Apple hits new highs again.

According to Dow Jones market data, Apple's stock price closed at $242.65 on Tuesday, up 1.28%, with a market capitalization of $3.67 trillion, making it the company with the highest market value in the world. Some analysts predict that Apple's market capitalization has the potential to exceed $4 trillion next year.

However, it cannot be denied that Apple, which ranked first last year, has fallen out of the top five at times this year, rapidly losing its dominance in the Chinese market.

In 2023, Apple became the sales champion in China's smartphone market for the first time with a 17.3% market share. It was originally thought to be the beginning of Apple's renewed glory, but unexpectedly, it turned out to be a final flicker before fading.

According to previous data from Counterpoint Research, iPhone sales in China fell by nearly 20% in the first quarter of 2024, dropping out of the top five in the domestic mobile phone market. OPPO, Honor, Huawei, vivo, and Xiaomi were ranked ahead of Apple. In the second quarter, amid an 8.9% year-on-year increase in shipments in China's smartphone market, iPhone sales continued to decline, while domestic brands such as vivo, Huawei, OPPO, Honor, and Xiaomi maintained the top five positions.

Fortunately, Apple returned to the top five in China's market with a 15.6% market share in the third quarter, driven by the launch of its annual new products.

Financial report data shows that Apple generated revenue of $90.753 billion in the first quarter of this year, a year-on-year decrease of 4%, with revenue in Greater China amounting to $16.372 billion, a year-on-year decrease of 8%, twice the global average decline. In the second quarter, Apple's revenue reached $85.777 billion, a positive growth of 4.87% compared to the same period last year at $81.797 billion, but revenue in Greater China still declined by 6.5%. Greater China is the largest market for iPhones globally and the only geographic region where Apple's revenue has declined year-on-year.

Harvest in autumn comes from sowing in spring, while winter's pain often pays for summer's mistakes. Apple's current predicament was sown years ago.

When the iPhone 13 was launched, Apple fans joked that the biggest difference between the iPhone 13 and iPhone 12 was their names. Even Apple's "die-hard" fan Duan Yongping couldn't resist joining in the ridicule. The mediocrity of the iPhone 14 even provoked criticism from within the company, with Steve Jobs' daughter publicly expressing her lack of interest in upgrading her phone. On the day of the iPhone 15's release, Apple's market capitalization plummeted by $340 billion overnight.

Lack of innovation has been Apple's biggest criticism for years, and this is not just due to the innate talents of its two generations of leaders but also to the inherent objective laws of industrial development.

Three years ago, Ren Zhengfei published an article titled "Stars Do Not Ask the Passers-by" on Huawei's internal platform. It contained the following passage:

Technological development is currently at a plateau on the saturation curve, where immense effort does not yield equivalent returns. Huawei invests $20 billion annually in research and development, but only receives a 40% return on that investment, with 60% of the effort wasted in the dark.

An undeniable fact is that as smartphones continue to advance in historical progress, the entire industry has entered a phase of late-stage technological innovation. Even with significant efforts, it is difficult to achieve breakthrough gains.

As a result, pioneers like Apple are gradually slowing down, while catch-up players represented by domestic brands are gaining the optimal strategic window to narrow the gap.

Since 2016, domestic phone manufacturers have moved towards independent innovation in screens, cameras, and other components. The most typical and successful innovations have been full-screen and foldable displays. By 2020, domestic phone brands had begun to mass-produce self-developed solutions for underlying software and core components, while also exploring technologies such as artificial intelligence.

While Apple is regressing, domestic phones are progressing, and the gap between them is continuously narrowing. When this gap reaches a certain point, a market reversal is inevitable, especially when Chinese consumers suddenly begin to prioritize cost-effectiveness. This moment has arrived sooner than expected.

Looking back, Apple's fatigue has been evident for years.

In 2017, Apple increased the pricing of the iPhone 8 and iPhone X, significantly boosting its corporate performance. Encouraged by this success, Tim Cook chose to continue increasing the price of the new iPhones in 2018, but consumers did not respond positively this time, and iPhone sales declined for four consecutive quarters thereafter.

To regain market share, Apple chose to release the iPhone 11 at a discounted price in 2019, and the effect was immediate. iPhone sales increased by 7.8% year-on-year in the fourth quarter of 2019, ending a year-long decline.

In fact, since then, Apple has realized that it has lost its ability to command a premium. It has since maintained growth through a strategy of trading price for volume. For example, although the starting price of the iPhone 13 is the same as that of the iPhone 12, its storage capacity has doubled, starting at 128GB. The maximum storage capacity of the iPhone 13 Pro and iPhone 13 Pro Max even reaches 1TB, offering more storage without an increase in price, essentially a disguised price reduction.

The difference is that previously, consumers would respond positively to Apple's price reductions, but now, even with discounts, it is difficult to revive the market.

In 2010, Apple's market capitalization surpassed Microsoft's for the first time. The New York Times commented, "This is the beginning of a new era and the end of an old one."

Times have changed, and at least in China's mobile phone market, Apple is becoming a casualty of the times.

Disclaimer

This article contains content related to listed companies based on the author's personal analysis and judgment of information disclosed by listed companies in accordance with legal requirements (including but not limited to interim announcements, periodic reports, and official interaction platforms). The information or opinions in this article do not constitute any investment or other business advice. Market Value Watch bears no responsibility for any actions taken based on this article.

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