Draw the key points

1. Although Apple Inc has created popular products such as iPhone 11, the low price of iPhone 11 has taken away the market of 11Pro and 11Pro Max. As sales of the more expensive iPhone decrease, Apple Inc's high profits may not be maintained. In the domestic market, Apple Inc's overall sales fell by 35.4% in November.

2. Apple Inc's anxiety is how to find the point of profit maximization on iPhone at different prices, and it needs to balance the relationship between its five major businesses and iPhone sales and profits. In order to maintain high profitability and shareholder responsibility, in the current rapid progress of Samsung and Huawei hardware, high profits can not be put down, which is a pain restricting Apple Inc's hardware innovation.

3. With the price of iPhone 11 reaching 5000 yuan, Huawei Mate 30 series and Apple Inc's new and old products have a bloody battle at this price. Apple Inc beat Huawei in the online market, but Huawei has more offline market than Apple Inc. With the exception of Huawei, XIAOMI, OPPO and vivo have all shunned new models priced at 5000 yuan this year.

4. Apple Inc is still the most profitable and powerful mobile phone company in the world. Different from Huawei's Samsung hardware breakthrough, Apple Inc's capital is mostly spent on the ecological improvement of iOS, but as growth is blocked, Apple Inc's technology research and development investment is also increasing year by year, looking for new breakthroughs. At present, it is greatly influenced by Huawei and Samsung.

Introduction

For Apple Inc, it is not difficult to make money, but how to earn more money to maintain the positive growth of the company.

Apple Inc held the autumn launch of the new product at Apple Inc headquarters in California on Sept. 11, 2019. Like the information previously exposed on the Internet, this year's iPhone challenged the aesthetic limits of fruit fans with alternative photos.

No surprise appearance, no accident configuration and upgraded but still crushed by XIAOMI CC9 Pro hardware camera module, if not for this year's iPhone 11 directly reduced the price of last year's XR by 1000 yuan, refreshing the starting price of the new iPhone in recent years with a price of 5499, I am afraid that Apple Inc's 2020 iPhone sales should aim to keep the top four global shipments.

Affected by the reduction in the starting price of Apple Inc's new iPhone, this year's iPhone 11 sales soared, directly occupying the best-selling models of the major e-commerce platforms at 5000 yuan.

The related data are: during the Singles' Day period, because of the subsidies offered by various major platforms, iPhone 11, which sells for more than 5000, directly ranked first in the sales of JD.com 's Singles Day mobile phones. In addition to iPhone 11, the top five Glory phones Glory 10 Youth Edition, Glory 9X, Glory 20i and Glory fun 8A on Singles Day are all medium-and low-end models with a price of no more than 2000 yuan.

The best-selling iPhone11 is reflected in the market capitalization of Apple Inc: on December 19, 2019, Apple Inc returned to the first place of the world's largest Internet company with a market capitalization of 124 million US dollars.

But unlike the skyrocketing shipments of iPhone 11, Apple Inc is not happy in the Chinese market.

Because according to Apple Inc's financial report, although Apple Inc's business consists of iPhone, iPad, Mac, services and wearable devices, iPhone's contribution to revenue as of the fourth quarter of Apple Inc's fiscal year 2019 is still as high as 52%, much higher than 20% of the second-place service business.

Among them, according to the data provided by Credit Suisse: although the iPhone11 series is selling well, iPhone shipments in the Chinese market have dropped by 35.4% compared with the same period last year. That is, iPhone 11 Pro and iPhone 11 Pro Max, where Apple Inc's mobile phone really makes a lot of money, the overall shipment volume is not as good as that of the same period last year.

Therefore, behind the reduced price sales of the new iPhone, with the skyrocketing shipments of iPhone11, iPhone 11Pro and iPhone 11Pro Max may not bring more profits to Apple Inc in the mobile phone business, but increase the pressure on Apple Inc to face transformation in 5G.

It is worth noting that according to JD.com 's sales information, Apple Inc only accounts for three of the five best-selling models with more than 5000 yuan, and the remaining two places are occupied by Huawei Mate 30 Pro 5G and Mate 305G.

