Apple has rarely cut prices in China: sales volume and capital pressure go hand in hand, and the brand advantage is gradually weakening

Apple has fallen off the altar.

At the close of trading on January 15, local time, Apple's market value was $2.87 trillion, and Microsoft's market value reached a new high of $2.89 trillion, which was the second trading day that Apple's market value was overtaken by Microsoft in this round. In June last year, Apple just became the first company in the world with a market value of more than $3 trillion, but in less than half a year, its stock price fell all the way back from mid-December last year, falling nearly 10% in just over half a month.

Behind this, is the combined result of Apple's own declining innovation and the stronger competitiveness of other brands, iPhone sales have plummeted, Apple's pursuit of new technologies has always lagged behind, and capital's confidence in Apple has begun to weaken. In order to stimulate sales and save the stock price, Apple has recently held a rare Spring Festival promotion on its official website, but in the eyes of industry insiders, this may have a limited effect on the sales of Apple products, and this year is a critical year, and Apple needs to come up with a product that can revitalize its brand power.

"Rare in history" discounts

"From January 18 to January 21, Apple welcomes you with a host of benefits. Save up to RMB 800 on selected Apple products with eligible payment methods. When I opened the official website of Apple China, this promotional slogan came into view.

Judging from the layout of the website, Apple still attaches great importance to this promotion, and has opened a new page of "Enjoy the benefits in advance and get up early".

In this promotion, you can save up to 500 yuan on iPhone 15 Pro, iPhone 15 Pro Max, iPhone 15, iPhone 15 Plus, iPhone 14, iPhone 14 Plus or iPhone 13 with eligible payment methods, up to 800 RMB on MacBook Air (M2 chip model) and MacBook Air (M1 chip model), iPad Pro, Save up to $400 on iPad Air, iPad (10th generation) or iPad mini, $200 on Apple Watch SE, up to $100 on AirPods (3rd generation) and AirPods (2nd generation) and $50 on Apple Pencil (2nd generation).

The "China Times" reporter also visited an Apple Store in Beijing and found that the event was jointly held online and offline, and some clerks reminded customers that if they were not in a hurry, they could wait until the event started on January 18 to buy, and there were more customers who came to the store for consultation in the past two days.

However, the e-commerce platform's promotional activities are not synchronized with Apple's official website. Take iPhone15 128G version as an example,"China Times" reporter logged in to Apple's Jingdong self-operated flagship store and found,Its current price is5199element,800Yuan cheaper on the basis of the original price5999element;But the price of Apple's Tmall official flagship store is still 5999element,The reporter asked the customer service if there is a discount activity recently,The customer service said that at present, there are only "education discounts for college students"Activities,And this activity is mainly for Mac、iPad and Apple Pencil, excluding iPhones.

"At present, it seems that Apple is only a limited-time price reduction discount activity this time, and the offline stores are still limited, how long the event will last, and whether there will be it in the future is still uncertain, but in fact, the iPhone15 series has always had discounts on the e-commerce platform, and the discounts will continue after the 'Double 11', and even the discounts will be greater. Guo Tianxiang, senior analyst at IDC China, said.

What is the reason for the unprecedented price reduction of the official website and directly operated stores? The reporter of "China Times" interviewed the relevant person in charge of Apple China, but as of press time, the other party has not given a reply.

Pressures from the market and capital

In the eyes of the industry, this round of price cuts is mainly related to the huge pressure that Apple is currently under.

On the one hand, there is pressure from the decline in sales. Recently, analysts at investment bank Jefferies said in a report that Apple has been hit hard in the Chinese market, with iPhone sales falling off a cliff in the first week of 2024, plummeting 30% from the same period last year, and in December last year, Apple's sales fell by double digits.

From his own point of view, Ma Jihua, a communications expert, told the China Times that Apple's recent generations of products are not innovative enough, and there is not much leadership, especially the popularity of this generation of new products has declined significantly, so some promotional measures can only be taken to stimulate sales.

