Iphone SWOT

Part
01
of three
Part
01

IPhones Overview: Asia

China is Apple's third largest market for iPhones after the Americas and Europe accounting for $11.4 billion in revenue, while significantly impacting the performance of iPhones in the Asian region. China's nationalistic movement to shifting towards domestic brands amidst the trade war has been a leading cause for consumers switching towards other brands. The probability of switching as of 2018 was around 40%. However, the decision to switch to other brands ultimately lies with the individual customer.

REASONS FOR BUYING & STAYING WITH THE BRAND

  • Apple is doing well in the mature and wealthy economies in Asia such as Japan, Singapore, and South Korea where high prices are affordable to the general public.
  • In China, Apple is still seen as a luxury brand and impartial customers still continue to use it. This is also helped by the goodwill that the brand had created by being involved in social causes such creating 5 million jobs in the country.
  • While there are nationalistic consumers who refuse American brands in China, there are many users to whom it does not matter much. Ultimately, this decision depends on each individual consumer.
  • Apple has a strong market in the UAE due to the immense loyalty and prestigious image associated with the brand in the region, where customers are ready and willing to upgrade their device.

PROBABILITY OF SWITCHING TO OTHER BRANDS

  • According to Morgan Stanley estimates, the iPhone retention rates in China, the largest iPhone market in Asia, has been 60% during 2018, which can be translated to a 40% (100-60%) probability of switching to other brands.
  • During 2017, the probability of Chinese iPhone users switching to other brands was only 26% (100-75%), which is indicated by the retention rate of 74%.

REASONS FOR SWITCHING TO OTHER BRANDS

  • Nearly half of iPhone users in China that switched to other brands chose Android devices, where almost half of them opted to switch to Huawei. The main reason for this switch is the loyalty towards domestic brands—particularly Huawei, which is intensifying within the Chinese market.
  • In economies such as Thailand, Indonesia, and Vietnam, the iPhone lags behind rivals since most buyers choose to go for cheaper Chinese and South Korean brands.
  • Some customers in China switch to Huawei due to the availability of employee discounts for buying this brand, and also due to Chinese made phones offering better value for money.
  • According to local sources, using the American made iPhone in China is seen as an embarrassment among some consumers. The impact from US trade war against China and the blacklisting of Huawei exports is further strengthening the movement within the country to boycott Apple products.
  • In addition to the unfavorable economic environment, the lower demand for iPhones resulted from more people replacing batteries instead of buying new phones. The decrease in battery replacement prices from US$79 to US$29 as well as the general durability of the phone is another contributing factor.

LOYALTY BASED CUSTOMER SEGMENTATION

Part
02
of three
Part
02

Iphone SWOT

Some of the strengths of iPhone in Asia and Europe include innovative touch screen and scratch resistant screen. Weaknesses include prices and one sim card slot.

STRENGTHS

  • They have an innovative touch screen and have many functions of other mobile phones in it.
  • "The phone works with iTunes and other Mac/Apple products and OS software tools which means limitless potential for upgrade-ability".
  • The screen is scratch resistance and the phone is resistant to computer viruses.
  • The phones have very nice specs in terms of space, camera, battery life, and so on.
  • Apple has increased revenue for iPhones in Asia.

WEAKNESSES

  • People who are used to other OS have a hard time adapting to iOS.
  • The prices of iPhones are relatively high across the globe and are higher in Europe.
  • Other mobile brands have more than one sim card slot while iPhones have only one.
  • Other brands have features that iPhones do not have.
  • iPhones are the same for everyone regardless of geographic regions while other brands such as Xiaomi customize their products according to each country.

OPPORTUNITIES

  • Apple has an opportunity to grow their brand in Asia.
  • There is room for more innovations to being excellent features and make iOS more user-friendly.
  • The iPhone eSim can remove the roaming charges.

THREATS

  • Due to the intellectual property rights, there is no immediate notification of a theft.
  • There is less interest and hype in Asia due to the wide use of smart phones and therefore it will be difficult penetrating the market.
  • There is competition from Android due to its predominance in Asia.
  • Market share of iPhones in Asia has been stagnant.
  • Market share of iPhones fell in Europe due to the success of Asian brands.

CONSUMER PERCEPTION

  • For six consecutive years, iPhone has been considered by consumers as the second best brand in the world.
  • In Asia, 65.7% intended to buy iPhone 8, 8 plus or X. 75.7% said they intended to buy either of the iPhone 7 models. The number of people saying they would buy an iPhone as their next phone dropped to 24.2% from 31.4% during the launch of the iPhone 7.
  • iPhone is expensive in Europe. Apple fans are unwilling to buy iPhone X for $999 when cheaper brands like Xiaomi offers phones with iPhone features.
  • "According to CCS, more consumers are searching for alternative means to secure a smartphone. More than half are on SIM-only contracts, which have been found to be better value, compared to purchasing a device and SIM separately. CCS’s research also revealed a growing interest from consumers in second-hand and refurbished devices".
Part
03
of three
Part
03

Phones Overview: Europe

Apple is currently the second largest market share in Europe, second only to Samsung, although this trend is different in the UK where Apple still holds the most market share and they account for 22.73% of the shipments to Europe. Huawei took a lot of market share in the last couple of years growing 66%, however the latest controversy and ban of their products due to privacy issues in other countries such as the US has led to not only a decline in their standing but opportunities for Apple to regain their lost market share. Only 25% of UK Apple users would consider switching for economic concerns, mainstream Europe is more accepting of switching brands as evidenced by their uptake of brands such as Huawei.

