The success and failure of iPhone XR

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According to Leifeng.com, on December 24, Counterpoint released a report announcing the top ten best-selling smartphones in the world in Q3 2019. Among them, iPhone XR ranked first, occupying 3% of the market share. This means that since Q4 2018 (iPhone XR was launched in Q3 2018), iPhone XR has been the most popular model in the world.

Let’s take a quick look at the top ten best-selling smartphones in the world in Q3 2019:

• As shown in the figure, in addition to iPhone XR, iPhone 11 is also on the list of the top ten best-selling smartphones in the world in Q3 2019, with a market share of 1.6%. However, since this phone was launched in mid-September, its sales ranked fifth.

• The second-best-selling model is the Samsung Galaxy A10, with a market share of 2.6%; the third and seventh places are both Samsung phones, namely the Galaxy A50 and Galaxy A20.

• OPPO's performance this time is also very impressive. The three mobile phone models on the list are OPPO A9, A5s, and A5, ranking fourth, sixth, and eighth.

• Redmi 7A and Huawei P30 ranked ninth and tenth, with market shares of 1.2% and 1.1% respectively.

Interestingly, among the above 10 mobile phones, except for iPhone XR and OPPO A5, which are "old models" launched in Q3 2018, the rest are newly released in 2019. In other words, even though iPhone XR was launched last year, its competitiveness has not been affected by this factor.

Shortly after the iPhone XR was launched, its strong growth in sales was already evident. In November 2018, Greg Joswiak, Apple's vice president of product marketing, said in an interview with Reuters that the iPhone XR was the most popular iPhone at the time. Fortune even called the iPhone XR "the most worthwhile Apple phone ever."

In fact, there is a reason why the iPhone XR has received such high praise - whether it is hard power or soft power, the iPhone XR is "online".

First, let's talk about the hardware. Like the iPhone Xs series released at the same time, the iPhone XR is equipped with the A12 Bionic chip, which is the first 7nm chip used in smartphones. Even today, more than a year after its launch, the A12 chip is still very powerful.

According to Apple's presentation at the September 2019 Fall New Product Launch Conference (pictured above), in terms of processor, the iPhone XR (A12 Bionic) released in 2018 is still better than the Galaxy S10 with Snapdragon 855 launched by Samsung in February 2019 and the P30 with Kirin 980 launched by Huawei in April. This shows the strength of A12 Bionic to a certain extent.

In terms of functions, the high-end iPhone Xs series supports FaceID, Animoji, Bluetooth 5.0, NFC, rear camera depth control and front camera anti-shake, etc. The iPhone XR is also equipped with dual SIM cards, and only Chinese users can enjoy the dual SIM card treatment.

In addition, the battery life of iPhone XR is also greatly improved compared with its predecessor. When using wireless peripherals, the talk time can be up to 25 hours, the Internet time can be up to 15 hours, and the wireless video playback can be up to 16 hours.

More importantly, the starting price of iPhone XR is 6499 RMB when it was released. Compared with high-end iPhone models that cost tens of thousands of RMB, the price of this phone is indeed very affordable. Just as its name implies - "R" stands for "Reach", Apple hopes that this phone can reach consumers faster. Moreover, iPhone XR has been dropping in price since its launch. Leifeng.com logged into Apple's official website and found that the starting price of iPhone XR is now 599 USD (about 4300 RMB).

On the other hand, in the overall environment of the smartphone market, more and more mobile phone manufacturers are beginning to charge into the high-end market segment. This phenomenon was already evident in 2018.

According to the 2018Q2 high-end smartphone market report released by CounterPoint (Leifeng.com: Counterpoint defines high-end smartphones as smartphones priced at USD 400/RMB 2,800 or above), the global high-end smartphone market grew by 7% in Q2 2018, and the market has accounted for one-fifth of the global smartphone market share. This growth is mainly due to the excellent performance of Chinese smartphone manufacturers in high-end product shipments.

Apple seems to be aware of this, and it launched the cost-effective iPhone XR in Q3 2018, perhaps as a proactive response to this phenomenon. Of course, Apple's change in pricing strategy has indeed brought it benefits.

In addition, according to the 2019Q1 global high-end smartphone market report released by CounterPoint (pictured above), Samsung, with its three Galaxy S series phones launched in Q1 2019, accounted for a quarter of the global high-end smartphone market in that quarter; Huawei's P series phones also helped it gain a 16% share of the global high-end smart market and overturned Apple's dominance in the Chinese market for the first time.

From any perspective, competition in the high-end smartphone market is intensifying. Although the iPhone is somewhat of a "luxury device" compared to other mobile phones, the price of the iPhone XR has been reduced to be close to some Android models, which has greatly shortened the distance between consumers and the iPhone.

In September and November 2019, Apple released three mobile phones at its fall new product launch conference, including a new phone with a similar positioning to the iPhone XR - the iPhone 11; however, it has been optimized and upgraded in terms of processor, camera, battery life, etc.

More importantly, its starting price is $699 (about 4,900 yuan), which is $50 (about 350 yuan) lower than the iPhone XR, which was previously known for its cost-effectiveness. This means that while Android phones are advancing rapidly into the high-end market segment, Apple continues to adopt the "enemy advances, I retreat" price reduction strategy.

Affected by the new iPhone 11, iPhone XR sales fell in Q3 2019. According to data from market research firm CIRP:

• In Q2 2019, iPhone XR accounted for 48% of total iPhone sales in the quarter; this is the single model with the highest quarterly sales share since the release of iPhone 6 in 2015.

• In Q3 2019, the share of iPhone XR in total iPhone sales in that quarter fell back to 36%; among the three newly launched mobile phones, the sales share of iPhone 11 was 9%, and the sales shares of iPhone 11 Pro and iPhone 11 Pro Max were 6% and 4% respectively.

Wu Yiwen, senior analyst at Strategy Analytics, believes that the iPhone 11 has abandoned the suffix (R) that makes consumers think it is a "cheap" phone, which has stimulated their purchasing enthusiasm to a certain extent. Moreover, the price of the iPhone XR is close to the bottom (about 4,300 yuan). In comparison, consumers may be more willing to buy the iPhone 11, which has many major upgrades but is priced similarly.

This is indeed the case. Leifeng.com learned that after the release of the new iPhone 11 series, iPhone sales in the US and Indian markets were higher than the same period last year; the same is true in China - according to the Beijing News, on the first day of pre-sale, iPhone 11 sales on Tmall increased by 335% year-on-year, and pre-sale sales on JD.com increased by 480% year-on-year (compared with iPhone XR in the same period last year).

iPhone 11 ranked first in JD.com's mobile phone sales in September with about 383,000 units sold, twice as much as the second-place iPhone XR.

Moreover, around October 1, 2019, there were reports that Apple had increased its orders for the iPhone 11. Among them, the foreign media Nikkei Asian Review reported that Apple asked suppliers to increase the production of the iPhone 11 by about 10%, which means that the iPhone 11 will be produced by 8 million more units. Financial services company Cowen also expects that iPhone 11 shipments in Q4 2019 will be higher than expected.

All in all, the strong performance of iPhone XR once broke the record. Its birth also means that Apple has begun to have new thoughts on the rising price of iPhone every year, breaking Apple's usual "noble" attitude.

However, the highlight moment of everything will fade away one day. For now, the iPhone XR has completed its mission, and its successor, the iPhone 11, will continue to forge ahead in the increasingly competitive high-end mobile phone market.