From an external point of view, "the entire Android camp has made rapid progress in recent years, and it is no worse than Apple in terms of product strength, and Huawei's strong return last year has also had a greater impact on Apple's Chinese market." Ma Jihua said. Guo Tianxiang also pointed out that the improvement of the competitiveness of Chinese brands in flagship products, including not only the return of Huawei, but also the Xiaomi 14 series, vivo's X100 series and Honor's folding screen series, have formed greater pressure on Apple's market performance.

The sharp drop in sales has led to a decline in confidence in Apple at the capital level, which is another pressure on Apple. From mid-December last year to early January this year, Apple's stock price experienced a wave of decline, from a high of $199.62 per share on December 14 last year to a low of $180.17 per share on January 5, a decline of nearly 10%, and its market value fell from $3 trillion back to the $2 trillion range.

Although the stock price has recovered in the last 10 days, the increase is not large, and on January 15, local time, Apple closed at $185.92 per share. Recently, brokerage Barclays also downgraded the company's stock rating and target pricing, downgraded Apple's stock rating to "underweight" from "neutral", and lowered Apple's price target to $160 per share over the next 12 months.

However, the factors affecting Apple's stock price are not only sales, Ma Jihua added that the most active directions in the market in recent years, artificial intelligence models, folding screen mobile phones and smart cars, Apple's progress is not large, and the degree of capital's favor for new technologies can be seen from the wave of AI capital ushered in after the popularity of large models last year.

Under the huge market and operating pressure, Apple said in the agency notice on January 11 that the company's CEO Tim Cook's total compensation in 2023 will drop from $99.4 million in 2022 to $63.2 million, mainly reflecting the decline in the value of its stock incentives.

The lag in the research and development of new technologies

Experts have different opinions on how much this discount can boost Apple's sales.

Guo Tianxiang said that although the challenges have increased, and the upgrade of the iPhone 15 series itself is limited to the attractiveness of Chinese consumers, the comprehensive competitiveness of Apple's products is still the strongest, so after the price is significantly discounted, it will still attract more consumers to buy.

Ma Jihua believes that Apple's price reduction will definitely drive some sales, but it is difficult to say how much this sales can increase and whether it can meet expectations.

It is worth mentioning that while Apple is carrying out preferential activities, several of its major competitors are also doing price reduction promotions. The "China Times" reporter learned from the relevant person in charge of Glory that the first phase of the discount began on December 22 last year, and as of January 17, the second phase of the preferential activity strategy will come out soon. As you can see from the poster, in the first phase of the preferential activities, the purchase of folding screen products will give away watches, viewing glasses and other products, and the glory Magic5 series is limited to a maximum of 400 yuan.

Samsung has also significantly reduced the price of products on its official website and e-commerce channels, such as last year's new Galaxy Z Flip5, which dropped by 1000 yuan to 6499 yuan, and the Galaxy S23 series also had varying degrees of price reduction.

In such a fierce market competition, will Apple continue to cut prices sharply?

Ma Jihua believes that Apple itself needs to maintain a certain brand image and involves old customers, so it is impossible to significantly reduce prices. However, Guo Tianxiang predicts that at the beginning of this year, Apple has first adjusted the channel price of the iPhone15 series, which is the first time in history that it has been adjusted at such an early time, indicating that there is still more room for price adjustment in some third-party channels and e-commerce platforms.

Previously, Apple's attitude towards the development and application of new technologies seemed to be unhurried. "If Apple still moves forward step by step, the advantage will become smaller and smaller, once the brand pull is not enough, there will inevitably be a collapse, of course, 2024 is not enough, but this year is also very important for Apple, to see if the new product can revive Apple's brand power. Ma Jihua said.

Judging from the recent news, the company has begun to catch up in a hurry. This month, the U.S. Patent and Trademark Office officially granted Apple a patent for foldable devices such as iPhones, hybrid tablets and laptops that describe a method for chemically making textured glass at the fold to prevent glass from breaking.

In addition, it is reported that investment bank Morgan Stanley recently issued an investment memorandum, believing that Apple is accelerating the implementation of AI achievements and will announce Siri 2.0 at the WWDC 2024 developer conference, which will boost iPhone 16 series sales.

Editor-in-charge: Huang Xingli Editor-in-chief: Han Feng