Sunday , April 11 2021

A matter of volume: the threat of ascending Chinese phones hangs over Apple



SAN FRANCISCO: A series of benefits warnings from Apple Inc. suppliers this week boosted investors' concerns that iPhone sales in terms of volume reached a wall that could attribute problems to the company's plans to make its services the main pillar of growth.

During the past year, investors were largely willing to ignore sales of stagnant iPhone units because the average selling prices continued to increase. But now he faces the fierce competition of phones at the manufacturers' medium price such as Xiaomi Corp.

Apple has often declared its plan to increase its revenues for paid services, such as Apple Music and iCloud. This, at least in part, requires a growing base of homeowners of devices powered by their iPhone, which analysts believe they represent about two-thirds of the 1300 million Apple devices in use around the world.

Wall Street analysts have expressed concern that sales of slower smartphones will hinder Apple to keep the market share of smart phones when people take off their most expensive phones. That, in turn, could hamper the revenue growth of Apple services, said Toni Sacconaghi of Bernstein.

Without the growth of volume in promising foreign markets such as India, Brazil and Russia, the concern between analysts and investors is that Apple has at least part of its bad strategy with too much emphasis on its premium brand and the high prices that accompany, more than $ 1,000 for its best models.

Hal Eddins, chief economist at Apple shareholder, Capital Investment Advice, said phones like the OnePlus 6T are roughly similar to high-end Apple phones for almost half the price. "You can get a lot of phone for a lot less," he said. "The landscape of the phone is changing rapidly and I think that manufacturers miss a trick when going to the US $ 1,000 route."

Apple refused to comment on its strategy, or the movement of actions among its suppliers.

The company's executives warned investors in the past to set low data points in their large supply chain. Apple for over a decade has insisted that its gadgets should not be judged solely in their specifications, arguing that sales data suggest that Apple has successfully performed.

The company also has customer satisfaction and loyalty rates that are unmatched in the mobile phone industry, said Ben Bajarin, Creative Strategies analyst.

However, a trio of Chinese smartphone makers – Xiaomi, Oppo and Vivo – accounted for about a quarter of the global market in the first half of 2018, according to data from the IDC research firm, from only 8.9 percent to In 2014 and almost 20 percent last year.

With the exception of the fiscal 2015, Apple has not increased its market share. It had 13.6 percent of the world market in the first half of this year, a decrease of 14.8 percent for 2014, although its share usually rises with year-round results due to strong sales in December.

The 1.3 million iPhones, iPads and Macs used around the world serve as a group of potential clients for Apple services: a business that has reached 37,100 million dollars in revenue for the most recent fiscal year.

This accounted for 14 percent of Apple's total revenues, up 8.5 percent in fiscal year 2015 when iPhone unit sales peaked.

But IDC expects the global smartphone market to grow only 2.4 percent based on 1,000 million units by 2022, indicating a saturated market in which the Cupertino-based firm will face rivals for each client.

Xiaomi, in particular, is gaining fans quickly. In India, where Apple only has little presence, Xiaomi has, in some quarters, overcome Samsung Electronics Co. Ltd to become the nation's leading telephone vendor and also advances to European markets such as Spain, IDC said in a report.

According to IDC data, Xiaomi was the leading smart phone vendor in India in the first and second quarters of 2018, with 30.3 percent and 29.7 percent, respectively, of the smartphone unit market there.

"This is the case where it is very different in other parts of the world," said Ryan Reith, vice president of IDC's mobile device monitoring program, noting that most US consumers are not familiar with Xiaomi, Oppo and Vivo phones .

"Many of these brands do not play (in the United States), but they are playing in places where they have never played before," as India and Europe said.

SUPPLIERS SUFFER

In its recent earnings this month, Apple impressed investors with a lower sales forecast than expected for the commercial vacation quarter and with its announcement that it would stop reporting the sales of the units for their hardware products as usual last 20 years

Emphasizing the flattening of the sales of the iPhone unit, it also said it sold 217.7 million iPhones in its most recent fiscal year, virtually unchanged from the previous year and well below a high point of 231.2 million in fiscal year 2015.

Its price of action, reached at the time of the forecast, extended losses after warnings of benefits from suppliers such as Japan Display Inc, British chipmaker IQE Plc and Lumentum Holdings Inc. The stock has already dropped 8 percent since November 1.

Apple's newest models, such as the iPhone XS and the iPhone XR, are being popular among their loyal fans in rich economies. However, they vary up to $ 1,449 in price – out of reach for many consumers in less developed markets.

The strategy of Apple is to attract consumers to their ecosystem with older models at cheaper prices.

He also emphasized that their phones are designed to last longer than the competition, have expanded their repair options and have developed their latest operating system update to accelerate older devices.

But Chinese smartphone makers turned their phones with high-end chips and features such as low-grade digital printing sensors that seek to attract consumers that would otherwise take a look at Apple phones.

These manufacturers are increasingly adopting the most powerful mobile phone chips in Qualcomm Inc, said Cristiano Amon, the chief of chip operations in the American chipmaker, which is blocked in a bitter judicial dispute with Apple.

These phones were originally sold in China but "we have also seen them earning money outside of China, especially in areas such as India and Europe," said Amon.

In his home too, Apple is facing new challenges from at least one Chinese manufacturer, OnePlus, which is being introduced in the traditionally high trademark territory of the US firm. Although the processor's chip for iPhone 7 exceeds the OnePlus 6T in some speed tests published by the Geekbench chip tracking company, the OnePlus phone has a contemporary design with fine bezel around the screen, similar to the latest iPhone models.

After years of being available in the United States only through an online store and monitoring among technology enthusiasts, the OnePlus 6T is being transported through the stores T-Mobile US Inc.

In US $ 549, it is placed between iPhone 7 and iPhone 8 in terms of prices. Kyle Kiang, general manager of North America for OnePlus, said sales of the new model were 86 percent higher in the United States than the previous OnePlus released there, although it did not reveal absolute figures. He said sales were higher due to the T-Mobile relationship.

(Stephen Nellis Report in San Francisco; Edited by Edwina Gibbs, Nick Zieminski and Matthew Lewis)


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