Image source @ Visual China
Wen 丨 Wang Xinxi
All kinds of signs and signals show that the situation facing the high-end electronic consumer product line this year is not optimistic, and in the smartphone market, the iPhone may usher in a big decline in sales this year.
From a domestic point of view, the impact of this year's continuous and changeable epidemic on the economy, consumer mentality and many industries has been visible to the naked eye, and the "three years stolen by the epidemic" have aroused wide resonance, and the downturn in the entire market environment is difficult to improve in a short period of time.
At present, the Internet, real estate, consumer electronics, catering and many other originally hot industries have turned into a downturn and the demand is shrinking, reflecting the mobile phone industry, that is, people's demand for replacement machines is reduced, and the replacement cycle continues to lengthen.
As a result, the recent social media for "why young people are reluctant to change mobile phones" the topic suddenly exploded, which stemmed from a tacit change of mentality, the topic reached 400 million total readings, the total number of discussions reached 52,000.
Apple felt a chill
Spring River Plumbing Duck Prophet, as the leader of the smart phone market, Apple was the first to feel the changes and chills in the market.
According to Guo Mingqi, an analyst at Tianfeng International, Apple plans to cut the annual shipments of the iPhone SE 3 this year from 25 to 30 million to 15 million to 20 million (more than 20% of the orders).
The Nikkei Asian Review also quoted people familiar with the matter as saying that due to the Russian-Ukrainian conflict and soaring inflation that hit consumer electronics demand, the decline in demand led Apple to plan to cut the next quarter's iPhone SE production by about 20% compared with the original plan.
In addition, the supply chain also revealed that Apple will reduce the number of iPhone 13 and AirPods orders, and some models of the iPhone 13 series have begun to be discontinued, partly because there are still 5 months before the iPhone 14 is about to be released. Of course, behind this also reflects that the iPhone 13 series has accumulated a certain amount of inventory.
Of course, not only Apple, the Android camp is also deeply affected.
Guo Mingxi also said on social media that major domestic Android mobile phone brands have cut about 170 million orders so far this year (accounting for 20% of the original shipment plan in 2022), of which more than 70% of orders use MediaTek chips. Due to low consumer confidence, orders are likely to continue to decline in the coming months.
In addition, in addition to Apple's cutting orders, another action that has aroused attention is the launch of the Phone hardware subscription service model.
According to Bloomberg, Apple is preparing to launch subscription services for hardware such as iPhones and iPads, and the hardware will be provided to users in a similar form of leasing, that is, just like using Apple's iCloud cloud storage, users can get the right to use the device in the form of a monthly subscription fee. Unlike installment payments, this hardware subscription service supports replacement to the latest equipment during the rental process.
The so-called subscription service is essentially hardware rental.
Behind this, in fact, Apple also feels the chill of the mobile phone market, the momentum of iPhone sales is not good, and some new measures need to be taken.
Obviously, from the perspective of Cook's actions, the essence of subscribing to the iPhone is that Apple is thinking about lowering the threshold for users to use the iPhone and expanding the user base to cope with the weak smartphone market.
In addition, another trend that has happened to Apple is that the AirPods, which have been selling well before, have also begun to sell.
AirPods have become the best-selling true wireless headphones since their launch in 2016, helping Apple win more than 25 percent of the global market share, according to Counterpoint.
But AirPods began to face a downward trend in demand this year. A few days ago, Guo Mingji said in a tweet that AirPods 3 orders in the second and third quarters of 2022 decreased by 30%+. Due to the failure of the product segmentation strategy, the demand for AirPods 3 is significantly weaker than that of AirPods 2. To avoid repeating the mistakes of the past, airPods Pro may be discontinued after Apple launches AirPods Pro 2 in the second half of 2022.
The key point of The AirPods 3 setback that Guo talked about is that consumers are reluctant to spend $50 more on the new selling point of the AirPods 3.
In fact, this is also indicative that consumers are beginning to tighten their wallets and are no longer willing to pay for premiums that are unnecessary and practical.
After all, the impact of the epidemic on the economy has led to a reduction in the income of many people, which in turn has led to a decrease in people's purchasing power, and correspondingly, due to the impact of the epidemic on many industries, the supply of consumer products will also decrease, and prices may show an upward trend.
If people's spending power decreases, then price sensitivity and consumption rationality will increase. In economics, people who think they are rational are "economic people" and "non-emotional" people.
In today's market consumption environment, "economic people" began to become more numerous, in the case of relatively limited national income, the future income stability expectations are reduced, people's self-interest motives are stronger, and strive to obtain the greatest economic benefits at the smallest economic cost.
The wind direction of the secondary market also highlights this trend. According to the Q1 mobile phone market report of the transfer group, compared with Q4 in 2021, the proportion of Apple iPhone transactions in the second-hand market in Q1 this year has declined, while the proportion of domestic brand transactions has steadily advanced, and the sales of OPPO, vivo, millet and glory in the second-hand market have shown positive growth.
