Why and how Apple is losing corporate users in Europe

Hello.

One segment in which Apple's sales have historically been strong has been the corporate segment. Past

timing with the release of the iPhone 14 has become a fact forEuropean market, the price of devices has risen sharply, as well as the cost of their ownership. The microcosm of the European corporate market perfectly reflects the crisis that is developing before our eyes and is pushing Europe into recession. The main slogan of Europe is to save in everything and on everything, to save at any cost. The reason is the cost of energy, it is growing before our eyes, although it does not affect large companies until a certain point, they sit on long contracts that compensate for price fluctuations. The next stage of price changes for many companies is the beginning of 2023. Literally everything depends on the cost of energy, the prices of any goods, heating, communications, and so on. The cost of the same 5G is becoming unbearable for operators, prices will rise before our eyes. In a separate article, he showed how the cost of maintaining 5G in Europe is changing, the numbers speak for themselves.

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Within the framework of the crisis, corporatea segment where companies buy smartphones or computers for their employees, pay for communication services, although this segment has always been very interesting, with a high average bill. In Europe, the ratio of B2C and B2B in the telecom market remains at the same level: the market size is about 250 billion euros per year, and the share of B2B is about 35%. This money includes not only office Internet, corporate systems, M2M, but also mobile phone bills for their employees, although the share of such expenses is relatively low in the overall pie. Separately, you can count the money that goes to the purchase of the equipment itself.

In Russia, the volume of purchases by corporate clientswas abnormally high for Europe, the share of sales was about 15% of the total, of which about 30% were Apple smartphones. That is, in Russia, with a market volume of 32.5 million units last year, the corporate segment accounted for 4.8 million smartphones, of which 1.44 million were for the iPhone. iPhone. At the same time, if on the open market the average cost of the iPhone was about 55 thousand rubles, then in the corporate segment it amounted to 94 thousand rubles. This shows the importance of the segment for the company, there is a high average bill. The explanation should be sought in the fact that the top management of many companies buys the devices they want to use. The use of company resources for conditionally personal purposes is a universal human flaw, and given that the iPhone has long been a demonstration of a certain status, everything converges here.

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A sharp drop in iPhone sales in Russia in March andApril is directly related to corporate consumers, they stopped spending companies' money on purchases. Nothing like this has happened in Europe yet, since the 2022 budgets have been approved, plus or minus, money has been allocated for them. But what will happen in 2023?

The average company in Europe will face rising costs for telecom services:

• The cost of Internet for offices (price increase from 50 to 100%);
• Cost of mobile communication (growth from 30 to 140%);
• The cost of equipment (growth from 15 to 30% at the moment).

The need for additional payments to employees,even taking into account salary fixing. All costs are rising, which means that cost-saving programs come into play, in particular, staff is reduced, bonuses are frozen, and so on. The situation with layoffs in IT is clearly visible in Silicon Valley, world leaders are shrinking, in Europe the situation is even worse.

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What will corporations do when faced withforced downsizing? They will start saving on everything, including the purchase of equipment for the company. And here we are faced with several scenarios.

In one case, the purchase of an iPhone was not tied tosome information systems, they were bought as fashionable devices. Giving up the iPhone will be painless, this scenario is typical for most companies. It is worse for those who have created their IT systems exclusively for the iPhone as a terminal device, there are few such companies, but they exist.

As part of the crisis, when there are layoffs,when there are no funds to increase salaries, and only separate compensations are thrown up, it is impossible to buy the most expensive smartphones on the planet. As part of the economy, there is simply no demand for them. This is well demonstrated by the new generation of iPhone 14 - in Europe, their orders from corporate customers are at the lowest level in the last decade. The reason is that the operators have raised the price in proportion to what Apple has set (they are sold under contracts, that is, you do not need to pay the full price right away, but the price has still grown). But the presence of the budget has shifted the demand for older models, that is, in fact, now there is an increase in the consumption of older iPhones. You don't have to be a jack-of-all-trades to guess what will happen to the 2023 budget. It will disappear or be greatly reduced.

Many companies are starting to translate their systemson Android where it is impossible to refuse purchases. The reason is the need to save money, the ability to inexpensively buy smartphones with decent characteristics, no worse than the basic iPhone, at half the cost. Considering that the corporate consumer often cannot influence purchases, people will be happy with any device, there is no block here. Yes, and top management will set an example in saving, in how and what they use.

The example of mycomrade, he is a top manager in the middle hand of a German company, uses the iPhone X, which was bought by his own company (it should be noted that he is not the owner of this business). When purchasing smartphones, it took a long time to figure out what is more profitable - to take it in installments from operators with services or buy separately and buy additional services. It turned out that it is more interesting to buy smartphones separately for the full price, provided that they are used to the bitter end. The savings over the years turned out to be cosmic, but here we have an example of the fact that people initially knew how to count and were looking for profit. Many companies and people do not know how to count, but a period of savings on everything will force them to learn how to do it.

The most recent results for the European market are for the second quarter, the drop in sales is obvious, but there is no B2B segment in it, its influence is leveled by long budgets.

The third quarter will obviously be at least like thisin the optimistic scenario, in the real one, it will most likely continue to fall, despite the best efforts of companies. Economy is becoming the main word for many countries and companies, Europe is at the forefront of progress here.

And here we come to the adaptation of the BYOD strategy(bring your own device), when companies offer to buy a device on their own, but at best pay for communication costs. As an intermediate scheme, companies are willing to pay part of the cost of the device, usually around 300 euros. Well-fed times are over, there is no way to buy devices in the same volume.

Per quarter Apple sales in the European B2B marketmake up almost a million devices. In 2023, we will see a drop in at least 30% of the corporate segment, the reason is the high cost of the iPhone, both in Europe and in the USA. For the cost of one iPhone 14, you can buy two similar Android smartphones.

Another negative factor iscost of ownership, such as app purchases. Apple has changed the minimum app price for Europe from 99 cents to 1.19 euros. It seems that for corporate clients this does not play any role, in the end, the user himself will buy applications. In fact, this is an indicator of the cost of developing information systems; various developers will be guided by a price increase of 20%. And in terms of euros, this cost will increase. Yes, this is a long-term trend that will reduce the attractiveness of the platform.

It is a mistake to regard the situation as static, inwhich Apple will not take any action. For large corporate clients, the company will offer its own options for installments, payment for communication services, reduced cost (which the company almost never did, unlike Samsung). Blocking such devices to a specific company will help to avoid their appearance on the open market, and this is also a way to maintain your share. Therefore, I say above that the fall will be about 30%, but not 50-60%, as it could be.

From country to country falling share of purchasesthe corporate sector will be different, but the impact of this factor will become very noticeable in the second half of 2023, the first half of the year will only be a preparation for full-blown problems. Manufacturers, particularly Apple, will assume that companies will be able to raise money in the second half of the year. When they are convinced that this is not happening, they will launch some kind of sales promotion program for B2B. But the situation is such that the corporate segment in the coming years will save on matches, not the best time to buy expensive equipment, and therefore Apple loses more than other companies.

Electricity price for 4G and 5G base station. This Europe is on fire!

How the energy crisis is killing European cell networks and pushing 5G to the brink of extinction. Consider the cost per base station.

The fall of the giants of Silicon Valley, the economic crisis in IT corporations

The fall in income of Silicon Valley corporations, the crisis and layoffs, the exodus of IT people from the valley, the rise in prices for all hardware - how much will the iPhone 14 cost.