On September 12th, Beijing time, Apple will hold a special event tonight and is expected to release the iPhone 15 series of flagship phones, ushering in the 17th iteration of Apple mobile phones. In this "age" when most products have lost their appeal, can the iPhone still hold up?
access:
Apple Online Store (China)
There’s a general rule when it comes to consumer electronics: Generally speaking, the older a device is, the more competitors it has and the price will go down. This is true for televisions, PCs and portable music players.
Smartphones should also follow this rule, but the iPhone is an exception. Not only have Apple mobile phones not lost their appeal, but they have become more and more expensive, and they are selling better than those relatively cheap mobile phones, and their market share has also expanded.
The older you get, the better?
Over the past five years, the iPhone has increased its share of total global smartphone sales and expanded its sales share in the world's four largest markets: China, Japan, Europe and India. Data from market research company Counterpoint Research shows that in the United States, the largest market for iPhones, Apple’s mobile phone market share exceeds 50%, up from 41% in 2018. Those gains have helped it account for about a fifth of global smartphone sales, up from a low of 13% in 2019.
Counterpoint data shows that in the second quarter of this year, Apple’s share of China’s smartphone market reached 16%, ranking third, higher than 13% in the same period last year. OPPO and vivo lead the Chinese mobile phone market with 18% market share.
Apple ranks third in China mobile phone market share in Q2
As the smartphone industry falters, Apple has expanded its mobile phone empire. Sales of Android smartphones have dropped significantly over the past two years, but iPhone sales have not fallen as much because it has been winning new customers, and it has done so while selling them at its most expensive price.
Apple first solved the iPhone's price sensitivity problem by creating a business model similar to U.S. car sales. Like cars, iPhones can last for years, allowing consumers to trade them in to offset the cost of a new car. Wireless carriers, like car dealers, offer buyers discounts and installment plans that make the latest iPhones affordable. Consumers, like brand-loyal car buyers, are more likely to buy another iPhone than switch to Google's Android platform.
Apple is also lucky. Samsung and Huawei are Apple's biggest challengers, but both companies have encountered problems in recent years. In 2016, the "Battery Gate" incident occurred in Samsung mobile phones, which ruined its reputation. Huawei is popular in China, but U.S. sanctions have affected its phone production.
In contrast, Apple has remained stable over the years and its mobile phone release plans are on track. Apple updates the iPhone every year. Although the upgrade is not significant, the design is stylish and the system is reliable. Then, Apple will accurately assemble the mobile phones and bring 200 million flawless iPhones to the public every year.
Young people want “identity”
In the United States, the iPhone is expected to become increasingly popular in the coming years. According to investment bank PiperSandler, nearly 90% of American teenagers own iPhones.
For young people, iPhone allows them to integrate into social circles. Many people choose iPhones over Android phones because Apple changes the color of messages posted by non-iPhone users in group chats from the default blue to green. Green messaging can embarrass young people. Dave Storrs has a 14-year-old son who told his father when he was buying his first smartphone: Get an iPhone or don’t buy one.
"The iPhone is a status symbol and they don't want to be treated differently," said Stowers, an Army veteran who lives in El Paso, Texas.
Android phone messages will appear green
Stowers, 49, is also under pressure to replace his iPhone. For more than a decade, he has prided himself on being an "iPhone traitor" (one who doesn't use an iPhone). He owns a collection of LG and Motorola phones, although his son and other family members have been urging him to buy an iPhone. This year, his family gave him a pair of $99 Apple wireless headphones, AirPods. As a result, he succumbed.
Whenever he wanted to use AirPods on his Android phone, he had to sync them manually. This trouble gave him the idea of buying an iPhone 13, which can instantly connect to AirPods. After years of using Android phones for free (probably provided by carrier plans), he now switches to an iPhone, paying $11 a month. He said he would never go back to Android because he likes wearing AirPods while walking his catarrhalan leopard dog, Teddy, and using them to take calls, "which is so convenient."
Android "traitor"
New buyers like Storrs illustrate how Apple wins customers. The differences between the two major operating systems, iOS and Android, are tilting in Apple's favor. About 94% of iPhone users are likely to buy another iPhone, compared with 91% of Android users, according to technology research firm Consumer Intelligence Research Partners.
Android users are switching to Apple at an accelerating rate as promotional discounts, installment payments and trade-ins make the iPhone's high price less of a barrier. After U.S. carriers T-Mobile and Sprint merged in 2020, wireless carriers have improved their packages to win new users or retain existing ones. Cliff Maldonado of smartphone research company BayStreetResearch said that the merged T-Mobile launched a 30-month plan for buying iPhone 12 for 0 yuan. Subsequently, AT&T also provided similar packages. This allows Android users to replace their iPhone painlessly.
At the same time, Apple and wireless carriers began promoting installment plans more aggressively. This payment method reduces the purchase burden of a new iPhone from US$800 to US$1,200 to less than US$40 per month. For users who want to buy a second-hand iPhone, the burden is even lower. BayStreet Research's Maldonado said used iPhones sell for up to $640 and are auctioned off to buyers in Asia who resell them at a higher price.
"The mobile phone market is like the real estate market. You can make a down payment and pay it back over time," Maldonado said.
Huawei returns
China is Apple's second-largest market by national income after the United States. For users who want to buy high-end mobile phones, the iPhone can be said to be the default choice. Samsung was squeezed out of the Chinese market a few years ago. Huawei is unable to launch new mobile phones that support the latest wireless technology due to U.S. sanctions. The lack of competition has helped the iPhone become China's best-selling smartphone in recent quarters.
However, Apple's dominance in the high-end market is being challenged by Huawei. Last month, Huawei released its new high-end mobile phone Mate60Pro, which has very fast network speeds and was sold out as soon as it was launched. That's not all. Huawei then released its new foldable flagship phone MateX5, which also triggered panic buying.
Mate60Pro
However, Apple may be able to use growth in India to offset challenges in China. In India, the world's fastest-growing smartphone market, Apple's market share has now increased to 5%, up from 1% in 2019. Counterpoint predicts that Apple's market share in India will double to 10% next year.
The growth of iPhone in India is the result of Apple’s years of layout. In 2017, Apple began working with Indian government officials to produce iPhones locally, lowering prices by avoiding import tariffs so that Indians could afford them. At the same time, Apple also opened stores in New Delhi and Mumbai.
Price increase is not a problem?
Supply chain analysts revealed that Apple’s upcoming iPhone 15 will be equipped with a faster processor, a more sophisticated camera, and use titanium instead of stainless steel casing. These upgrades are expected to bring a price increase of US$100 to US$200, bringing the purchase cost of the iPhone 15 Pro to US$1,100, and the Pro Max to US$1,200.
However, analysts predict that fruit fans will shrug off the price increase. For those who pay in installments, the price increase means they will pay less than $5 more per month. For those trading in their old ones, the price increase is even smaller.
"The economy is doing quite well, the prices of everything have increased, and people are now insensitive to price increases." Michael Levin, co-founder of Consumer Intelligence Research Partners, said.