Apple Priced Itself Out of Shrinking Chinese Smartphone Market

That&#x27;s part of it, but the bigger issue is China is rapidly slowing down. Otherwise Apple would be seeing shrinking sales in other regions, which according to Cook has not been the case.<p>WSJ today posted this alarming chart of Chinese consumption-tax revenue:<p><a href="https:&#x2F;&#x2F;i.imgur.com&#x2F;2LzUKrz.png" rel="nofollow">https:&#x2F;&#x2F;i.imgur.com&#x2F;2LzUKrz.png</a><p><a href="https:&#x2F;&#x2F;www.wsj.com&#x2F;articles&#x2F;chinas-economic-downturn-takes-the-shine-off-its-resilient-consumers-11546513717" rel="nofollow">https:&#x2F;&#x2F;www.wsj.com&#x2F;articles&#x2F;chinas-economic-downturn-takes-...</a>

You can&#x27;t blame it on the price of the iPhone for what&#x27;s happening in China right now.<p>Also from Bloomberg: Chinese consumer tax receipts down 70% in November. <a href="https:&#x2F;&#x2F;www.bloomberg.com&#x2F;opinion&#x2F;articles&#x2F;2018-12-31&#x2F;china-s-economic-slowdown-is-worsening-stop-dithering-beijing" rel="nofollow">https:&#x2F;&#x2F;www.bloomberg.com&#x2F;opinion&#x2F;articles&#x2F;2018-12-31&#x2F;china-...</a>

I really don&#x27;t understand why anyone is paying $1000+ for a phone when you can get really amazing phones for $300.

There&#x27;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&#x27;s the possibility of something similar happening in the US&#x2F;West. I&#x27;ve been tempted to try Android but Facetime &amp; iMessage are pretty good at keeping me on iOS.

Neither pricing nor the economy fully explains why Apple&#x27;s suddenly doing so poorly in China and not in the US or EU. They&#x27;re triggers certainly, but not the root cause. There&#x27;s one keystone here-- WeChat.<p>In the US and EU, Apple has people locked into their ecosystem. That doesn&#x27;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 in many ways their _entire operating system_.<p>You pay your utility bills with WeChat, it&#x27;s your social network, map app, phone app for VOIP, video calls, you access local services, your banking, payments like Venmo, your healthcare, read the news, buy stuff from online stores, EVERYTHING is in WeChat.<p>And WeChat is cross-platform.

The tone of articles like this is always the same. As if it&#x27;s a stupid mistake made on the fly. As if Tim Cook was heading out to dinner and someone yelled &#x27;before you leave how much should we charge Tim???&#x27; and he shot back with the answer.<p>Apple made a mistake and priced incorrectly but that was not after consideration, thought and strategy.<p>A writer for Bloomberg or an analyst for Loup Ventures is in a different league as far as risk and predictions and job rigor. Apple made a mistake but by the same token the same people making the decisions have done pretty well generally and (wait for it) way better than most SV companies, VC or angels who get multiple do-overs in their daily decision making and analysis.

I read all the comments, and nobody has mentioned consumer nationalism? The US president&#x27;s behavior and the concept of face?<p>Apple is being dragged down the trade war&#x27;s reputational halo effect. Keep an eye on major international consumer US brands (Disney, McDonalds, Starbucks, and others).<p>Obviously there&#x27;s an rapid economic deceleration, too, but things happen for more than one reason most of the time.

Chinese flagships offer better, more differentiated technology at the same or lower prices... also Android AOSP China is more desirable now because Android apps are first class citizens in China (WeChat + social + camera apps).<p>Apple is losing it&#x27;s innovation edge as well. Current flagship phone cycles in China are faster than Apple&#x27;s -- triple, quad cameras, in-screen fingerprint readers, articulating selfie-cams, pinhole selfie screens, and a much better storage proposition (much more NAND for the price in almost every Chinese Android flagship).

Why is the comparison always done to the newest, high end Apple phones? The iPhone 7 is still sold for $550 unlocked and $23&#x2F;month on installment in the US. I assume it is also more reasonably priced in China as compared to the high end XS phones.<p>You don&#x27;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 phone seems misguided to me.

Is it possible that they deliberately priced themselves in excess of the competition in an attempt to cultivate a more exclusive, high-end image? With so much competition in the Chinese market it has to be hard to distinguish themselves otherwise.

Is Android the only alternative in China? Can Google monetize the Chinese users at all? Must very frustrating to have 1&#x2F;4 of the worlds population using your OS behind a firewall.

They certainly priced themselves out my value zone.<p>When my 6s died recently (power connector issues) I picked up a moto g6 it works fine for me. My personal age of Apple is now completely over. Over about 3 years or so, I went from all Apple (powerbooks&#x2F;macbook pros, apple tv, iphones, ipad) to no Apple. It was fun while it lasted.

People aren&#x27;t going to buy a $850 apple when they can get a $300-400 (equivalent in Yuan) oppo or xiaomi that is very near top end flagship Android specs.

I wonder if we&#x27;ll see a new SE. I hope so.

Today’s Apple is like what Microsoft used to be. iPhone X this and iPhone X that. Just like the many editions of Windows. It’s a brand dilution and it almost feels like “ let’s milk it when you still can”. It’s damaging to the brand. This is what companies do when they are no longer run by product people.

This is an interesting development, but not exclusive to the Chinese market. They&#x27;ve priced themselves out of many working Americans who refuse to put payments on a phone.<p>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.<p>I believe what we&#x27;re seeing isn&#x27;t an Apple-ism, this is market behavior. And the market is dictating that Tim Cook and others make these decisions from the top down.<p>Almost all auto manufacturers in America are dropping a few cars in their lineup in favor of more expensive SUVs, which people are willing to purchase. And there are many other instances of this behavior going on. Don&#x27;t pay mind to Apple doing this. Instead, focus your time reading on why companies in the CRSPTM1 are all doing similar things regarding consumer purchases.<p>With the T10Y2Y approaching zero, and eventually negative percentages, I believe we&#x27;re sitting on a ticking time-bomb that goes off sometime between 2020-2022, but I&#x27;m not educated enough to know if this is highly probable or not.

and that&#x27;s OK<p>Apple is not aiming for mass market. In the same way that Chanel or Coach is not aiming for mass market.