back to article China cools on Apple's high-priced iBling

Readers and pundits like to compare Apple products to Veblen goods: the pricier they are, the stronger the demand. An iPhone is a status symbol and an aspirational good; it shows the world you have taste and money. When Apple tried a cut-price iPhone, it flopped. With the latest iPhone X topping £1,000 SIM free, that’s about …

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Well yeah ....

The Huawei/Honor phones are decent tech and good value for money.

The only special thing about Apple phones is the ecosystem (to some) and the badge.

I'm amazed that people know how much mark up is on an Apple device then still gladly hand over their money. Samsung and Google are playing that game now and it isn't going to end well for them.

I have had Samsung devices since the Omnia HD in 2009, including Galaxy S, S2, S3, Note 2, S7 edge and now Note 4. The price of the latest models is shocking for no justifiable reason so my next handset will be Honor. Nothing special about the Samsung phones for almost twice the price. Also the position of the fingerprint scanner on the 8 series models is insane and renders it unusable.

I really hope others see this as well. we're being taken for mugs.

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Re: Well yeah ....

The price of the latest models is shocking for no justifiable reason

Well, we might not think it justifiable, but its easy to see where the money goes:

1) Samsung's corporate bloat. As corporation live, they get middle aged spread, and build large cost bases simply because they think that adds value, when in reality it is just empire building by PHBs.

2) Samsung want to try and retain higher net margins in phones, when challenger brands will tolerate making commodity handsets and making smaller margins.

3) Samsung do probably do more R&D, and product innovation at the high end

4) Samsung need to recover the costs of the $10bn Note 7 disaster

5) With an official UK/EU/US presence, there's a lot of expensive marketing - the UK promotion budgets for a new flagship phone is around £40-50m, and then there's generic brand marketing on top of that. Globally Microsoft spent over $400m pushing its phones, with not much evidence of success.

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Re: Well yeah ....

I must be one of the very few that finds the location of the finger print on the s8 just fine. I have big hands and it allows me to unlock it one handed.

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Re: Well yeah ....

I must be one of the very few that finds the location of the finger print on the s8 just fine. I have big hands and it allows me to unlock it one handed.

The S8 had to be operable one handed, on the grounds of costing an arm and a leg.

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Far too early to call

Good points made about local phones in effect achieving parity with regular iPhones in most respects - and the Great Firewall of China ensuring a level playing field (up to a point).

But Apple must have been miffed that black or grey marketeers were making vast profits on its phones sold at retail, partly because they could have sold a thousand dollar phone a lot sooner. So they now ease their phones into the market place in a much more orderly fashion, making sure they rather than the “iPhone day traders” pocket most of the profit.

The real test will be in due course, whether Huawei can come to market with an iPhone X killer around the same time. That will be interesting to see. Until then I would say all bets are off.

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Re: Far too early to call

whether Huawei can come to market with an iPhone X killer around the same time.

Whilst I'm all in favour of the emerging Chinese brands, and the incredible value on offer (and have one in my pocket), I doubt that any of them are yet ready to offer a device that competes head on or "kills" the premium Samsung and Apple devices. I expect they'll quickly offer something visually similar, with very strong specs and a much better price, but the pace at the top of the market will remain the big two.

We'll only see a Chinese brand iPhone killer when that company has a customer base willing to pay the very high prices for all the bells and whistles required, AND it can innovate ahead of or around Samsung and Apple. That day will probably come, but it may not come very quickly.

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Re: Far too early to call

> ...Great Firewall of China ensuring a level playing field

I'd say it does the exact opposite of that.

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Had a Huawei Mediapad T1-701u as primary device. Nice little device.

However...

After getting a Xiaomi Redmi 4A I was glad for a smaller phone as biggenphones always have a problem wrt storage, whether it be in your pocket or wherever.

And yet a Samsung S4 mini trumps both devices wrt single-hand use.

So big is not always better.

