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Difficult Times for Apple…

Will Apple be able to retain its Market Leadership in 2019?

Difficult Times for Apple
1. Apple Inc says China iPhone Ban would force a settlement with Qualcomm:

The Fuzhou Intermediate People’s court has granted Qualcomm’s request for two preliminary injunctions against four Chinese subsidiaries of Apple Inc. Ordering them to immediately cease infringing upon the two Qualcomm patents through the unlicensed sale, import, offers for sale of various Apple iPhone models in China. Apple and Qualcomm have been locked in a bitter legal dispute since early 2017 over licensing fees. The row was sparked when the world’s most profitable smartphone company asked its iPhone assemblers Foxconn, Pegatron and Wistron to stop paying royalties owed to Qualcomm on its behalf. Apple accused Qualcomm of unfair patent licensing practices, while Qualcomm hit back with claims that the smartphone maker had infringed its patents.

The two US companies are locked in a worldwide dispute over licensing fees that Qualcomm charges for the use of technology that the chipmaker says underpins all modern phone systems. Apple has argued its former supplier unfairly leverages its position as the biggest supplier of chips for smartphones to force payment. Qualcomm has countered that Apple is using its intellectual property without paying for it, and the legal cases are aimed at forcing it to lower licensing charges.

“Apple will be forced to settle with the Respondent, causing all mobile phone manufacturers to relapse into the previous unreasonable charging mode and pay high licensing fees, resulting in unrecoverable losses in the downstream market of mobile phones,” Apple is in talks to shift production of older iPhones to a key Taiwanese supplier in a bid to avoid the loss of billions in revenue in China as a result of a long-running global patent row with Qualcomm of the U.S. Sources close to the matter said the exemption was due to the fact that Pegatron, on behalf of Apple, paid a fee to license the contested software, unlike Foxconn and Wistron. China contributed 20% of Apple’s total $166.69 billion in iPhone sales for fiscal 2018. For all of 2018 so far, about 6% of total iPhone revenue came from the sale of older phones such as the iPhone 6s and iPhone X in China, two sources with knowledge of Apple’s Chinese sales have said.

2. Apple hits lowest-ever market share in India for 2018:

Hit by radical changes in its distribution strategy, Apple logged its lowest quarterly growth in India by grabbing a mere 1 per cent market share, according to the market analysis. Another major handicap for Apple has been its prohibitively expensive tag which prevents it from getting scale. Only iPhone 6 is made in India and why would people buy an old model. Apple needs not only make-in-India but also made-for-India pricing. The success for the Indian market is the right pricing model which will help Apple crack the India market. It is a Catch22 situation for them. If they lower price, they would lose their exclusive tag, and if they keep it, they would find it tough to get buyers but for a market like India, pricing strategy will help beat the competition and gain the market share. Hence Apple would require to change the marketing strategy which I have highlighted in my earlier article on – The Market Leadership for Apple in India.

3. Apple Plans to Open a New Austin Campus in $1bn Texas Expansion:

Apple plans to open a new campus in the US for its technical support staff and to hire an additional 20,000 employees over the next five years, the company said. Apple currently employs 84,000 employees in the US, with the majority of those housed in their Cupertino Headquarters. The company is expanding its resources through projects such as, Data Centers, that get placed throughout the US. This development is a good news for the Trump Administration supporting his strategy of creating employment opportunities in the US market.

Being an Apple fan and avid user of all its products, I wish Apple a great 2019 and hope it is able to strategise a plan to gain its Leadership position in the Smartphone Market.

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