This may mean that consumer perceptions are changing, with the global economic stagflation, consumer market demand slowing down, the demographic dividend sharply reduced, the consumption downturn is difficult to boost in a short period of time.
After all, consumers do not have much money in their hands, and they begin to tighten their wallets, reduce consumption expectations, and even in the use of daily necessities and electronic consumer goods, they will tend to reduce unnecessary expenses.
The downward trend of the stock price becomes more likely
iPhone sales have always been large and small cyclical law. After the big year's upward sales cycle, it is followed by a wave of low tides in the small year.
But in fact, apple's upward growth cycle has continued for three years since the launch of the iPhone 11.
In particular, apple iPhone sales in 2021 are as high as 239 million units, which also greatly engulfs the market demand in 2022, especially in the epidemic environment like this year, the probability of demand shrinking will increase.
From the past history, Apple's stock price trend has always been highly correlated with the sales of iPhones, Apple's market value last year once exceeded $3 trillion, which is the highlight of its history, which is behind the iPhone series sales soared, according to Counterpoint data, in 2021, the world's top ten sales of mobile phones, Apple accounted for 7.
iPhone sales growth is essentially positively correlated with an upward trend in stock prices.
However, from the current trend of Apple's stock price, it is still maintaining an upward trend, and trends such as Apple's order cuts and the decline in AirPods sales seem to be intentionally ignored by the capital market.
On January 3 this year, Apple's market value exceeded $3 trillion for the first time, becoming the first company in the world to step into the "$3 trillion club". At the end of March, Apple also set the longest consecutive rise in a decade.
This year, the capital market has also maintained a bullish trend towards Apple.
Analysts overwhelmingly rate Apple stock as "better than the broader market," according to The FactSet survey, with 69 percent of analysts surveyed by FactSet raising their expectations in January 2022 and 77 percent predicting an increase in profit figures in February. In March, 100 percent of analysts raised their expectations for Apple's earnings.
Judging from the trend of Apple's stock price over the years, behind the collective bullishness of analysts in the past, there are often some potential subtle market trading behaviors in the capital market, because the upward trend of Apple's stock price is often accompanied by good news in the market.
But from today's point of view, more and more countries on apple tax regulatory pressure, iPhone14 series sales expectations, and the overall electronics consumer market shrinkage, the bearish trend is much greater than the positive, but also has nothing to do with Apple's "key product cycle".
Looking back at the trend of Apple's stock price, 2019 is a key year for Apple's stock price to show a rapid upward trend in the past 10 years, with an annual increase of more than 100%, in fact, there are two key product lines pulling, one is the iPhone 11 series, and the other is AirPods.
The former is through price reductions to confirm that as long as the iPhone returns to reasonable value, the popularity value, brand value and high-end market position of its products are still unshakable. The latter unexpectedly became a hit and became a new pole driving Apple's revenue growth.
But from this year's point of view, whether it is the sales trend of the iPhone or the sales of AirPods, the downward trend will be more obvious.
From the perspective of Apple's stock price law over the years, the release of new iPhone products is a very critical node, from the media news, iPhone14 will continue to squeeze toothpaste iteration, in the absence of a balance of forces against opponents, this strategy has still worked in the past, but this year's uncertainty is undoubtedly increased.
According to documents disclosed by the U.S. Securities and Exchange Commission (SEC) on April 5, two Apple executives (Chief Operating Officer Jeffery E. Williams) and Senior Vice President of Retail and Human Resources Deirdre O'Brien sold a total of 135,099 apple shares, worth about $24.0448 million.
Behind the sale of Apple's stock price by Apple executives, or the signs of a decline in iPhone sales, it can be said that Apple's stock price is currently at a very delicate high.
As mentioned earlier, in the Chinese market, due to the uncertainty of the epidemic and the reduction of consumers' expectations for the future, they will pursue more cost-effectiveness and practicality.
To put it simply, in the economic downturn and the uncertain market shrinkage environment under the epidemic, people's demand for brand premium will make people more inclined to reduce consumption than consumption upgrading.
Therefore, just-needed consumption may further flow into the low-end market products, and the impact of high-end mobile phone products this year may be more obvious, and Apple may bear the brunt of it.
epilogue
Of course, from the perspective of market competition, brand competitiveness and product level, Apple's position in the high-end market is beyond doubt. However, from the perspective of the favorable time and place, Apple is likely to lose to Tianshi this year.
After Huawei gradually faded out of the market in 2020, Apple basically harvested the high-end market dividend after Huawei's withdrawal and enjoyed the market dividend for more than two years.
But this year, Apple's growth curve in the Chinese market may enter a new inflection point, and the possibility of a big decline in iPhone sales is very large. The opponent who beat Apple has not yet appeared, but Apple may be temporarily defeated by the time of day, how to make a safe transition in the downturn, test Apple's market response adjustment ability and business wisdom.