance ratio. The emergence of Xiaomi has allowed countless players to see the benefits of small profits but quick turnover, and the domestic mobile phone market has seen a strange phenomenon of no top but only lower prices. This strategy of holding high the banner of cost-performance ratio has also enabled many manufacturers to grow rapidly, but as the smartphone market matures, manufacturers have begun to try to get rid of the dilemma of only selling goods but not making money.

Therefore, we have seen a clear price increase trend in the domestic mobile phone market since last year. Xiaomi has broken through the "fixed" 1999 yuan, and OV has become the norm to sell for more than 3000 yuan (this is also due to the rising prices of mobile phone components). However, it is a pity that despite the certain increase in the price, the profit per unit of domestic mobile phone manufacturers is still pitifully small.

According to a report released by market research firm Counterpoint Research, in the third quarter of 2017, among the world's six largest smartphone manufacturers, Apple's profit per unit was the highest at $151, Samsung had about $31, while Huawei, the domestic mobile phone manufacturer with the highest profit per unit, had only $15, and Xiaomi's profit per unit was as low as $2, not to mention the others for now.

Therefore, for domestic mobile phone manufacturers, continuing to push high-end prices is undoubtedly their most important thing in the future. And the extremely high prices of the new iPhones are undoubtedly good news for them.

First, as the benchmark of the smartphone industry, if the iPhone continues to maintain its original starting price of 5,000+, domestic mobile phone manufacturers who raise the price to 3,000+ will lose a lot of customers. After all, when there is no obvious price difference, more users are willing to choose iPhone. The price increase of iPhone X undoubtedly provides more room for growth for domestic manufacturers.

Secondly, as the entire Android ecosystem continues to improve, the gap between high-end Android flagship models and iPhone in daily use has been significantly reduced. At the same time, the high price of iPhone X will make some iPhone users settle for the second best and choose the "good value for money" Android flagship model, and these disappearing Apple fans are the "new cake" for Android players.

Of course, Apple is not Nokia, and the cycle of prosperity and decline is not necessarily based on ten years. It is rumored that Apple will still launch three new iPhones in 2018, including a "cheap" model with an LCD screen, which is more practical and approachable. This may pull some users back from the Android camp, and may also inspire more new users who have longed for iPhone. But one thing will never change: if you don't move forward, you will fall behind.