Apple secret documents: Consumers want things we don't have

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Foxconn executives once pointed out to me in a casual chat: "Samsung is using the power of the entire country to fight Apple." This is indeed true, but fundamentally, it is far more than that. In the two-day lawsuit between Apple and Samsung over infringement, a secret plan of Apple in 2013 was disclosed by Samsung: Apple had already recognized Samsung's forward-looking capabilities in the consumer market at the beginning of last year.

Apple's reflection plan is valuable and worth learning from for domestic mobile phone manufacturers. It points out the multiple changes that are happening among mobile phone consumers, operators and mobile phone manufacturers, and acknowledges that consumers want something that Apple does not have.

Let’s first look at the free fall of growth rates revealed by Apple’s own data: in 2009, the annual growth rate of the iPhone was 107%, in 2010 it was 93%, in 2011 it was 78%, and in 2012 it was 74%. By the three quarters of last year, the growth rates were only 26%, 12%, and 8%, respectively.

The market is undergoing multiple changes, including: first, strong market demand for cheap, large-screen mobile phones; second, restrictions from operators: subsidies, unfriendly policies, and lack of consistency in distribution among different operators.

The background here is: mobile phone sales in the United States are mostly tied to operators. When Apple first launched the iPhone, due to the lack of competitors, Apple required very high rebates from operators and tended to sign exclusive contracts, such as the cooperation between AT&T, the second largest operator in the United States, and Apple. This led to a certain degree of aversion to Apple among operators and increased cooperation with the Android camp.

Third, regarding competitors, Apple acknowledged that competitors have greatly improved hardware and some ecosystems. In addition, in order to achieve greater sales, these competitors have also spent a lot of money on advertising, operators and channels.

It is worth noting that the competition in the smartphone industry is not just about hardware. It is a system competition, which is different from traditional smartphones that use “usability” as a parameter. In other words, what and how much software users can use on the hardware is crucial. Apple had an advantage when the iPhone was first launched. Before Jobs launched the iPhone, Apple already had a large number of high-end users of its Mac series, iPod series, and iTunes, which laid the foundation for good user migration for the iPhone.

However, Android-based phones have never had a truly large number of users; and the "poverty" and "wealth" of these users have created a "new cycle". Note: Apple products are not cheap, iPhone users are users with high commercial value, and when the Apple Store platform gathers a large number of users who may purchase applications, more and better software applications are more likely to be produced.

In mid-2010, Ray Lillywhite, the developer of music player software APM, told me: "At present, Apple Store is still the best way for developers to earn income. Choosing iOS platform instead of Android platform is still a more commercially conscious choice. Until the day when Android has a larger market share and more application downloads, this situation may be difficult to change."

Gartner just released information last month: last year, global tablet sales reached 195.4 million units, up 68% from 2012; Android tablet market share reached 62%, sales increased by 127%, ranking first; Apple iOS tablet market share fell 36%, losing the largest share of the global tablet market; in addition, according to NPD Group data, in the field of smartphone operating systems, Android's market share had surpassed Apple's iPhone OS as early as the first quarter of 2010.

So what do consumers want that Apple doesn't have? In the third part of this reflection plan, "Consumers want what we don't have", Apple draws a model:

In 2011, the global sales of smartphones reached 494 million units, and in 2012, the global sales of smartphones reached 722 million units, with the entire market growing by 228 million units. Of this 228 million units, 91 million units were smartphones with a price of more than $300 and a screen larger than 4 inches (represented by Samsung), and 159 million units were smartphones with a price of less than $300. On the contrary, the sales of smartphones with a screen smaller than 4 inches but a price of more than $300 (such as Apple) decreased by 22 million units.

Here is the background of how Apple's secret plan was uncovered:

Two years later, Apple and Samsung again attacked each other over patent issues, involving Samsung's Galaxy S3, Galaxy Note 2 and Galaxy Tab 2 10.1, while Apple's case involved every iOS device sold by Apple between 2010 and 2012.

Apple sued Samsung for infringing five software patents, hoping that Samsung would pay compensation of $33 to $40 per device, a total of $2 billion. Although Samsung only sued Apple for two patents, the scope of infringement covered all iOS devices from 2010 to 2012. Samsung hoped that Apple would pay a fine of about $6.9 million, and if Samsung wins the case, it may lead to a ban on the sale of Apple devices.

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