Apple, despite maintaining its position as the best-selling smartphone brand in China in 2023, is currently resorting to drastic measures to boost sales. An unusual promotional campaign featuring significant price reductions has surfaced on the official Chinese Apple website.

Customers using specific payment methods to purchase select Apple products can enjoy discounts of up to 800 Chinese yuan. This promotion includes the latest iPhone 15 series, Macs, AirPods, and Apple Watch.

According to an announcement on Apple China’s official website on the 15th of the month, Apple China is set to launch the “Welcome the Spring Festival Limited-Time Offer” from January 18th to January 21st. Customers who meet certain payment criteria will be eligible for varying discounts.

Taking the iPhone as an example, models like the iPhone 15 Pro, iPhone 15 Pro Max, iPhone 15, iPhone 15 Plus, iPhone 14, iPhone 14 Plus, and iPhone 13 are all part of this promotion, with potential savings of up to 500 Chinese yuan.

For those interested in purchasing the 13-inch or 15-inch MacBook Air (M2), or the 13-inch MacBook Air (M1), the discounts can reach up to 800 Chinese yuan. Other products such as the iPad series, Apple Watch SE, AirPods, and Apple Pencil-related models are also covered under this special offer.

It’s worth noting that this move by Apple is quite unusual, as they rarely introduce such significant price reductions for new products in the same year. For instance, during last year’s Chinese New Year event, only the previous generation models, iPhone 13 and iPhone 13 mini, were included in the promotion.

This is seen as Apple’s effort to boost sales in response to increasing competition, particularly from Huawei, which made a comeback in 2023 with flagship smartphones dominating the high-end Chinese smartphone market.

As Huawei plans to expand its market share in the high-end flagship category this year, targeting the domestic demand in China, coupled with geopolitical factors, this could directly compete with Apple and potentially exert significant pressure on Apple’s production performance in the this year.

Recent reports from Jefferies analysts cited by Bloomberg highlight the impact of the Huawei Mate 60 Pro’s presence and the Chinese government’s ban on iPhones for officials. It is estimated that the sales volume of Apple’s latest products in China in 2024 could decline significantly by 30% compared to the previous year, potentially resulting in a double-digit decline in sales for the entire year.

(Image: Apple)

Apple CEO Tim Cook recently made the official announcement that the company’s inaugural spatial computing product, Vision Pro, is set to go on sale on February 2nd in the United States. According to a report by TechNews, due to the limited preparation of Vision Pro units, with an estimated quantity of only 60,000 to 80,000, there is a high likelihood that the product will sell out on the first day of its release.

TechNews cites the latest analysis from China’s TF Securities analyst Ming-Chi Kuo, who recently posted on X. According to Kuo, Apple has prepared only about 60,000 to 80,000 units of the Vision Pro before its launch, and due to the limited quantity, it is expected to quickly sell out once it hits the market.

Kuo also notes that despite questions about Apple’s lack of clear positioning and key features for the Vision Pro, as well as its relatively high price, the company is likely to sell out rapidly based on its groundbreaking technological innovations, creating a user experience that includes the illusion of mind-controlled interfaces. This, coupled with Apple’s strong core user base and a significant number of heavy users, should result in a swift sellout after the product’s release.

There are rumors suggesting that even though online ordering is possible, users may need to adjust the head circumference size, and Apple may prefer customers to try fitting it in person, which could lead to some consumers adopting a wait-and-see approach.

However, a user on the X platform, Aaron @aaronp613, discovered an encoding set as ‘ You will be able to use the Apple Store app to scan your face to pick the right size,’ indicating that users who are unable to visit stores for fitting may use the Apple Store app to scan their faces and order the correct Vision Pro size. Vision Pro requires a proper fit for functionality, involving a tight seal and correct headgear.

Apple has also introduced the Head Measure and Fit app to help developers test Vision Pro and determine the correct product size. Similar functionality may be built into the Apple Store app.

According to the latest data from TrendForce, global shipments of Apple Vision Pro are expected to reach 500,000 units in 2024.

(Image: Apple)

Due to consumer spending pressures this year, the smartphone market is not as robust as before. With Apple facing strained relations with China, market sentiment continues to be pessimistic about Apple’s prospects.

Recently, citing from a report from Jefferies Financial Group’s analyst, Bloomberg stated that the sales volume of Apple’s latest products in China is expected to decline by 30% compared to last year in 2024, potentially experiencing a double-digit decline for the whole year.

The Wall Street Journal once reported that last year, the Chinese government announced its restriction on officials using iPhones, with at least eight provinces instructing officials to cease using iPhones.

