The apple has fallen from the altar.
On January 15th local time, Apple's market value closed at $2.87 trillion, while Microsoft's market value reached a record high of $2.89 trillion. This is the second trading day that Apple's market value has been overtaken by Microsoft in this round. Last June, Apple just became the world's first company with a market value exceeding $3 trillion, but in less than half a year, its stock price has been falling all the way since mid December last year, dropping nearly 10% in just over half a month.
Behind this, it is a common result of Apple's own decline in innovation and the increasing competitiveness of other brands. iPhone sales have suddenly declined, and Apple's pursuit of new technologies has consistently lagged behind, leading to a weakening of capital's confidence in Apple. In order to stimulate sales and save stock prices, Apple has recently held a rare Chinese New Year promotion on its official website. However, industry insiders believe that this may have limited impact on boosting Apple's product sales. This year is a critical year, and Apple needs to come up with a product that can revitalize its brand power.
A rare discount in history
"From January 18th to January 21st, Apple will accompany you to welcome the Chinese New Year with full benefits. Buy Apple designated products through eligible payment methods, with a maximum of RMB 800 per province." This promotional slogan directly catches your eye as you open Apple China's official website.
From the layout of the website, Apple still attaches great importance to this promotional activity and has opened a new page specifically titled "Enjoy benefits in advance, wake up early".
In this promotion, purchasing iPhone 15 Pro, iPhone 15 Pro Max, iPhone 15, iPhone 15 Plus, iPhone 14, iPhone 14 Plus, or iPhone 13 through eligible payment methods can save up to 500 yuan; MacBook Air (M2 chip model) and MacBook Air (M1 chip model) can save up to 800 yuan; IPad Pro, iPad Air, iPad (10th generation), or iPad mini can save up to 400 yuan; The Apple Watch SE can save 200 yuan; AirPods (third-generation) and AirPods (second-generation) can save up to 100 yuan; Apple Pencil (second-generation) can save 50 yuan.
A reporter from the Huaxia Times also visited an Apple Store retail store in Beijing and found that the event was jointly organized online and offline. Some staff members reminded customers that if they were not in a hurry, they could wait until the event started on January 18th to make a purchase. There were also many customers who came to the store for consultation in the past two days.
However, the promotional activities on e-commerce platforms are not synchronized with Apple's official website. Taking the 128G version of iPhone 15 as an example, a reporter from Huaxia Times logged into Apple's self operated flagship store on JD.com and found that its current price is 5199 yuan, which is 800 yuan cheaper than the original price of 5999 yuan; But the price of the official flagship store of Apple and Tmall is still 5999 yuan. The reporter asked customer service if there are any recent promotional activities, and customer service said that currently there is only a "discount on education for college students" promotion, which mainly targets Mac, iPad, and Apple Pencil, not iPhone.
"At present, it seems that Apple's price reduction promotion this time is only a limited time, and offline stores are still limited. It is uncertain how long the promotion will last and whether it will continue in the future. However, in fact, the iPhone 15 series has always had discounts on e-commerce platforms, and the discounts have continued after the 'Double 11', even with greater discounts." said Guo Tianxiang, senior analyst at IDC China.
What is the reason for the unprecedented price reduction on official websites and direct stores? The reporter from Huaxia Times interviewed the relevant person in charge of Apple China regarding this matter, and as of the time of publication, the other party has not provided a response.
Market and Capital Pressure
In the industry's view, this round of price reduction is mainly related to the enormous pressure Apple is currently facing.
On the one hand, it comes from the pressure of declining sales. Recently, analysts from investment bank Jeffrey stated in a report that Apple has suffered a heavy blow in the Chinese market, with iPhone sales experiencing a cliff like decline in the first week of 2024, a 30% drop from the same period last year. In December of last year, Apple's sales experienced a double-digit decline.
From his own perspective, communication expert Ma Jihua told a reporter from Huaxia Times that Apple's innovation in recent generations is not strong enough, and the level of leadership is not high. Especially, the popularity of this new generation of products has significantly decreased, so some promotional measures can only be taken to stimulate sales.
