Price reduction of the iPhone, crazy harvest Android phone market

Image source: Vision China

Saying goodbye to June means that half of 2023 has passed. However, in this hot summer, the cell phone market still does not have any warmth.

A few days ago, market research firm DIGITIMES Research predicted that global smartphone shipments in the second quarter of this year will decline by 6.4% year-on-year to 257 million units, and the point of return to positive growth is still being delayed. Or rather next year.

Another more obvious signal is that in the just past 618 shopping festival, the performance of smartphones is also little bright, despite the increase in the average selling price, but the overall market size is still in the decline channel.

As you can see from the battle reports released by the major cell phone brands, everyone has one or more championship titles. However, in addition to Xiaomi announced sales data, other brands gave more year-on-year growth as well as the data of the price segment they are in. This, in turn, has attracted many netizens to spit, " as long as there are enough definite words, everyone is a champion ".

From the era of feature phones to smart phones, the industry land competition is like an examination. When the difficulty of the test paper is low, it is difficult to open the gap, the paper score is quite high. But when the paper has additional questions, after the difficulty is increased, the top students immediately pulled apart the gap.

In the down cycle, Apple is that " superior student", in addition to continuing to expand in the high-end market, but also by cutting prices down to steal the middle and high-end Android users. Last week, Apple's market capitalization regained its high of $3 trillion amidst a chorus of "no more" questions.

By contrast, the Android phone market is being squeezed. According to the news released by "Mobile Chip Man", MediaTek has cut another 4nm, 6nm and 12nm order in TSMC.

Cut single, price war, Android market continues to be squeezed

This year's cell phone market is not good, Android phones are even worse. Detailed data for the second quarter is not yet available, referring to the performance of the first quarter of this year, the global smart market fell 12% year-on-year, the fifth consecutive quarter of decline. Among the global top five, Apple became the only brand to achieve positive shipment growth, and this also means that the Android cell phone market size decline.

Image source: " Mobile chip maker " Weibo

The terminal is the barometer of the industry chain, and the decline of Android cell phone sales also affects the performance of chip makers. Mobile chip master " said in social platform, MediaTek in TSMC cut another 4nm, 6nm, 12nm large orders. Previously, in April, the blogger also pointed out that MediaTek is not only cutting 5G chips, but also cutting 4G wefer.

For MediaTek's cut single action, an industry insider pointed out that Qualcomm's latest release of Snapdragon 7 Gen2 Plus, using 4nm process, very high cost performance, simply put, is the Snapdragon 8+ weaker version, which allowed MediaTek to lose OPPO, Vivo's many projects, in the declining Android market orders even less.

At the same time, Huawei's performance this year is very eye-catching, becoming the first quarter of the domestic cell phone market in the top seven, the only two positive sales growth of the brand, an increase of 41% year-on-year, the market share also rose to 9.2%. This, in turn, will allow OPPO, Vivo and Xiaomi to be affected, leading to a reduction in shipments of MediaTek.

Huawei said its product release cycle has returned to normal since it was sanctioned by the U.S. more than three years ago. It was also previously reported that Huawei had raised its 2023 cell phone shipment target to 40 million units, which it had set at 30 million earlier in the year.

IDC China senior analyst Guo Tianxiang also told Titanium Media App, MediaTek cut single, first of all, still think that the short-term recovery of the downturn in smartphones is not too optimistic, followed by the brands still have a lot of low-end 4G chips in stock, and low-end 4G chips to MediaTek mainly, it still takes a while to consume inventory.

It is worth noting that since this year, cell phone manufacturing cost pressure eased, the cost of upstream components fell, in the compressed Android market, domestic cell phone manufacturers in the mid-range market set off a new round of price war.

However, the price war is always a double-edged sword, harvesting sales while also putting the cost to a higher test. Later, as the cost of components rises, the pressure on Android brand manufacturers to balance performance and cost will be even greater.

As the biggest shopping festival in the first half of the year, 618 is regarded as a key battle for the year's sales by major cell phone manufacturers, and even Apple has opened a live broadcast. Data released by TechInsights shows that estimated smartphone sales for this year's 618 were 13.4 million units, down 7 percent year-over-year. Despite an increase in average selling price, the overall market size declined by 1% year-over-year.

Image source: TechInsights

The chart released by the research firm shows that Apple remains the undisputed NO.1 in 618, with sales of 5.628 million units and a 42% market share. Xiaomi and Glory are in the second and third places, with sales of 3.752 million and 1.206 million units respectively, with market shares of 28% and 9% respectively.

Price war, roll fast charging, roll video, a series of actions down, Android cell phone brands are still in the original pool to grab users, Apple fish in the pond not less but more fish. According to GfK, there is no sign of recovery in China's consumer electronics market, and the cell phone market will continue to run at a low level. As for the Android phone market, it's hard to dig incremental volume from Apple at the moment.

