Thursday (1/3) is a gloomy day for Apple. The stock price drops to 10 percent a day. The massive sale of Apple shares pierced Apple CEO Tim Cook's statement through an official letter to investors which revealed that the company's revenue for Q1 2019 could potentially drop below expectations.
In the letter. The cook team also mentioned that the condition of the world economy was one of the causes. Especially that happened in Apple's biggest market namely China because of the impact of the weakening of the yuan against the US dollar due to the US-China trade war. The weakening of Yuan finally affected the sale of the iPhone. Interestingly, besides the weakening of the yuan, Apple also acknowledged that the decline in iphone sales was a result of a cheap battery replacement program. Last December, Apple started a battery replacement program at a more affordable price.
The program was motivated by
criticism of the update of iOS 11, which at that time was known to affect the
decline in the performance of older iPhones. Apple argues, this is to keep the
old iPhone device safe to use because of the aging condition of the battery.
Not just criticism, some customers also reportedly sued Apple for the policy.
Apple then answered with two strategic steps. First, the opening of a low-cost
battery replacement program also launched a new update by not strangling device
performance. But precisely the program became a stumbling block for Apple
itself. According to Apple, as explained earlier, the battery replacement
program that began since December 2017 and until December 2018, triggered
customers to be reluctant to buy a new iPhone.
Potential
Losses
If Apple is indeed the replacement of batteries is the cause of the decline in sales of the new iPhone, how much influence? according to observer John Gruber through his writing on Daring Fireball. There are at least 11 million units of the iPhone that replace batteries on discount programs launched by Apple. According to Gruber, replacing the original battery through Apple usually only reaches one or two million replacements during the same period. But he believes that there are 11 million customers predicted to join the battery replacement program or increase by 10 times.
If 11 million people replace the iPhone battery and choose to spend 29 US dollars instead of buying a new iPhone for 1,000 US dollars, roughly equivalent to 11 billion US dollars of lost income. Even if the 11 million figure is accurate, Apple will generate around 319 million US dollars in revenue from battery replacement alone, this also means 11 million remain to enjoy Apple services instead of switching to Android devices.
As a reference, Apple lowered its revenue forecast for Q1 2019 between 5 and 9 billion US dollars. of course, not every roaster who replaces the battery also means those who were thinking of buying a new iPhone, and estimates of Apple's original income should also include calculations - the calculation of the cost of replacing the battery. So these numbers only illustrate the scale of the consumer response.
Overpriced and Less innovation
Two reasons Apple made regarding the projected decline in sales do make sense. But what is impossible to recognize is the pricing of the new iPhoni which is considered too expensive by some observers. Imagine, the price of the superior product of the latest iPhone reaches 1000 US dollars, and even the most affordable iPhone XR costs 750 US dollars. In Indonesia, the iPhone XR sells for Rp. 15 million which is clearly far from affordable. On that basis, a Wedbush analyst Daniel assessed that Apple needs to do "significant price cuts" on the iPhone XR to control the price of "hubris" (snobbery).
As quoted by investors via Ubergizmo said, "as we discussed with investors, Apple has become a price issue on the iPhone XR which is the main factor in the disaster in Apple's December quarter revenue. While the iPhone XS continues to focus on premium prices, so the support is the iPhone XR in China, which represents around 20% of all iPhone models in the turnover cycle.
However, he also said that some
investors would be concerned about cutting prices and the impact on top-line
growth in the coming quarters, another reason would be to lose the perception
of being a luxury smartphone, and be a step back for Apple. This is different
from the opinion of journalist Rcode, Kara Swisher. He argues that the Chinese
market is important, but Apple is also faced with a lack of innovation. Swisher
also said that Cook had done an "astounding" job to make Apple an
"economic power", the company could not protect itself from economic
pressure if its team did not produce a successful product.
No doubt, now more innovations from China are emerging. For smartphones, brands from China have managed to create more fresh designs with new features. In fact, Apple's closest rival, Samsung is also making a way to introduce a folding smartphone. While Apple's latest innovation is still not heard. Some of the latest leaked iPhone only implies the use of a new camera.
So, which makes more sense related to the cause of the decline in Apple sales? overpriced, trade war, cheap battery replacement or Apple itself which lacks innovation?
No doubt, now more innovations from China are emerging. For smartphones, brands from China have managed to create more fresh designs with new features. In fact, Apple's closest rival, Samsung is also making a way to introduce a folding smartphone. While Apple's latest innovation is still not heard. Some of the latest leaked iPhone only implies the use of a new camera.
So, which makes more sense related to the cause of the decline in Apple sales? overpriced, trade war, cheap battery replacement or Apple itself which lacks innovation?