REASONS FOR POSSIBLE SWITCH FROM THE APPLE BRAND

  • Hauwei's numbers of shipments in Europe has risen very quickly by 66% compared to iPhone's significant decline of 22.73%, thus giving Apple less than 15% of the market share while Hauwei has grown to 25.39%.
  • However, major issues regarding privacy and allegations of spying led to Huawei's products being banned in the US and should allow for Apple to recapture their market fairly quickly.
  • A 2017 survey of UK Apple fans indicated that 25% would consider switching brands in light of tightening budgets and recent price increases. However, each European country values the different brands differently, with Apple having the highest market share in the UK at 51.4%, but coming in second in Germany at 30.43%, in comparison to Samsung at 29.66% and 43.12% in both countries respectively.
  • France shows little difference with Samsung and Apple coming in at 37.86% and 33.06% respectively.
  • Huawei has also emerged as a big competitor in European and other markets.
  • Although it was reported that Apple had sales of over 3 million iPhones, they reported they only had 2 million new activation, which points to the effects of the "black" market and phone unlocking for use outside of a network.

REASONS FOR BUYING AND STAYING WITH APPLE

  • To encourage customers to upgrade, as they are holding on to their phones for longer periods of time, Apple is aggressively bumping up the trade-in values of older phones.
  • The promotion is designed to increase new device sales, incentivize upgrades, and help the company increase the stock of quality refurbished devices that can then be resold in emerging markets.
  • Mainland Europeans are undecided in their commitment to a brand, unlike their UK and US counterparts that clearly prefer the iPhone.
  • Apple, along with other phone companies, has increased their prices for new phones; however, this has led to the phenomena of users buying the more expensive product and keeping it for longer periods of time. This is likely due to their enjoyment not only of the numerous features, but also to personalization.
  • Apple users are keeping their phones for longer periods of time; however, Apple runs campaigns to encourage users to upgrade to newer phones.
  • Even so, the market for refurbished iPhones grew at a 15% CAGR while new iPhone sales remained stagnant.
  • Apple's Services business is the second-largest sector for the company, and has grown over 20% in two years, reaching its large installed base of 1 billion.
  • Key services they provide that encourage customers to stay are app installs, licensing revenue, and iCloud subscriptions, all of which can drive growth even though hardware sales have stalled.

Segmentation of Apple Iphone users based on their commitment to the brand

  • Apple segmented its users in three categories including customers with high loyalty, technical oriented customers, and social acceptance oriented users.
  • Apple has an 87% brand loyalty rank in Europe. The highly loyal customers are those from middle to high class who are willing to pay any amount for the new features and benefits of the products.
  • The technical oriented users are those attracted by new designs of the product, and include mainly adults who are in the middle class.
  • The social acceptance users are those who are driven by social status.
Sources
Sources

