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Apple Priced Itself Out of Shrinking Chinese Smartphone Market

bloomberg.com

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Re: Apple Priced Itself Out of Shrinking Chinese Smartphone Market

#41

Post by gwright »

wmf wrote: post #32
gwright wrote: post #20

Why is the comparison always done to the newest, high end Apple phones? The iPhone 7 is still sold for $550 unlocked and $23/month on installment in the US. I assume it is also more reasonably priced in China as compared to the high end XS phones. You don't have to purchase the most expensive iPhone to get a high quality phone from Apple. Attributing the decreased demand in China to the price of the most exclusive ph…

It's possible that many people in China can't even afford that. Back when the newest iPhone model was $650 I assume the N-2 model was priced even lower than $550.

Sure, but that is a different explanation than the demand for the new models is down, which is what one of the major narrative's seems to be over the last 24 hours.

Re: Apple Priced Itself Out of Shrinking Chinese Smartphone Market

#42

Post by baroffoos »

inscionent wrote: post #14
baroffoos wrote: post #7

I really don't understand why anyone is paying $1000+ for a phone when you can get really amazing phones for $300.

I really don't understand why anyone is paying $300+ for a t-shirt when you can get really amazing t-shirts for $10.

Thats an even better example of mindless consumerism. At least an expensive phone actually has slightly better features. A tshirt is a tshirt, if it feels good and looks good thats the only meaningful statistics. The expensive ones don't last any longer than the cheap ones in my experience and its purely to show off that you have an expensive brand name shirt.

Re: Apple Priced Itself Out of Shrinking Chinese Smartphone Market

#43

Post by threeseed »

bearcobra wrote: post #38

There's been quite a bit of discussion on how WeChat is basically the OS of Chinese smartphone users, so as long as a phone runs that the switching costs are pretty low. I wonder if there's the possibility of something similar happening in the US/West. I've been tempted to try Android but Facetime & iMessage are pretty good at keeping me on iOS.

WeChat is definitely popular but it isn't everything.

Chinese users also buy apps, take photos, watch movies, listen to music, create content. All of which on iOS is tied to the Apple services ecosystem and hence the switching costs are still significant.

Re: Apple Priced Itself Out of Shrinking Chinese Smartphone Market

#44

Post by jdminhbg »

hendersoon wrote: post #13

Neither pricing nor the economy fully explains why Apple's suddenly doing so poorly in China and not in the US or EU. They're triggers certainly, but not the root cause. There's one keystone here-- WeChat. In the US and EU, Apple has people locked into their ecosystem. That doesn't apply to China. WeChat is their alpha and their omega. They use it not only for chatting, as you might expect from its name-- WeChat is i…

And WeChat has been all of those things for years, so what's different about 1Q19?

Re: Apple Priced Itself Out of Shrinking Chinese Smartphone Market

#45

Post by joe_the_user »

ancorevard wrote: post #4

You can't blame it on the price of the iPhone for what's happening in China right now. Also from Bloomberg: Chinese consumer tax receipts down 70% in November. https://www.bloomberg.com/opinion/articles/2018-12-31/china-...

Why can't it be both? It seems logical that a downturn would hit luxury models most strongly.

High pricing can often be self-justifying, especially if it's combined with actual higher quality - except once you reach the point that a thing involves too many material sacrifices and then suddenly the "value proposition" stops making sense.

Re: Apple Priced Itself Out of Shrinking Chinese Smartphone Market

#46

Post by rconti »

bearcobra wrote: post #38

There's been quite a bit of discussion on how WeChat is basically the OS of Chinese smartphone users, so as long as a phone runs that the switching costs are pretty low. I wonder if there's the possibility of something similar happening in the US/West. I've been tempted to try Android but Facetime & iMessage are pretty good at keeping me on iOS.

That happened with the web, ironically helping Apple's 'desktop' marketshare. To a large extent, this has always been the case with mobile (particularly if you want to think back to pre-app iOS, where the only lock-in was perhaps with iTunes music).

Personally, iMessage and shared iPhoto galleries between a dozen family members around the globe make it fairly "sticky" with me, but there's no reason I couldn't just consume the photos on desktop.

I'm not sure I have much of a point here, but I don't think the switching costs have ever been all that high with mobile, and since the popular platforms are pretty mature, most 'necessary' apps are cross-platform.

Re: Apple Priced Itself Out of Shrinking Chinese Smartphone Market

#47

Post by inscionent »

sonnyblarney wrote: post #25
inscionent wrote: post #14

Earlier quoted context omitted.

I really don't understand why anyone is paying $300+ for a t-shirt when you can get really amazing t-shirts for $10.

Market for $300 T-shirts is very small. Niche, not really consumer.

Yeah NO ONE has ever made money selling luxury consumer goods, ever. /s

Re: Apple Priced Itself Out of Shrinking Chinese Smartphone Market

#49

Post by max76 »

megaman8 wrote: post #18
inscionent wrote: post #14

Earlier quoted context omitted.

I really don't understand why anyone is paying $300+ for a t-shirt when you can get really amazing t-shirts for $10.

despite all the advertising, it may surprise you to learn that it's actually quite rare for people to buy expensive clothes. i looked it up one time. i think it said less than 1% of the jeans sold in the US cost more than 50$

Off topic, but I think jeans are a great example of a product where more money leads to a better product, especially for a well informed consumer. Japanese Selvage Denim[0] (starting at ~$80)[1] uses higher quality denim, is woven tighter, comes unstretched/untreated so that the fabric better forms to the wearer's unique body shape, and often uses natural dyes which fade slower.

In my experience they last longer, feel more comfortable, hold a better shape, keep a better color.

[0]https://www.highsnobiety.com/2012/11/16/japanese-denim-a-his... [1]https://www.amazon.com/Unbranded-Brand-UB401-Indigo-Selvedge...

Re: Apple Priced Itself Out of Shrinking Chinese Smartphone Market

#50

Post by hinkley »

snazz wrote: post #11
andrewmcwatters wrote: post #3

This is an interesting development, but not exclusive to the Chinese market. They've priced themselves out of many working Americans who refuse to put payments on a phone. Many companies, not just Apple, are raising their ASPs, or cutting categories to pursue more affluent customers while tacking on corporate debt to buyback shares in efforts to prop up share prices. I believe what we're seeing isn't an Apple-ism, th…

What this might be telling us is that there is, in fact, a cap for the amount of money someone will spend on a phone. I thought $650 was a lot, but then it started looking reasonable as soon as we got to $1000 phones. I have been continually surprised for the last few years that people are not only willing to spend more money but Apple’s unit sales have increased as well.

$650 to $1000 is a big jump, but it's important to factor inflation into any financial logic unless you want bad conclusions.

Random inflation calculator is telling me that 2019 prices should be 6% more than 2015 prices. So right there you're talking about $690 for the same phone this year. The 55% apparent increase in phone price over that period is more like 50%. Which is still huge, but not quite as huge.

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