Apple doesn't want to be the next Intel.

Author | Ding Mao

Editor | Zhang Fan

On September 10th, Apple released the brand - new iPhone 17 series of mobile phones.

At this press conference, Apple made an appearance with full sincerity, changing its previous "incremental innovation" model. Not only did the entire series come equipped with the A19 series of chips and 120Hz refresh - rate screens, but it also launched the thinnest iPhone ever, the iPhone Air. Even more surprisingly, instead of raising the prices as the market expected, the base model of the iPhone 17 series was even $1000 cheaper than its predecessor. The market joked that Apple "squeezed out too much toothpaste."

Such an unusual move has attracted wide - spread attention in the market. So, why has Apple, which has long adhered to a high - profit strategy, suddenly shifted to an aggressive "spec - stacking" model? What strategic considerations are hidden behind this change?

Weak Innovation but Increasing Profits Year by Year

Weak innovation has been the main criticism of Apple in the market in recent years.

In the past, Apple's update rhythm was similar to Intel's "Tick - Tock" model, a cycle of "major updates - minor updates." However, in recent years, as the smartphone market has entered the mature stage, core technologies such as battery life, processor performance, and screen display have become saturated, and smartphone manufacturers have made fewer and fewer disruptive breakthroughs.

Against this background, the competition among smartphone manufacturers has shifted from revolutionary leaps in product performance in the past to continuous spec - stacking of existing performance and design, as well as lowering prices to improve cost - performance.

The change in the industry's competitive environment did not catch Apple's full attention. In the face of the new competitive landscape, for a long time, Apple still adopted a relatively conservative strategy, maintaining the "Tick - Tock" innovation model.

The underlying logic is that, compared with the Android camp, Apple phones are positioned at the high - end market, with their own operating systems and software ecosystems, presenting obvious differentiation advantages from other brands.

Therefore, Apple attempted to give up the competition for some market share and maintain its high - end brand image and relatively high profit margins through a stable group of high - value users. The effect of this strategy was also very obvious. According to financial report data, in the past five years, Apple's profitability has been increasing year by year, with its gross profit margin rising from 38.2% in fiscal year 2020 to 46.8% in Q3 of FY25.

Chart: Apple's gross profit and gross profit margin performance in the past 5 years    Data source: wind, compiled by 36Kr

However, there is a fundamental assumption behind this, that is, the competition in the Android camp is concentrated only in the mid - to - low - end segments and will not impact Apple's core market. In fact, in the past two years, as domestic mobile phone brands such as Xiaomi and OPPO have been making efforts in the high - end market, the competition has clearly spread from the mid - to - low - end market to the high - end market. Coupled with Huawei's resurgence in the domestic mobile phone market this year, Apple's competitive pressure has been increasing. Moreover, the gradual improvement of the operating systems and software ecosystems of domestic mobile phones such as Xiaomi and Huawei has also impacted Apple's differentiation advantages from another aspect.

The Cost of High Profits: Continuous Loss of Market Share

Based on this, an interesting phenomenon has emerged.

While Apple's profitability has been continuously improving in recent years, its sales share in the global smartphone market has started to "shrink." In 2024, Apple's global shipment market share dropped from 20% to 18%. In China, its market share even fell out of the top three, dropping to 15%. In the first half of 2025, it further slipped to the fifth place, with the market share dropping to 14%.

Chart: Apple's global shipments and market share    Data source: Canalys, compiled by 36Kr

Chart: Changes in Apple's shipments and market share in mainland China    Data source: Canalys, compiled by 36Kr

If we look at a longer period, we can find that actually since the second half of 2023, affected by the continuous decline in shipments, Apple's revenue in Greater China has started to show negative growth. As of the second fiscal quarter of FY25, Apple has maintained negative growth for seven consecutive quarters, and Greater China has become the only market where Apple has been continuously losing money.

Chart: Apple's revenue and year - on - year growth rate in Greater China   Data source: wind, compiled by 36Kr

The Lesson from Intel's Decline

The continuous loss of market share seems to indicate that Apple's previous innovation model based on the "major updates - minor updates" cycle can no longer effectively meet the current main demands of the smartphone market.