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Well being very happy with an iPhone SE (I know groan - but I know what I am paying for the ecosystem - and I do not buy on contract!) I concur - these big phones are a pain in the arse (well back pocket)

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It seems that the 'Galaxy S[n] Mini' range has been replaced by the Galaxy A range. Makes sense, because the Mini Galaxies were always less powerful than their bigger cousins. The review below says the A3 only has 1.5GB RAM.

The only folk making compact handsets with full-power internals are Sony, it seems.

http://www.expertreviews.co.uk/mobile-phones/1404624/samsung-galaxy-a3-2016-review-the-s6-mini-in-disguise

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Anonymous Coward

"But as any visitor to China knows, the Chinese just don’t buy small packages."

On a visit to Hong Kong in 1993 it was surprise to see people in the street using big bulky mobiles that were long since superseded in the UK. Our host explained that it was all about visibly flaunting status - and he pointed to all the big Mercedes cars in streets where a Mini would have been more suitable.

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Re: visibly flaunting status

So there's a market for phone extenders. A lightweight shell that fits around a small phone. Sort of like a phone case, but not to prevent against impacts/scratches, just to make the phone look bigger. Have some icons painted on the front panel around where the phone sits and it will look like a bigger phone.

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Paris Hilton

What do we want...

This smacks of having done no upstream marketing: i.e. find out what your customers want before trying to sell it (and ideally, before making it in the first place).

There are local/cultural issues all over the world: big and obvious digital stuff in China and Africa; big and obvious SUVs in large swathes of the USA (vs obviously small and electric in other USA markets); Chelsea tractors in metropolitan UK (a.k.a. Barbour and Landrover) and so on.

It's not like Apple don't have sufficient capital tied up offshore to target such markets - it just doesn't want to, or more likely (and worse) just can't believe anyone can refute whatever they declare to be ideal.

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Re: What do we want...

"find out what your customers want before trying to sell it"

That's how the Ford Edsel was designed.

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Re: What do we want...

i.e. find out what your customers want before trying to sell it

Selling what your customers want is just logistics. Marketing is the art of changing what the customer wants into what you have already decided to sell, and that's what Apple have have historically been good at. However, that doesn't mean you can buck the market. You have to be on the same trajectory as the customers and use greater insight to deliver what they would want had they the vision to conceive it.

That's what the iPod, iPad and iPhone did and what Apple have conspicuously failed to do with the iWatch (which is the closest they've come to innovation lately). Once you lose that ability to see further along the path the customers are walking you're reduced to being just a brand name and that inevitably means a contracting market share until you reach equilibrium alongside the likes of Chanel, Gucci and Rolex. The only other option is to abandon pretentions of superiority and compete on price, which risks fatally undermining your brand (e.g. the Jaguar Mondeo X Type).

With the iPhone X/8 Apple demonstrated no vision (pun intended) beyond what Samsung already released (facial recognition is a gimmicky detail, not a core feature, irrespective of how well it works) and the prices indicate they're not interested in competing on price. That leaves the Louis Vuitton handbag strategy and that inevitably means (indeed, requires) contracting market share.

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Anonymous Coward

Bellends

Seems China has worked out that flashing an Apple product just sends the bellend message....

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Coat

Re: Bellend Message

^G^D

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There isnt much to see here. A small reduction in the number of people who say they will buy an iPhone, which isnt realistic anyway as only 8.5 % do. I dont think we should start the Apple is Doomed website again, not just yet.

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The iPhone 8 is expensive and at first, second and third glances is no different to 2014’s iPhone 6; all the extra speed is wasted because iOS doesn’t let you anything that needs all that power. So there seems no compelling reason to upgrade to an iPhone 8.

The iPhone X is svelte, definitely much nicer than the 8, but it’s absurdly expensive, even for Apple, and replacing the very elegant and successful Touch ID with unproven facial recognition just seems moronic. The general workflow for functions like Apple Pay will be far more physically torturous with facial recognition - imagine going through a tube station gate in friendly, easy going London, having to pause, gormlessly stare into the phone, wait, then pass through. Fine for the Apple campus cafe, where the counter staff will get sacked for not grinning appropriately. Not so fine for the real world.

So Apple’s problem with its new phones is this: they’re just not worth it. I can’t see that this is China-specific.

