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Monday, August 19, 2019
CEBU

Ng: The Apple has fallen from the tree

Wired Desktop

SOMETHING happened last week that will probably reverberate for years to come.

A few months ago, Apple became the first company to hit $1 trillion market capitalization. Apple seemed to be a company that could do no wrong. Its phones with the same features comparable to Android phones were selling at much higher prices, and they still sold. It was like a company with a Midas touch. It was the most valuable company in the world.

A year ago, an analyst put it well. Although Apple only makes about 15 percent of the world’s cellphones, they make more money than probably all the other smartphone manufacturers combined.

There was some criticism about its products, but they were like Teflon--nothing stuck and the products continued to sell. Until the last few months.

It all started in China.

China is now the world’s biggest market for smartphones, and of course, most smartphones, including Apple’s, is made in China. Apple was met with a lot of local competition in the likes of Huawei, Oppo, Vivo and Xiaomi.

Apple held itself well, but these companies continued to come up with better models at lower prices, and they also continued to work more closely with the cellphone companies for subsidies and lockouts.

Apple was really a pricey option, but for many years, consumers were willing to pay extra for that cool brand.

But things were changing.

Most people in China really want to optimize their pay, so it came out that many of them were on the lookout for phones that could accommodate two SIM cards. Some wanted one phone for work and one for personal use. For others, it made sense to have two SIM cards--one for just phone calls and ther other for data to download videos and complete transactions. For many years, Apple ignored this market, and only the local brands gave that option.

In the end, their high price, but less attractive options cost them the market.

In the last few months, the trade friction between the US and China may have also contributed to many Chinese buyers not going for the American brand.

Apple president Tim Cook recently announced that Apple’s sales in China will be much lower. Some opined that the loss would be more permanent–-that Apple has lost the brand or its ability to charge premium prices for its phones.

China is important because almost 20 percent of Apple’s total global sales is from that market. So from a high of more than $1.1 trillion, Apple’s value is down to just about $700 billion. There was one day last week when in a single day, Apple lost $74 billion-–that’s almost one year of total Philippine exports.

Its market value is still significant, but losing $400 billion is a lot of money. That’s more than the total market value of Facebook ($382 billion), more than the market value of Alibaba ($338 billion), three times the value of McDonald’s ($135 billion), or 14 times the value of Ford ($30.9 billion).

Will it ever get back to $1 trillion? Only time will tell.


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