From an external perspective, "the entire Android camp has made rapid progress in recent years and is not inferior to Apple in terms of product strength. Moreover, Huawei's strong return last year has had a significant impact on Apple's presence in the Chinese market," said Ma Jihua. Guo Tianxiang also pointed out that the increase in competitiveness of Chinese brands in flagship products, not only including Huawei's return, but also the Xiaomi 14 series, vivo's X100 series, and Honor's foldable screen series, have put significant pressure on Apple's market performance.
The sharp decline in sales has caused a decline in confidence in Apple at the capital level, which is another heavy pressure that Apple is facing. From mid December last year to early January this year, Apple's stock price experienced a downward trend, dropping from its peak of $199.62 per share on December 14th to its lowest of $180.17 per share on January 5th, a drop of nearly 10%. Its market value also fell back from $3 trillion to the range of $2 trillion.
Although the stock price has rebounded in the past 10 days, the increase is not significant. On January 15th local time, Apple closed at $185.92 per share. Recently, brokerage firm Barclays Bank also lowered the company's stock rating and target pricing, downgraded Apple's stock rating from "neutral" to "underweight", and lowered Apple's target price for the next 12 months to $160 per share.
However, the factors that affect Apple's stock price are not just sales. Ma Jihua added that in recent years, the most active directions in the market, such as artificial intelligence models, foldable phones, and smart cars, have not made much progress for Apple. The degree of capital's favor for new technologies can be seen from the wave of AI capital that followed the popularity of big models last year.
Under immense market and operational pressure, Apple announced in its proxy notice on January 11th that CEO Tim Cook's total compensation for 2023 has decreased from $99.4 million in 2022 to $63.2 million, mainly reflecting a decrease in the value of its stock incentives.
The lag in research and development of new technologies
Experts have different opinions on how much boost this promotional activity can bring to Apple's sales.
Guo Tianxiang stated that although the challenges facing the iPhone 15 series have increased and the appeal of upgrades to Chinese consumers is limited, Apple's overall competitiveness remains the strongest. Therefore, after significant price discounts, it will still attract more consumers to purchase.
Ma Jihua believes that Apple's price reduction will definitely boost some sales, but it is difficult to say how much sales can increase and whether it can meet expectations.
It is worth mentioning that while Apple is conducting promotional activities, its major competitors are also offering price reductions. The reporter from Huaxia Times learned from the relevant person in charge of Honor that the first phase of discounts started on December 22, last year, and as of January 17, the strategy for the second phase of promotional activities will be released soon. From the poster, it can be seen that in the first stage of the promotional activity, customers who purchase foldable screen products will receive free watches, viewing glasses, and other products, while the Honor Magic5 series has a maximum time limit of up to 400 yuan.
Samsung has also significantly reduced the price of its products on its official website and e-commerce channels, such as last year's new Galaxy Z Flip5, which was directly reduced by 1000 yuan to 6499 yuan. The Galaxy S23 series has also seen varying degrees of price reduction.
Will Apple continue to significantly lower its prices in such fierce market competition?
Ma Jihua believes that Apple needs to maintain its brand image to a certain extent and involves old customers, so it is impossible to significantly reduce prices. However, Guo Tianxiang predicts that Apple has already adjusted the channel prices of the iPhone 15 series at the beginning of this year, which is the first time in history that such an adjustment has been made so early, indicating that there is still greater 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 calm and unhurried. "If Apple continues to move forward step by step, its advantages will become smaller and smaller. Once the brand's strength is not enough, there will inevitably be a collapse. Of course, 2024 is not enough, but this year is also important for Apple. It depends on whether new products can revive Apple's brand power," said Ma Jihua.
From recent news, it seems that this company is already in a hurry to catch up. This month, the US Patent and Trademark Office officially granted Apple a patent for foldable devices such as iPhones, hybrid tablets, and laptops. The patent introduces a method of chemically manufacturing textured glass at the folding point to prevent glass breakage.
In addition, according to reports, investment bank Morgan Stanley recently released 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 sales of the iPhone 16 series.