This restriction not only applies to government agencies but also extends to state-owned enterprises, including large entities in China’s power generation, harbor construction, mining, manufacturing, education, and investment markets.

In addition to political restrictions, Apple is also facing pressure from Chinese competitor Huawei. Analysts from Jefferies Financial Group previously stated that sales of Huawei’s Mate 60 Pro surpassed the iPhone 15.

In 2023, Huawei held the highest market share in the Chinese smartphone market, growing by approximately 6% compared to the same period in 2022, while Apple’s market share in China declined by 4% year-on-year.

Patriotic Enthusiasm Supports Local Smartphone Brands

Driven by “patriotic enthusiasm,” according to Jefferies’ estimation, Huawei’s smartphone shipments last year reached 35 million units, falling below the expected 40 million, possibly due to constraints in component supplies.

The Huawei Mate 60 Pro features a SMIC-manufactured 7nm processor tailor-made for the domestic market. Huawei continues to develop and expand its HarmonyOS operating system, competing with iOS and Android.

Yet, according to MacDailyNews, Huawei has allegedly exaggerated the capabilities of the Mate 60. In reality, its processor specifications lag behind Apple by several generations.

The “Kirin 9000S” is a 7nm chip, with a Geekbench 6 single-core score of 1,267 and a multi-core score of 3,533. In comparison, Apple’s A17 Pro features a 3nm chip, scoring 2,902 in Geekbench 6 single-core and 7,221 in multi-core tests.

The Huawei Mate 60 falls behind even Apple’s entry-level third-generation iPhone SE. The latter is equipped with the 5nm A15 Bionic chip from September 2021, scoring 2,237 in Geekbench 6 single-core and 5,173 in multi-core tests.

Smartphone Price Reduction Fails to Boost Sales

To salvage the market, iPhone 15 Pro and iPhone 15 Pro Max witnessed a substantial 16% price reduction on the Pinduoduo e-commerce platform during the first week of 2024, with similar discount levels observed in December. However, analysts from Jefferies believe that these discounts will not stimulate sales growth.

As iPhone sales constitute approximately 52% of Apple’s total revenue, China has consistently represented Apple’s most crucial international market.

In the face of the competitive pressure in the Chinese market this year, TrendForce analysis suggests that Huawei’s successful sales will exert sales pressure on Apple, which also targets the high-end market in China.

Therefore, TrendForce is not optimistic about the production forecast for Apple in 2024, estimating the annual production volume to be around 215-225 million, slightly lower or flat compared to the previous year.

In terms of regional market operations, Apple continues to increase its production share in India, aiming to offset the lost market share in China through the growth of the high-end market in India. It is estimated that by 2025, the production share in India will further increase to 25-30%.

Read more

• [Tech Recap and Glimpse 5-4] Can Huawei Successfully Capture Apple’s High-End Smartphone Market?
• [Insights] Chinese Government Invests in Huawei Supply Chain; Semiconductor Self-sufficiency for China’s Long-Term Growth

(Photo credit: Huawei)

In June 2023, Apple introduced its inaugural spatial computing device, the Apple Vision Pro, entering the mixed reality (MR) landscape. On January 8th, 2024, Apple revealed on its official website that the Vision Pro would be available for pre-orders in the United States starting January 19th, with an official release date of February 2nd.

According to Apple’s official news release, Apple’s CEO Tim Cook has indicated as follows: “The era of spatial computing has arrived. Apple Vision Pro is the most advanced consumer electronics device ever created. Its revolutionary and magical user interface will redefine how we connect, create, and explore.”

In June 2023, at the WWDC (Worldwide Developers Conference), Apple unveiled its head-worn device, the Vision Pro, priced at USD 3,499. This cost is over three times the price of Meta’s high-end virtual reality (VR) model, the Quest Pro, at that time.

To bolster the ecosystem behind Vision Pro in the realm of mixed reality, Apple has made comprehensive preparations. In June of last year, the company announced the launch of new software tools and technologies, enabling developers to craft app experiences tailored for Vision Pro. Additionally, Apple established developer labs in California, London, Munich, Shanghai, Singapore, and Tokyo.

Considering factors such as pricing and the absence of certain essential features, TrendForce has previously anticipated a modest shipment volume of approximately 200,000 – 400,000 units for Apple Vision Pro in 2024.

The market’s response will heavily depend on the subsequent introduction of consumer-oriented Apple Vision models and the ability of Apple to offer enticing everyday AR functionalities that will drive the rapid growth of the AR market as a whole.

TrendForce also noted that the Apple Vision Pro boasts cutting-edge hardware specifications and innovative design. However, a substantial price tag of USD 3,499 and the requirement for an external power source to operate for a mere two hours pose challenges to consumer adoption.