While Apple Inc is facing growth pressure in the international market, China's high-end market is also being challenged by Huawei. In the fourth quarter of 2019, there may still be many variables for the temporary recovery of iPhone 11.

First, Apple Inc's self-help

Apple Inc's plight and self-help should start with the iPhone XR and iPhone XS series released at the autumn product launch in September 2018, when the iPhone XR was priced at 6499 yuan, making it the most expensive iPhone phone for Apple Inc in nearly a decade.

Due to the high pricing and the stand-alone configuration in the second half of 2019, the XR was the best-selling model in the new iPhone series of that year, but it still dragged down the financial performance of Apple Inc in fiscal year 2018.

Therefore, in January this year, shortly after Apple Inc's first fiscal quarter report was released, Cook used the description that Apple Inc's sales fell short of expectations as a result of the deterioration of the external economic environment in Apple Inc's revised notice to investors. Apple Inc was indirectly admitted that the price was too high.

In fact, the starting price of the iPhone has been raised three times since 2010, peaking on iPhone XR last year.

Faced with the sales dilemma in 2019, Apple Inc did not choose to reduce prices to improve profits, but chose to adjust the charging method of the service business, choosing to block the focus of growth on the service business.

The related facts are: on March 26 this year, Apple Inc further launched the news subscription service Apple News+ and the streaming video subscription service Apple TV+ on the basis of the original services such as Apple Care, Apple Pay, iCloud and Apple Music.

Affected by the adjustment of service business, Apple Inc's service business accounted for a rapid increase in revenue from the second to fourth quarters of 2019. It rose from 12.9% in the first quarter to 19.7% in the second quarter, 21.3% in the third quarter, and 19.5% in the fourth quarter.

The reason for Apple Inc to bet on the service business is that, according to statistics from foreign research institutions, the highest proportion of Apple Inc's models is not the new model and last year's old model, but the iPhone7 series, which has been released for nearly two years, with a combined proportion of 7 and 7p accounting for 28.13% of all iPhone models.

In the face of the current situation that users are unwilling to pay for the new hardware, Apple Inc has previously "forced the palace" through system updates to reduce the processor frequency.

But this move did not succeed, but in Apple Inc's number one rivals Samsung and Huawei's progress, resulting in a serious loss of their own users.

The related figures are: the total cost of S8 + was about $343 in 2017; S9 + rose by $36 in 2018; while in 2019, the cost of S10 + reached a high of $500 in a market environment where the price of memory chips fell uniformly. As the biggest competitor in the domestic market, the pricing of Huawei P series and Mate series has also been approaching the position of iPhone in the past few years.

The replacement data of more than 38000 Apple Inc mobile phone users collected by BankMyCell from October 2018 to July this year show that Apple's brand loyalty is declining and the retention rate of iPhone users has dropped by 15.2%.

According to a user who switched from iPhone 7 to Huawei Mate30 Pro in October:

IPhone7 has been used for three years, and although iPhone 11 entered my option when considering what phone to buy for 6000 yuan, the appearance of bangs and big black edges, as well as the price of 5499 only 64GB, made me choose Huawei.

Therefore, behind Apple Inc's adjustment of the proportion of its service business, it is actually under pressure from Samsung and Huawei to prepare for this year's cheap iPhone. Judging by the fact that overall sales of the new iPhone are still shrinking by 35 per cent, Apple Inc's cheap strategy has not been successful despite the surge in iPhone 11 sales.

Second, Apple Inc's "it is difficult to make money"

Although 2019 has entered the end, but the folding screen in the first half of the year and a variety of 5G mobile phones in the second half of the year, Apple Inc's absence is full of criticism.

As a technology company with the highest market capitalization, it is difficult to find a new bright spot in this year's new iPhone except for the three shots. In order to cover up the embarrassment that there is no innovation, Apple Inc also learned the marketing tricks of some Chinese manufacturers at the launch of the iPhone 11 series, and ran points with its own A13 and Qualcomm Inc Snapdragon 855 and Hayth Kirin 980s.

As a giant enterprise with a market of more than 1 trillion US dollars, revenue of 260.1 billion US dollars in fiscal year 2019 and net profit of 55.26 billion US dollars after tax, Apple Inc's current dilemma in hardware innovation is how to maintain high profits. maintain market capitalization stability and financial data growth.

