Apple forced to discount iPhone 15 in China as it flirts with danger

You almost never hear about Apple providing a discount on its older iPhones, let alone its latest models. Its retail and carrier partners may offer discounts, but it almost never happens that you get discounted iPhones from the company's online or retail stores.

Apple's unique position in the market gives it a pricing power that Android manufacturers don't enjoy. There's no competitor making iOS-powered phones while Samsung literally has dozens of rivals making Android phones. However, concerns over lack of demand in China have forced Apple to offer a rare discount on its latest iPhone 15 models directly.

Apple is directly offering customers in China a 500 yuan, or $70, discount between January 18 through 21. This discount is being offered on all iPhone 15 models, including the flagship iPhone 15 Pro Max ahead of the Lunar New Year in February, a major Chinese holiday.

The Lunar New Year holiday season is one of the busiest online shopping periods in China. Companies routinely offer significant discounts as people purchase gifts for their loved ones. While other Apple products like the Mac and iPad get discounts, it's extremely rare for Apple to provide direct discounts on latest iPhones through its online store.

It's usually the third-party retailers in China that often provide discounts on the iPhone. Apple doesn't really do that through its official retail channels. It has been forced to do so because it seems that the Chinese customers aren't buying as many iPhones as they used to.

Market analysts believe that Apple has seen a whopping 30% decline in iPhone sales in China over the past year. The company's solid ecosystem which keeps customers within its walled garden doesn't seem to be doing much to stop Chinese customers from switching. It's not that they're not buying premium phones, they're choosing to opt for premium phones from the likes of Huawei and Xiaomi, who've also come out with Android-powered foldable phones.

China has long been one of the most lucrative smartphone markets for Apple. The company has consistently seen high demand from customers in the country. People in China have a deep affinity for premium products, and given the iPhones positioning as one of the most premium devices on the market, it developed a natural allure for customers there.

That shine seems to be wearing off now as homegrown giants like Huawei continue to bring new premium products to market despite sanctions. Even as it was left virtually unable to source 5G-enabled advanced chipsets, Huawei launched the Mate 60 Pro last year which featured a locally manufactured 5G chipset. Analysts believe that this device also contributed to the lack of demand for iPhones in 2023.

It appears that things may get worse before they get better for Apple with China remaining a challenge. Barclays recently downgraded Apple's stock to underweight due to low iPhone 15 sales in China. It's also expected that this lack of demand will continue in 2024 even when the iPhone 16 is released.

Over the years, demand from China has helped Apple sustain a decent growth rate for iPhone sales, even if it saw weak demand from other markets. At one point, China seemed to have an insatiable appetite for iPhones but that trend now appears to be on a downward trajectory. Remember, iPhone users in China aren't switching to iPhones made by another company. They're leaving the Apple ecosystem and going to Android.

It goes to show that whatever Apple has been doing with the iPhone over the past couple of years hasn't been enough to retain the Chinese customer's interest. On the contrary, it's essentially be flirting with danger by maintaining the status quo. Customers no longer seem to like what they're getting with the iPhone and are more than happy to spend their yuans elsewhere, even if that means switching platforms.

Simply doing more of the same won't help Apple regain those lost customers. It remains to be seen how much this rare discount helps the company slow down the rate of decline. If these discounts become more common, it will be a clear indication that Apple is struggling to move iPhones in the lucrative market.

Apple needs to do a lot more to ensure that it doesn't lose the interest of the Chinese customer. Much like Samsung saw its once significant market share there decline to low single digits, a similar fate may await Apple, as the homegrown Chinese manufacturers won't wait a second to capitalize on its misfortune.