Currently, the Apple Vision Pro lacks sufficient applications for mainstream users, making it more attractive to developers and enterprise customers who can capitalize on its innovative features to create diverse applications. Consequently, the higher price point of the product is justified.

Read more

• [News] Apple Reportedly Accelerates Production of MR Headset “Vision Pro” for Potential February Launch
• [News] Apple Could Introduce Micro LED into Vision Pro, Replacing Existing Micro OLED Technology

(Photo credit: Apple)

In late December 2023, Apple faced sales suspension of certain Apple Watch models in the United States due to concerns over patent infringement with Masimo’s blood oxygen detection technology.

Despite Apple’s appeal for reinstatement, regulatory authorities will review updated designs presented in mid-January 2024 to determine whether sales suspension persists. The potential financial and time costs associated with settlement or redesign may prompt Apple to reassess the necessity of incorporating blood oxygen detection.

TrendForce’s insight:       

Apple and Masimo’s Prolonged Legal Battle Set to Conclude in Mid-January 2024, Verdict on Blood Oxygen Monitoring Patent Infringement

Since the introduction of the S6 in 2020, Apple Watch has featured blood oxygen monitoring technology, addressing the demand for detecting hidden hypoxia and hypoxemia, particularly in the context of the COVID-19 pandemic. Many smartwatches released during the same period also incorporated this functionality.

The blood oxygen monitoring technology in Apple Watch utilizes traditional pulse oximetry. The built-in sensor consists of red, green, infrared LEDs, and a photodiode sensors that converts light into electric current.

In essence, the technology relies on shining light onto wrist blood vessels to capture data on the difference between oxygenated and deoxygenated blood. Algorithms are then employed to determine the blood oxygen content.

Hence, this technology involves not only software-related analytical applications but also hardware configurations and usage considerations.

In fact, the infringement dispute between Apple and Masimo has been ongoing. Since 2020, Masimo has accused Apple of patent infringement. The legal battle continued until October 2023 when the U.S. International Trade Commission (ITC) ruled in favor of Masimo, determining that Apple had indeed infringed. Consequently, in late 2023, a sales ban was imposed on certain models of Apple watches.

Despite Apple’s appeal allowing them to resume sales, regulatory authorities will reassess Apple’s redesigned models in mid-January 2024 to determine if improvements have been made.

Currently, the most severe impact of the ban is on models with blood oxygen functionality from the S6 onwards, including the S8, while only the SE series, without this feature, remains unaffected.

Diminished Need for Blood Oxygen Monitoring in Temporal Context – Apple May Reconsider Necessity

Given the current situation, there are several possible developments. Firstly, Apple may reapply for approval of a redesigned model by regulatory authorities, allowing them to resume sales after making necessary adjustments.

However, this approach involves not only software modifications but also hardware changes, encompassing testing, review processes, and relaunching, which could take several months. Considering Apple’s usual product release schedule in September each year, the company faces significant time pressure.

Secondly, Apple may opt for a settlement with Masimo. In the past, Apple has resolved disputes over chip technology and intentional slowdown of older devices with Qualcomm and in collective lawsuits with users.

However, settlement amounts were substantial, approximately $4.5 billion with Qualcomm and potentially up to $500 million in the case of collective user lawsuits. Compared to Apple Watch’s annual revenue in 2023, which may not have reached $20 billion, such outcomes may be less favorable for Apple.

If Apple cannot bypass Masimo’s patent through updates, settlement and payment of ongoing patent fees may become a necessary consideration. However, this to some extent may prompt Apple to reevaluate the necessity of the blood oxygen monitoring feature.

After all, for smartwatches equipped with blood oxygen monitoring is intended for health, not medical purposes. Besides Withings’ products, most smartwatches with this feature have not obtained approval from the U.S. Food and Drug Administration (FDA). In other words, they cannot be used for medical purposes.

While having more features at the same price would enhance the product value for consumers, the current context of the post-pandemic era and Apple’s user loyalty suggest that the demand for additional functionalities may vary.

If Apple does not intend to further integrate blood oxygen data with other physiological data, there might be room to reconsider the necessity of redeveloping the technology and the continued existence of the blood oxygen monitoring feature in future Apple Watches. The value of incorporating such functionality may be subject to greater flexibility in this scenario.

Read more

• [News] Apple Reportedly Accelerates Production of MR Headset “Vision Pro” for Potential February Launch
• [News] Apple Could Introduce Micro LED into Vision Pro, Replacing Existing Micro OLED Technology

(Photo credit: Apple)