The price of iPhone is still very fragrant

"Android phones are really being pressured by the reduced-price iPhone," wrote the mobile chip maker. Last year, after Apple released the iPhone14 series, it was trolled for not differentiating innovation and squeezing toothpaste year after year. However, it turns out that the iPhone with a price cut still smells good.

Since January this year, several e-commerce platforms and channels have reduced the price of iPhone14, triggering a wave of sales fever. 618 shopping festival, iPhone is also the most popular products. Data from Jingdong 618 shows that iPhone sales increased by 100% year-on-year in the opening 10 minutes, ranking first in sales and total sales of cell phone brands. Three of the top five cell phone sales are iPhones.

Image source: Jingdong 618 cell phone speed chart

A cell phone category operator of an e-commerce platform revealed to Titanium Media App that iPhone is the most popular among platform users in such large promotions as 618, with various coupons stacked on the platform, the price is suitable and sells best." From our observation, Android phones, especially domestic brands, are already very good, but Apple's brand power is still unique, and is recognized for its large volume in the mid- to high-end market."

Guo Tianxiang believes that consumers still have a higher recognition of the iPhone high-end brand, believing that the iPhone has been in a higher price segment, so when the iPhone is clearly reduced in price, it is more attractive to consumers. This also reflects that in the high-end market, the share of Android phones, although there is some growth, but the overall still difficult to compete with Apple.

Last quarter, Apple's revenue from the iPhone was $51.334 billion, exceeding analysts' previous expectations. Market analysts believe that the iPhone's counter-trend growth in the first quarter was partly due to consumer promotions like those during the Chinese New Year in the Chinese market, and partly due to price reductions in some retail channels for the iPhone14 series, which allowed more consumers to choose to buy them. And in the Chinese smartphone market, Apple's share reached 19.9 percent, making it the highest market share in the first quarter since 2014.

At the moment, the iPhone 14 series has entered the end of the product cycle, but still has strong competitiveness after the price cut. With the strong performance of 618, it is expected to further boost Apple's second quarter earnings performance.

As of July 3, Apple's total market value exceeded $3 trillion. iPhone's strong performance is driving Apple toward the $4 trillion goal.

To break Apple's dominance, Android brands need to say goodbye to " ineffective" innovation

The contrast between Apple's highs and the declining cell phone market is stark. One thing is for sure, the smartphone market this year is still hardly optimistic, TechInsights revised the annual smartphone shipments in 2023 from 1,188.1 million down to 1.16 billion units, down 2.8% compared to 1.2 billion units in 2022.

In the absence of incremental growth across the board, breaking Apple's dominance in the mid- to high-end market is the most direct way for Androids to regain growth. Multiple figures are also proving that breaking out into the higher-end market is something that Android phones and also domestic brands will have to face.

Data from Counterpoint shows that smartphone shipments in China in 2022 are down 41.5 percent compared to their 2016 peak, but sales are down only 11.7 percent. The ASP (average price shipped) of smartphones in China, has been growing year-over-year since 2014 to date.

Image credit: Counterpoint

Over the past six years, high-end smartphone sales have grown against the trend, despite the overall market being in a downward spiral. 2018 saw China overtake Europe as the world's second largest high-end smartphone market, with sales surpassing 80 million by 2021 and growing at a CAGR of 9.8% between 2017 and 2022.

Counterpoint notes that domestic high-end smartphone users have a stronger willingness to purchase larger-cup versions with more powerful specifications and performance, or even mega-cup flagships, when upgrading their products than in the past.

For the time being, apart from Huawei, the country has yet to come out with a second brand that has successfully broken out in the high-end market. Whether in the global or domestic cell phone market, the iPhone is occupying a higher voice in the high-end market. In the past 2023 MWC Shanghai exhibition, Honor CEO Zhao Ming said, "A thousand sails are competing, domestic manufacturers still have to have the impetus to break Apple's dominant situation."

Guo Tianxiang believes that for Android phone makers, only by continuously innovating and creating differentiated products and experiences can they expect to find new growth points, but a long-term accumulation process is needed. Zhao Ming also pointed out that " the consumer electronics industry is a long-cycle industry, the greatest impact is never the economic cycle, but the innovation cycle ".

Just, innovation is only the basic sense of breaking out of the high-end market, say goodbye to " ineffective " innovation is the key. Looking back at the past two or three years, Android cell phone volume image, volume fast charging, comprehensive performance has long been excess, but like Apple can lead the industry to change the innovation point still has not appeared.

Product is the foundation of the brand, innovation is the long-term value of the brand embodiment. It is no exaggeration to say that in the matter of innovation, Android machines have always been the followers of the iPhone.

"Hardware gap is easy to narrow, but the brand influence, software experience and ecology is really not good to catch up", a cell phone brand R & D staff reluctantly said, " not worried about the next generation of iPhone price increase, I am afraid of iPhone price probe, Android machine, especially domestic brands, when not in the high-end market to speak of cost performance, may be really challenging the iPhone bottom it."