Because the proof to prop up Apple Inc's market capitalization of more than one trillion US dollars is Apple Inc's almost crazy ability to make money.

According to Apple Inc's fourth-quarter financial results, Apple Inc still had a cash reserve of US $205.9 billion in the fourth quarter. Based on XIAOMI's current market capitalization of 251.2 billion Hong Kong dollars, Apple Inc's cash reserves alone are sufficient to acquire XIAOMI more than six times.

The secret of Apple Inc's wealth accumulation lies in the huge profit margins of mobile phone products. For example, Techlnsights, a foreign evaluation institution, estimates that the cost of this year's 256g version of iPhone 11 Pro may be less than 3000 yuan, but Apple Inc's announced price is 9999 yuan, and the difference is enough to buy a Huawei Mate 30 Pro.

This price difference is reflected in the performance of Apple Inc's financial report: the mobile phone business is still the largest source of Apple Inc's net profit.

For Apple Inc, the concern of not doing product hardware innovation is that the high hardware cost may compress Apple Inc's profit margin on mobile phone products, resulting in a decline in Apple Inc's profitability.

According to Aurora Mobile Limited big data's smartphone industry research report in 2019, the current mobile phone consumption is still dominated by mobile phones under 3000 yuan, of which mobile phones under 3000 yuan account for 80.8% of the domestic mobile phone consumption market. The mobile phone market of more than 4000 yuan accounts for only 7.5% of the total.

At a time when the market of more than 4000 yuan is already a niche market, higher hardware investment means higher prices that Apple Inc must maintain in order to maintain relative profits, while higher prices mean longer replacement cycles and fewer consumer groups.

So in March this year, Apple Inc urgently adjusted its profit focus, taking the service business as the biggest bet after the growth of the mobile phone market stagnated.

In fact, according to the financial report of Apple Inc, Apple Inc fell into a profit stagnation in 2015, and did not achieve a major breakthrough until fiscal year 2018 after making a profit of less than $50 billion for two consecutive years in fiscal year 2016 and fiscal year 2017. This breakthrough came to a standstill again in fiscal year 2019 with a double decline in revenue and profits.

The same set of data as Apple Inc's revenue and profit stagnation: after 2017, Apple Inc's total assets began to decline rapidly, while its total debt remained high at 240 billion US dollars.

According to one investor:

The reason why Apple Inc's market capitalization has returned to the high level of 1 trillion US dollars is that apart from the best-selling iPhone 11, Apple Inc's initial success in the transformation of its service business and the current slump in the US stock market economy are the more important factors.

After the transformation at the beginning of this year, the service business has become the second largest source of income for Apple Inc, which means that it is possible for Apple Inc to launch a lower price iPhone in the future. The growth of iOS users will drive Apple Inc to generate more income in the service business, especially the best-selling iPhone 11 this year, dispelling market investors' concern about the unattractiveness of Apple Inc's mobile phone.

The shirtless battle between Apple Inc and Huawei in the Chinese market

With the popularity of iPhone 11, there has been a silent dispute between Apple Inc and Huawei who bought it better.

In fact, according to second-rate technologists and mobile phone practitioners:

The price reduction of iPhone this year is unanticipated by Huawei, and iPhone is better than the system and experience, which is why it is difficult for other mobile phone brands to impress Apple Inc consumers with performance-to-price ratio, so this year XIAOMI, OPPO and vivo have cancelled 4000 to 5000 positioning models, and Huawei is the only one engaged in a shirtless war with Apple Inc in the domestic market.

The related figures are: according to JD.com 's mobile phone list, iPhone 11 ranked first in selling more than 40,000 units in the past seven days, iPhone XS Max ranked second in selling more than 20,000 units in the past seven days, and Huawei Mate 30 Pro 5G ranked third in the past seven days.

Unlike the online market, Apple Inc monopolizes two seats in that the second-rate tech talent learned after visiting non-official channel vendors of Apple Inc in Beijing: at present, in the offline mobile phone stores in Beijing, the sales of Huawei's Mate 30 Pro 5G phones are about 2 to 3 times that of iPhone 11.

