Apple's stock price fell after launching two new mobile phones

Apple's stock price fell after launching two new mobile phones The BBC reported that after Apple launched two new iPhone mobile phones at the same time, the company's stock price appeared...

Apple launched the most advanced iPhone 5S and the relatively cheap iPhone 5C mobile phone on Tuesday (September 10). However, the most basic iPhone 5C phone with 16GB of storage costs $740, which is still too expensive in the eyes of many people. Analysts believe that investors are worried that Apple's latest two mobile phones will not help it expand its share in emerging markets, thus causing the company's stock price to fall.

On Wednesday (September 11), Apple's closing price was $467.7 per share, down 5.4%. Apple currently feels it is being severely challenged by South Korea's Samsung and China's Huawei in its attempts to expand into these markets.

How to position

Mark Luschini, chief investment strategist at Janney Montgomery Scott, an American financial and investment consulting firm, said that the latest price Apple offered to attract new markets was not low, which dissatisfied investors.

He specifically pointed out that the prices of Apple products cannot be compared with those of competitors. Apple has achieved great success in developed markets with its iPhone products, but has not been able to replicate such success in emerging markets such as China and India.

Analysts say that the higher prices of Apple products are only one of the reasons for the above results. Another important reason is that in these emerging economies, phone operators are often unwilling to subsidize the mobile phones themselves.

In this case, low-priced mobile phones are more suitable for consumers. Previously, many people had predicted that Apple would launch low-end mobile phones to attract consumers in these countries.

But analysts believe that the price of iPhone 5C is not low enough to seize global business opportunities, nor can it attract customers who cannot get subsidies from phone operators.

Some analysts pointed out that the problem facing Apple now is whether they really want to occupy these emerging markets, or whether they hope to continue to position themselves as a high-end mobile phone manufacturer.

Chinese smartphones challenge the "cheap" iPhone

The Wall Street Journal reported that although Samsung Electronics Co. and Apple Inc.) has shared most of the profits in the smartphone industry, but the international market share of these two companies has continued to decline. The reason is that lower-priced alternatives have emerged in markets such as China: a large number of Chinese start-ups have launched high-configuration mobile phones that are half the price of Apple and Samsung phones.

In the electronics market in Sham Shui Po, Hong Kong, you can see cheaper smartphones that are comparable to Apple and Samsung mobile phones.

Take the Zopo C2 mobile phone produced in China as an example. This Android-powered smartphone has a full HD screen, a 13.1-megapixel camera and a high-speed image processor. The price of such a high-configuration mobile phone is only slightly more than 300 US dollars, which is more attractive than the bare metal prices of Samsung Galaxy S4 and Apple iPhone of more than 600 US dollars. In addition, Xiaomi Inc.'s newly launched Mi 3 smartphone is priced at only RMB 1,999 (approximately US$327), while Gionee's Dream D1 smartphone is priced as low as US$230.

According to data provided by research organization Canalys, Samsung Electronics currently ranks first in China's smartphone market, with a market share of 18%. As other mobile phone manufacturers have grown in strength, Apple's ranking has fallen to seventh place, with a market share of only 5%.

Apple’s “low-end” strategy is disappointing

The Wall Street Journal reported that Apple's stock was punished by investors on Wednesday because investors believed that the new iPhone series launched on Tuesday did not introduce a new low-price strategy.

The investor reaction highlights the huge challenges facing Apple. Apple has long positioned its products as luxury goods: a premium look that could limit the company's growth, especially in developing countries. But the strategy of cutting prices to cater to the general mass market can also undermine a company's profitability and undermine its consistent corporate image.

Compared with the upcoming high-end iPhone 5S, Apple's iPhone 5C basically replaces last year's model with a new plastic shell, providing consumers with a lower-priced option. The iPhone 5C is controversial. The lowest price is US$99 for the contract model and US$549 for the bare model.

Some believe the iPhone 5C is not priced low enough to help Apple compete with Samsung Electronics Co. and other rivals. Companies such as Samsung Electronics have taken smartphone market share away from Apple by offering low-priced handsets that cost less than $100 and are particularly popular among developing countries and first-time smartphone buyers.

In China, most mobile phones sell for less than US$400, while the bare iPhone 5C costs US$733. Apple's market share in China fell to 5% in the second quarter.

Credit Suisse analyst Kulbinder Garcha said in a report to investors that the market is flooded with many low-end mobile phones.

At least three brokerage analysts downgraded Apple on Wednesday, all because of disappointment with new products. As of Tuesday's close, Apple's stock price was up 25% from the end of June. However, the stock price is still far from its record high of more than $700 in September last year.