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Anonymous Coward

Downvotes from Tim Cook and Jony Ive.

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Gimp

An iPhone makes for a good aspirator

"it shows the world you have taste and money".

I suppose Steve Jobs had money, but did he have taste?

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Facepalm

DOOMED!

"I wonder why they stay in the market at all."

Yes, it's true. Apple Inc. is "DOOMED®". They will never sell another iPhone ever again in China... Or anywhere else in the world for that matter. And since the entire Apple company has spent its entire 40 year existence selling just one very unpopular product (the iPhone... Remember the 1984 iPhone "failure"?), Apple will never be a success.

This is why over the past 40 years Apple has gone from being the largest most profitable company in the world, to being the smallest and least profitable company as it is currently. This is because the people at Apple have never been able to innovate, and they don't know how to run a company.

I highly recommend that Andrew Orlowski (who wrote this article and knows what he is talking about) be made CEO of Apple IMMEDIATELY. Only he has the knowledge and experience to finally make a success of Apple Inc.

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Re: DOOMED!

Their new products have been taking bit of a bashing lately. I don 't use them so don't know. Even the Guardian (the biggest wank organ for Apples cumliness) just slated the 8+.

I take your point. They aren't doing too badly. But then neither were Compaq a while back, or Commodore, or Sinclair, or ICL, or Marconi, or various defunct bits of HP, Lotus Notes!!, Sun, Daisy, Kodak, Amstrad . . . .

Fickle business this tech stuff. Just cos Apple have rocked since they invented the iPod doesn't mean they aren't 5-10 years from being a memory if they miss a turn or two. Releasing a $1000 phone that doesn't have any USP over a $500 phone seems like they aren't watching the road.

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Emergency announcement from Apple's CEO

Make the Kool-Aid stronger!!!

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Maybe Chinese just prefer to go with their own brands

When they feel the Chinese brands can do what they want/need? Trump can't prattle on about how China is killing us and wanting to make/buy American without having other countries say "hey, two can play at that game".

As the article stated, this has been a much bigger problem for Samsung's market share in China, so it would be silly to think Apple would be unaffected.

I would have to think that support for the Chinese languages, and since Android phones there have all the Googly bits removed and replaced with Chinese equivalents that may lead to a better / more integrated experience from a Chinese consumer's point of view versus downloading apps on iPhones or Samsungs.

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Re: Maybe Chinese just prefer to go with their own brands

Yes, have to acknowledge that Apple's market share is holding up well in comparison with, say, Samsung.

However, if the Chinese market does indeed turn away from Apple — and no one knows this yet — then this would have a significant effect on Apple's bottom line. Wouldn't be disaster because other markets, particularly the US, are extremely loyal to the brand and big enough to keep the money rolling in.

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Re: Maybe Chinese just prefer to go with their own brands

I think Apple has been and will be more resilient simply because they only play in the high end (well, there's the SE now, but as the article notes that's simply not a consideration for the size obsessed Chinese)

With China's growing economy, there are always people moving out of lower economic classes where they couldn't afford / couldn't justify spending the kind of money that Apple and Samsung charge for their flagships. Once they reach a higher class, some will move to higher end phones and it is reasonable to assume of those, some percentage will choose Apple.

Even if the percentage of "economic climbers" who switch to Apple is relatively small (due to already being in the Android ecosystem, and the inbuilt advantages of non-Googly Android for the Chinese market) the huge numbers of climbers due to China's rapid economic growth and massive population should help minimize the market share impact on Apple. The same is probably true for Samsung's flagships - I'll bet they are seeing more Apple like market share reductions in their flagships, and most of their share loss is in the cheap and midrange phones where Chinese companies are primarily competing.

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Stop

Shold have known better

Corporations pay a price for production in the PRC. Huawei products are probably better as they benefit from surreptitious examination of Apple and others engineering. The low cost iPhone floppiness may have been more about too much feature chop by Apple and availability than fashion. Huawei has one of the best smartwatches with perhaps Apple and Samsung variants as its only competition.

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