Buffett is selling Apple shares again.

According to Berkshire Hathaway's latest 13F filing, the company reduced its holding in Apple by 100 million shares in the third quarter, reducing its shareholding ratio to 26.24%. Berkshire Hathaway has been selling Apple shares for four consecutive quarters, but Apple remains its largest holding.

Last year, Apple ranked first, but this year it fell out of the top five, 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 market share of 17.3%. Initially, this was seen as the beginning of Apple's resurgence, but it turned out to be a final flicker.

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. The top five were OPPO, Honor, Huawei, vivo, and Xiaomi, all Chinese brands. In the second quarter, while iPhone sales in China continued to decline against a backdrop of an 8.9% year-on-year increase in smartphone shipments, vivo, Huawei, OPPO, Honor, and Xiaomi maintained their top five positions.

Fortunately, in the third quarter, Apple regained its position in the top five in the Chinese market with a 15.6% market share, thanks to the launch of its annual new products.

Financial reports show that in the first quarter of this year, Apple's revenue was $90.753 billion, a year-on-year decrease of 4%, with revenue in Greater China at $16.372 billion, a year-on-year decrease of 8%, double the global decline. In the second quarter, Apple's revenue was $85.777 billion, a 4.87% increase from the same period last year, but revenue in Greater China still fell by 6.5%. Greater China is the largest market for iPhones globally and the only geographic region where Apple's revenue declined year-on-year.

The harvest in autumn is due to the sowing in spring, and the pain in winter often pays for the mistakes in summer. Apple's current dilemma was planted years ago.

When the iPhone 13 was released, fans joked that the only difference between it and the iPhone 12 was the name. Even Apple "loyalist" Duan Yongping couldn't resist joining in the criticism; the mediocrity of the iPhone 14 led its own people to criticize it, with Steve Jobs' daughter publicly expressing no interest in upgrading her phone; on the day of the iPhone 15's release, Apple's market value plummeted by $340 billion overnight.

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

Three years ago, Ren Zhengfei published an article titled "Stars Do Not Ask the Passerby" on Huawei's Heartsound Community, which included the following passage:

Technological development is at the flat top of a saturation curve, where great efforts do not yield equivalent returns. Huawei invests $20 billion annually in research and development, but only 40% of this investment is returned, with 60% of the "candles" burning out on the dark path of exploration.

An undeniable fact is that as smartphones continue to advance in history, the entire industry has entered the tail end of technological innovation. Even with great efforts, it is difficult to achieve breakthrough gains.

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

After 2016, domestic phone manufacturers began independent innovation in screens, cameras, and other components, with the most typical and successful examples being full-screen and foldable screens. By 2020, domestic phone brands had begun large-scale deployment of 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 constantly narrowing. To a certain extent, a market reversal is inevitable, especially when Chinese consumers suddenly begin to pursue ultimate cost-effectiveness, accelerating this trend.

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 the company's performance. Encouraged by this success, Tim Cook chose to further increase the price of the new iPhone in 2018, but consumers did not buy into it, and iPhone sales declined for four consecutive quarters.

To regain market share, the iPhone 11 in 2019 was priced competitively, with immediate results. In the fourth quarter of 2019, iPhone sales increased by 7.8% year-on-year, ending a year-long decline.

Since then, Apple has realized it has lost its ability to command a premium and has maintained growth through a strategy of trading price for volume. For example, the iPhone 13 has the same starting price as the iPhone 12 but offers double the storage, starting at 128GB. The iPhone 13 Pro and iPhone 13 Pro Max even offer up to 1TB of storage, with no price increase, effectively a disguised price reduction.

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

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

Times have changed, and in the Chinese mobile phone market at least, Apple is becoming a victim of the times.

Disclaimer

This article contains information about listed companies based on the author's personal analysis and judgment based on information publicly disclosed by the companies in accordance with legal requirements (including but not limited to temporary 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 assumes no responsibility for any actions taken as a result of adopting this article.

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