A store manager explained to us: "the people who come to brick-and-mortar stores to buy mobile phones are older consumers who generally do not buy mobile phones online. These consumers have higher recognition of Huawei than Apple Inc." "

Compared with the price reduction of iPhone 11 this year, according to second-rate technologists: at present, the industry pays more attention to iPhone SE2, because mobile phone consumers with a price of 3000 yuan are the largest market for domestic mobile phone brand cake, based on the fact that Apple Inc has begun to bet on the transformation of its service business. If next year, Apple Inc company really offered a 3000 yuan price of iPhone SE2, then the domestic mobile phone market will usher in a blood wash.

However, according to Apple Inc's current financial report, if iPhone SE2 really appears, there should be only 64G version available, and only small batches of goods targeted to users should be available.

Because Apple Inc's current profit focus is still on mobile phone hardware, so the launch of iPhone SE2 is a way to hurt Apple Inc's enemies. After all, iPhone SE2 will also impact users who buy iPhone 11, and the profit of iPhone 11 is much higher than that of iPhone SE2.

Combined with our comprehensive analysis of Apple Inc company above, although in the third quarter of this year, data from third-party data agency Canalys showed that in the global market, Apple Inc iPhone Q3 shipped a total of 4350 units, down 7% from the same period last year; in the Chinese market, Apple Inc iPhone Q3 shipped 5.1 million units, down 28% from the same period last year.

However, the biggest obstacle restricting Apple Inc's shipments is not the strength of Apple Inc, but Apple Inc's choice of profitability.

If one day, iPhone gives up the profit margin of up to 6000 yuan compared with the cost to use the extreme hardware, and chooses to use the "performance-to-price ratio" in exchange for the improvement of the profit space of the "service business", then it will be the awakening of Apple Inc as a mobile phone enterprise.

In the words of an Apple Inc consumer: I do not buy Apple Inc, not because Android is easier to use than Apple Inc, but just because Apple Inc is too expensive.

The Battle of Apple Inc in the Future

As one of the richest companies in the world, Apple Inc is not sitting idly by in the face of stagnant growth.

According to Apple Inc's financial report, Apple Inc spent more of his money on the building and construction of the iOS system. Among them, Apple Inc's built-in differentiated functions such as music, video, voice assistant, structured light and well-known linear motor are all departments that Apple Inc spent a lot of money to buy back from companies around the world in his early years.

These unique features and services enable iPhone to generate a premium of up to 6000 yuan on the hardware cost of 3000 yuan.

According to Apple Inc CEO Cook: "if we have money left, we will see what else we can do. We have got all the right things we need and set strategic goals for it." As a result, we buy one company every two to three weeks on average. "

This kind of acquisition allows Apple Inc to be independent in the ecological construction of iOS, attracting a large number of developers to move in without open source at all.

In fact, in addition to the profligate acquisition, Apple Inc company's R & D investment is not a small number.

For example, it ranked seventh in the world with $14.2 billion in R & D spending in 2018. This R & D investment is up 23% from $11.5 billion in 2017.

According to Apple Inc's financial reports over the years, Apple Inc's R & D investment is still increasing. For example, Apple Inc plans to spend more than $16 billion on research and development in 2019, and Chief Financial Officer Luca Maestri has hinted that research and development will continue to rise.

In 2019, when investment, acquisition and R & D funds continued to rise, Apple Inc's cash reserves in fiscal year 2019 decreased from US $245 billion in the first quarter to US $2056 in the fourth quarter.

So Apple Inc never stops scripting on the bet on 5G and how to make more money.

Looking at the mobile phone market, although Samsung and Huawei have exceeded Apple Inc in sales, according to the fact that Samsung's average mobile phone price is 2000 yuan and Huawei's average mobile phone price is 1500 yuan, other brands in the Android camp still need to work hard.

But in 2019, when the mobile phone experience is becoming more and more assimilated and the innovation of the Android camp is gradually accelerating, who can guarantee that iPhone will have the last laugh in the face of the R & D costs of Huawei and Samsung which are both higher than 100 billion yuan in 2019?