"Depletion of equipment" haunts Apple's future

"Depletion of equipment" haunts Apple's future A few days ago, the American media CNBC website published a review article titled "The "device depletion" haunts Apple's future". The main contents are as follows:

Due to the combined effects of lack of innovation and the saturation of the market, Apple and other smart phone makers will find it harder to trigger a boom in the market.

Citigroup pointed out that there is a phenomenon of “depletion of equipment” in the smartphone market. In this situation, it is more and more difficult to develop new users of smart phones and find users who are interested in marginal improvement of new devices.

Before Apple released the latest iPhone on Tuesday, Glen Yeung, a Citigroup analyst, said in a report to customers that "exhausted equipment" means that the demand for high-end smart phones has significantly decreased, and the global market Saturation and hardware innovation are becoming more and more difficult. Today, this phenomenon is already evident in developed markets. It can be proved by the same reasoning and the same situation will occur in developing markets.

This study makes sense.

First of all, there is no major design update for the iPhone 5S and iPhone 5C that Apple has just released. Its main purpose is more like low price to seize China and other developing markets. Glenn Young believes that Apple may not be a big success.

Second, it is certain that smart phones have better opportunities in emerging markets. Research shows that the penetration rate of mobile phones in emerging markets is 89%, while that of smart phones is only 30%. However, from the perspective of historical trajectories and product cycle theory of other equipment, the average global sales price should fall. And, as the market reaches saturation, the average sales price drops, and the difficulty of innovation increases, the profit rate of high-end handset manufacturers will certainly decline.

But for Apple, it will probably mean poor sales. The shareholders have pushed Apple's stock price up by nearly 10% in the past month, which means that a similar downturn may occur after this conference.

In fact, after the conference was unveiled, Apple's share price began to fall and it had fallen by about 3% in the afternoon trading.

Glenn Young pointed out that Apple's profit margin has dropped by 874 basis points (or 8.74 percentage points) from last year's high point. However, historically, once the product market matures, the profit rate will be affected and it will tend towards an average profit rate. So, as the profit margins have been eroded, the stock price has followed suit.

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