From Part 01
Quotes
  • "Close to half of China’s iPhone users that switched devices in the first half of the year chose Android handsets, according to a report from mobile data research firm QuestMobile. Of those, nearly half opted for a Huawei smartphone."
  • "Against a backdrop of impending tech restrictions from the US, it appears that a shift in brand loyalty toward domestic brands⁠—particularly Huawei⁠—is intensifying among Chinese consumers."
  • "42.9% of iPhone X users in China choose Huawei when switching to Android in H1 2019, according to the report. "
  • "Apple’s smartphone market share in China dipped to 23.5% in H1 2019 compared with 25.5% the same period a year ago. Huawei’s market share meanwhile grew to 21.6% from 17.0% in H1 2018."
Quotes
  • "Yet despite this, Apple continues to drive strong market share with 22.3 per cent market share in UAE in the second quarter of this year. I believe this is mainly due to the massive brand loyalty and prestigious brand image that no one other than Apple enjoys in the region, and perhaps even the world,she said."
  • "Moreover, she said that Apple share sees a jump in the fourth quarter and first quarter of next year, due to the loyal consumer base that is ready to upgrade their device."
Quotes
  • "Greater China was Apple’s third-largest market in terms of revenue in the fourth quarter of 2018 — after the Americas and Europe — at $11.4 billion, according to company figures. The figure for Japan ($5.161 billion) and elsewhere in the Asia Pacific region ($3.429 billion), meanwhile, came to $8.59 billion. "
  • "Outside of China, Apple has done well in mature and wealthy economies such as Japan, South Korea and Singapore, where its pricey phones can be more readily afforded. But in the rest of Southeast Asia and India, where overall economies are growing but per capita incomes remain relatively low, the going has been tougher."
  • "Japan and South Korea-Japan and South Korea are wealthy economies and also two of the most mature smartphone and mobile device markets in the world. Still, figures from web analytics company StatCounter show that Apple consistently ranked No. 2 in the South Korean market last year behind Samsung and ahead of LG. "
  • "Southeast Asia-The company had top market share of 39 percent in city-state Singapore as of the end of the third quarter last year, according to research firm IDC. But in bigger economies such as Indonesia, Thailand and Vietnam, it lags behind rivals. That leaves most buyers with little alternative but to go for cheaper South Korean and Chinese models, she said."
  • "India-India is one of the world’s largest economies, but so far it remains a significant challenge for Apple. India has a growing middle class, but it still lacks the purchasing power of China’s, Kaur said: “I don’t see any comparison there.”Cook, for his part, has spoken of promise in the country, saying in 2016 that Apple will be in India for a “thousand years.”"
Quotes
  • "Apparently, some users in China are switching from iPhones to Huawei’s phones. There many reasons behind this, such as feeling embarrassed when using a U.S.-made phone in public and a growing national sentiment to use local products. "
  • " Other reasons are far more pragmatic, such as availing employee discounts on the purchase of Huawei devices or buying the Chinese company’s phones because they offer better value for money. No matter what the reason might be, Apple’s sales can definitely take a hit in the far eastern region."
  • "The company slashed its revenue guidance in the country because of China’s economic slowdown as well as rifts with the U.S.Since around 20 percent of Apple’s revenue comes from China, it is an important market for the company. According to an IHS Markit analyst, Apple’s market share was bound to go down in China anyway, because of its pricing strategies."
  • "However, IDC says that since Apple is still seen as a luxury brand, and impartial consumers might continue using it. It also helps that the company has created goodwill in China by being involved in social causes and creating around 5 million jobs."
  • "The growing resentment against the U.S. will only help it consolidate its position in its home country further."
Quotes
  • "George H. Brown has divided the brand loyalty status into four groups-Hard Core Loyals, who buy the same brand all the time; Split loyals, who are loyal to two or three brands; Shifting loyals, who shift from one brand to another and switchers, who show no loyalty to any brand. "
Quotes
  • "Using an iPhone in China is now seen as embarrassing by some consumers, says a local report.The combined impact of the Trump administration’s trade war on China and export blacklisting of Huawei is further strengthening the ‘Boycott Apple’ movement in the country"
  • "For Sam Li, who works at a state-owned telecom company in Beijing, switching from Apple to Huawei was also driven by an emotion. “It’s kind of embarrassing to pull an iPhone out of your pocket nowadays when all the company executives use Huawei"
  • "While the US export ban threatens to cripple the Shenzhen-based company in the short term, ongoing nationalist sentiment at home could play to Huawei’s favour and hurt Apple’s sales in China, according to analysts. "
  • "Apple is after all a luxury brand, and ultimately it all depends on the users,” said Bryan Ma, vice president of client devices research at IDC Asia Pacific. “There will be some who are nationalistic and say no to American products, but there are many other users to whom it does not matter as much."
Quotes
  • "Other surveys show Apple has stronger brand loyalty than competitors. A Morgan Stanley study found 74% of China’s iPhone owners would stay with Apple."
Quotes
  • "Chinese netizens know exactly what to blame: the ever-increasing price of iPhones. Is it really because of the slowed economic growth? Have you looked at your own products lately?” one of the top Weibo comments said. “Without any major technological breakthrough, iPhone prices have only gone up significantly."
  • "In recent years, Apple’s market share in China has been challenged by many rising Chinese Android brands. According to Counterpoint, the top five phone makers in the third quarter of 2018 were all domestic Android brands."
  • "Besides the unfavorable economic environment, Apple also attributed the weaker iPhone demand to the fact that more people are replacing their batteries instead of buying new ones. Last year, Apple reduced its US$79 battery replacement fee to US$29 after the company was criticized for slowing down old iPhones with dying batteries."
  • "A Chinese Weibo user who appreciates the durability of iPhones suggested that it might be another reason for declining sales."
Quotes
  • "Katy Huberty at Morgan Stanley estimates that Apple’s iPhone retention rate in China has been about 60% over the few months. This would lead to more users leaving Apple’s ecosystem. "
Quotes
  • "Under the leadership of late Steve Jobs, Apple mainly used mono-segment type of positioning, appealing to the needs and wants of a single customer segment. However, after Tim Cook became CEO, the multinational technology company has been consistently increasing its product ranges shifting from mono-segment type of positioning to multi-segment positioning."