If Apple continues to adhere blindly to this model, it may fall into the "innovator's dilemma" like Intel and eventually lose its market dominance.

As the absolute leader in the processor industry in the past, since 2005, under the "Tick - Tock" innovation model, Intel has always been one step ahead of its competitors in chip manufacturing processes by alternating between "process technology - improved architecture," building a solid moat.

However, in 2014, Intel encountered difficulties in breaking through the 10nm process. Sticking to the Tick - Tock model, the company carried out "incremental innovation" around the 14nm process for up to four years. The long - awaited breakthrough in new technologies, combined with the heavy - asset IDM model, seriously dragged down Intel's financial performance.

It was also during this period that Intel's competitor AMD closely cooperated with TSMC, leveraging the latter's advanced process and its own cost - performance advantages to launch processors with the Zen architecture. Especially after the success of Zen 2 in 2019, AMD comprehensively surpassed Intel in terms of performance, energy efficiency, and the number of cores, quickly eroding a large amount of Intel's market share.

Benefiting from this, in 2019, AMD's market share in the PC market reached 30% again, breaking Intel's near - monopolistic industry competition pattern. This delicate balance has been maintained for many years since then. This changing industry pattern has finally been reflected in the performance and market performance of the two companies.

Since 2016, AMD's revenue has shown a rapid growth trend, with its growth rate consistently leading that of Intel. Boosted by excellent performance, AMD's market value has also soared. In 2022, it even surpassed Intel. As of now, its market value is 2.5 times that of Intel.

Chart: Comparison of the performance and market value changes of Intel and AMD    Data source: wind, compiled by 36Kr

What Does It Mean for Apple to Hold on to Market Share?

With the lesson from Intel, it's not hard to understand why Apple has abandoned the "incremental innovation" model and shifted to "spec - stacking" to hold on to its market share in the smartphone market.

So, from Apple's perspective, what exactly does it mean to hold on to market share?

Looking at Apple's business composition disclosed in its financial reports in the past five years, an obvious phenomenon is that the revenue share of service businesses represented by software such as iTunes has been increasing year by year. From fiscal year 2020 to 2024, the revenue from service - related businesses increased from $53.8 billion to $96.2 billion, and the revenue share increased from 19.6% to 24.6% during the same period, further rising to 25.6% in Q3 of FY25.

Chart: Apple's software and service business revenue and its share   Data source: wind, compiled by 36Kr

This trend indicates that Apple is gradually transforming from a leading hardware supplier to a super - ecosystem provider that uses hardware products as an entry point, integrates software and services, and has in - depth integration capabilities. The specific implementation path behind this transformation is that every time Apple sells a hardware product such as an iPhone, it brings potential users for its App Store, Apple Music, iCloud, and various subscription services that may emerge in the future. Based on a large number of hardware users, Apple can obtain higher value - added through comprehensive software services.

Compared with the hardware business, these software service businesses have relatively higher gross profit margins due to lower costs, and the in - depth binding strategy also means stronger user stickiness. For Wall Street, the identity of a software ecosystem provider can naturally obtain a more imaginative valuation space than that of a hardware manufacturer.

Therefore, from Apple's perspective, holding on to the share of the hardware market, especially the mobile phone market, is equivalent to obtaining a stable and large - scale potential traffic. On this basis, Apple has the ability to better develop its software services and achieve continuous growth.

In the long run, the identity of an ecosystem provider can provide Apple with more considerable profitability and a more imaginative valuation coefficient, ultimately ensuring Apple's high profitability and stable valuation in the capital market.

So, in other words, in the short term, by sacrificing a certain amount of hardware profit margins and adopting a more proactive innovation attitude to hold on to market share, Apple is not only responding to the upgrading of user needs at this stage but also taking the necessary path to maintain high profitability and gain long - term recognition from the capital market under full - scale competition.

*Disclaimer:

The content of this article only represents the author's views.

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