AFTER SUNPIE'S PROMOTIONAL DOCUMENTS WERE EXPOSED, THE ACTIONS OF OTHER AUTHORIZED DEALERS BASICALLY CONFIRMED THE SPECULATION. Judging from the results of the e-commerce platform query, in addition to Apple's official website and Tmall's official direct stores still maintaining the original price, third-party authorized dealers such as Jingdong self-operated have begun to carry out large-scale discount activities.
Among them, Jingdong's self-operated iPhone 14 Pro series provides 800 yuan coupons for all models, which is higher than SUNPIE's promotion. Taobao's China Mobile-related Tmall flagship store also gave a discount of 800 yuan, in addition to the Tmall flagship store of some dealers to follow up, it can be determined that it is a large-scale promotional discount activity, not a lone wolf promotion of individual authorized dealers.
Source: JD.com
Since its release in September last year, the price reduction promotion of the iPhone 14 series has far exceeded the past, such as the iPhone 14 Standard Edition has been sold at a price far lower than the official website. Even launched promotions on the official website, you must know that in the past ten years, Apple's official website has almost no official promotions except for official price cuts and educational offers.
Frequent promotions, and even the beginning of a wide range of price cuts of the iPhone 14 series, show that Apple's official operating policy is undergoing earth-shaking changes.
Apple's Yang Scheme
Generally speaking, there are only two reasons for the large price reduction of products, one is that the product is unsellable, and it is necessary to clear up the inventory by reducing the price, returning funds while freeing up resources for the next generation of products, and the other is to seize the market and increase market share by reducing prices, which is what we often call "price war".
So what kind of apple does it belong to? In Xiaolei's view, there are both. Among them, the iPhone 14 standard version has been sold on platforms such as Pinduoduo at a price of about 1,000 yuan lower than the official website, if it was two years ago, I am afraid that a large number of authorized dealers have been fined by Apple or canceled the authorized distribution qualification.
Many netizens may not know that Apple once had strict restrictions on the shipment price of authorized dealers, on the one hand, to ensure the direct sales profit of the official website, on the other hand, to avoid a large and large-scale price reduction that caused damage to the brand value of the iPhone.
Therefore, the past iPhone price in the early 3-6 months of release, will remain in a relatively stable price range, it can even be said that in addition to the double eleven and other e-commerce platforms to provide a large amount of preferential promotion period, most of the time the third-party price of the iPhone is only 300-500 yuan cheaper than the official website.
However, since the release of the iPhone 14 series, this convention has been broken, and Pinduoduo, which has been known for tens of billions of subsidies, reduced the price of the iPhone 14 standard version to less than 90% of the official website within 3 months after the release, such as the iPhone 14 starting at 5999 yuan, for example, in Pinduoduo only needs about 5000 yuan to start.
However, the largest price reduction is the iPhone 14 Plus, which dropped the price by hundreds of yuan within a week after its release, and the price reduction was close to 1,000 yuan before the start of the Double 11 event, and the price was once close to the iPhone 14 of the same specification during Double 11. Even after the end of Double 11, Pinduoduo and some platforms are still offering large discounts, but they are lower than Double 11.
Source: Pinduoduo
The long-term, vigorous promotion of the iPhone 14 standard version is directly related to poor sales, and the iPhone 14 has almost no upgrades compared to the iPhone 13, resulting in the sales of the iPhone 14 standard version being far less than expected. Moreover, the "spirit island" of the iPhone 14 Pro makes it the first choice for most iPhone users to upgrade, which also causes the iPhone 14 Pro series to remain out of stock from its release to the end of November.
It is worth noting that the sharp price reduction of the iPhone 14 series has significantly stimulated iPhone sales, making Apple's market share rise for several months, and the global market share of the iPhone reached an all-time high in February this year.
On the one hand, the global market share is a new high, on the other hand, the iPhone business revenue fell 8%, in Apple's latest financial report, the net sales of the iPhone business fell from 71.628 billion US dollars in the same period last year to 65.775 billion US dollars, a year-on-year decline of 8%.
However, the reason given by Apple for the decline in net sales has nothing to do with price cuts, but because of supply chain problems, simply put, in Q4 of 2022, because of the domestic epidemic lockdown, the production capacity of hot-selling models such as iPhone 14 Pro cannot meet demand, which directly leads to a serious blow to Q4's net sales.
As the supply of the iPhone 14 Pro series returns to normal, the revenue of the iPhone business should recover, and the launch of large-scale promotional activities at this time will directly stimulate consumers' desire to buy, drive the market share of the iPhone to rise further, and continue to squeeze the market space of other mobile phone manufacturers.
Apple began to grab the market
Long-term and large-scale promotions obviously cannot be subsidized by authorized dealers and e-commerce platforms, and Apple has obviously played a role in driving the waves. If the price reduction of the iPhone 14 standard version is to reduce inventory pressure, then the price reduction of the iPhone 14 Pro series is basically to seize the market, so how does Apple balance the profit reduction brought by the promotion?
From Apple's financial report, although the overall revenue was dragged down by the iPhone business, resulting in a 13% decline in net profit, but the service revenue has an objective growth, in the Q1 fiscal quarter, Apple's service revenue reached 20.77 billion US dollars, the growth exceeded market expectations, a year-on-year increase of 6.4%.
In the disclosure of another document, we can learn that Apple's service revenue profit is more than 70%, and the service business has become Apple's main profit growth point, and the revenue growth of the service business is inseparable from Apple's mobile device market share record low.
Obviously, Apple is trying to reduce the profit margin on the hardware side to grab more market share, while compensating for the decline in profit on the hardware side through revenue from the service business. Of course, Apple's ultra-high hardware profits are enough to support their price reductions, and even if the price continues to fall, Apple still has a hardware profit margin that exceeds all mobile phone manufacturers.
Moreover, many industry insiders believe that with the cold macro economy, consumers often choose to extend the replacement cycle to avoid unnecessary large expenditures, and it can be seen that the consumer electronics market in 2022 will be almost completely cold. Apple clearly does not have the ability to buck the trend, and seizing the market in the early stages of the economic downturn by cutting prices is the most feasible and less costly option.
Source: IDC
After increasing market share by reducing prices, Apple's service ecosystem revenue will increase significantly. You know, the characteristics of Apple's mobile ecology (non-MacBook) are that except for a few jailbroken devices, all devices need to download the APP through the App Store, and Apple has to take a 30% commission for all consumption of users on the APP.
In addition, there are value-added services such as Apple TV for users to choose from, and from past experience, the virtual entertainment industry has been less affected than traditional industries during the economic downturn. The increase in the proportion of revenue in the service business will make Apple less affected by the economic crisis that may come in the future.
Therefore, the strength and number of price cuts that the iPhone 14 series broke the conventional may affect Apple's revenue in the short term, but in the long run, the real market share increase will further strengthen Apple's ability to resist risks.