Mysterious Woman in Charge of Apple Greater China

During the first half of 2017, Apple faced a series of problems in the Chinese market including declining revenue and market share.

Isabel Ge Mahe was appointed the first ever Vice President and Managing Director of Apple Greater China during this time.

Last July, Apple appointed Isabel Ge Mahe as vice president and managing director of Greater China to lead Apple’s China team. She is also the only Asian in Apple’s global management.

In the last six months, Apple’s performance in China excelled. But Apple also suffered from iPhone battery issues that drew negative publicity.

SEE ALSO: NGO Denounced Apple’s Planned Obsolescence and Called on Consumers to Resist

The newly-appointed executive keeps a low public profile despite opening a Weibo account last September and attending the World Internet Conference with Apple CEO Tim Cook. In Wu Zhen, Isabel Ge Mahe showcased Arkit, Apple’s augmented reality platform, yet her name remains unfamiliar to most people.

Inside Apple China, people familiar with her call her Isabel.

Staff members consider Isabel not solely as a boss, but also as a rigorous and down-to-earth engineer.

I

Apple’s China office is a three-story building located at No.391 Yuanshen Road, Pudong District in Shanghai. The building’s unique design stands out from its surroundings.

AppleCare, Apple Online Store and its supply chain management all reside within the 10,000 square meter building, which accommodates nearly a thousand staff members.

Isabel Ge Mahe was invited to the Apple office one week before the iPhone X launched last October.

“She simply introduced herself and showed us the unreleased iPhone X. It’s a little surprising that she’s not as cold as we thought she might be,” one participant said. The open lounge on the first floor of Apple’s Asia Pacific Operation Center was filled with people eager to see Isabel present.

Isabel Ge Mahe was born in Shenyang, Liaoning Province and speaks fluent Mandarin. She holds both a bachelor’s and master’s degree in electrical engineering from the University of British Columbia, Prov., as well as an MBA from the University of California, Berkeley.

Before serving as the managing director of Apple’s Greater China, Isabel led Apple’s wireless software engineering team for nine years. She led the development of cellular, WiFi, Bluetooth, NFC, positioning and motion technologies for Apple products. She also directed the engineering team that developed Apple Pay, HomeKit and CarPlay.

Isabel and the R&D team added new features to iOS 11 to make Apple’s products better suited for the Chinese market. These features included QR code support, SMS fraud prevention, and Apple ID registration via mobile phone number.

In 2018, Apple created an official WeChat account. Not long ago, Apple also launched a film, Three Minutes, to celebrate the Chinese New Year.

These developments were all driven by Isabel Ge Mahe.

Isabel Ge Mahe is perhaps the one Apple executive who knows China best. She and her team collaborate with Apple headquarters to align corporate strategy, product planning and brand positioning. She reconciles clashes caused by cultural and geographical differences between China and the West.

Before Isabel took office, Apple was unable to meet China’s market demands. Chinese users have long wished to register the Apple ID via mobile phone number. This function was not implemented until Isabel took office. At year’s Apple Worldwide Developers Conference, Apple exhibited a number of China-inspired functions, underscoring Apple’s increasing attention to the Chinese market.

Isabel has undoubtedly accelerated the adoption of Apple’s products and services in China. For example, Guangzhou and Hangzhou subway systems now support Apple Pay. iOS, MacOS and watchOS apps have Chinese names. The iPhone warranty information is easily found in the Apple WeChat account.

Apple’s website shows Isabel Ge Mahe and Deirdre O’Brien, Vice President of People, as second-tier managing directors. But as Isabel reports directly to CEO Tim Cook and COO Jeff Williams, she may have more influence.

“Before she came, it was mostly Americans that negotiated with Chinese government,” said an Apple China employee. When Apple needs to consult with the Chinese government over events such as battery issues, a Chinese face is much friendlier than an American’s.

Many employees believe that Isabel’s directive will strengthen Apple and help deter a further decline in Chinese markets.

Apple’s business in Greater China has slumped for six quarters since the second quarter of 2016.

In the second quarter of 2017, Apple Greater China’s revenue fell 14 percent. Moreover, the iPhone ranked fifth in sales volume in China, well behind Huawei, OPPO, Vivo and Xiaomi. The difference between iPhone and Huawei was 15 million units.

 

II

While there hasn’t been any monumental changes, Apple China staff recognized the small improvements that Isabel has brought.

Apple’s 2018 Fiscal Year Q1 Earning Report released on February 2 further proved Isabel’s merits.

Apple’s revenue in Q1 was $88.293 billion, up 13 percent from $78.351 billion a year earlier. Net profit was $20.065 billion, up 12 percent from $17.891 billion the same period last year. Revenue in Greater China was $17.956 billion, up 11 percent from a year earlier.

Since Isabel took office, Apple’s revenue in Greater China has achieved year-over-year growth for two consecutive fiscal quarters.

Apple did not specifically explain the rise in Greater China. Globally, the iPhone X is clearly the biggest contributor to Apple’s growth.

“The iPhone X performs better than we expected. It has been our best-selling iPhone every week since we launched it last November. We have also achieved another significant milestone. The active installation base of the equipment reached 1.3 billion in January, an increase of 30 percent within two years, which attests to the popularity of our products,” Tim Cook said.

Since launching the iPhone in 2007, Apple has been envied by its rivals.

International Data Corporation (IDC) data showed that 1.17 billion iPhones were shipped before iPhone X, generating $775 billion in revenue. The iPhone was the core base of Apple’s market capitalization, making up 63 percent of Apple’s revenue. In other words, the iPhone is still Apple’s most lucrative device.

Counterpoint, a market research firm, showed that one iPhone earns $151 profit, nearly 5 times that of Samsung and nearly 14 times the average of Chinese handset makers.

Even though iPhone shipments dropped by 1 million in the fourth quarter of 2017, Apple was the top player in the market with a share of 19.2 percent.

But now, Apple has to face more bad news.

IDC’s latest survey on smartphone shipments shows 437 million global smartphone shipments in Q4 2017, down 6.3 percent year-over-year.

Industry insiders predict that global smartphone shipments will continue to drop in 2018. Chinese handset makers will continue to offer premium technology with the latest features at a lower cost, while market leaders Apple and Samsung offer a variety of products.

In 2017, the top five smartphone makers had widely unequal distributions of market shares. The market capture differences diminished among the third, the fourth and fifth companies. The competition was unprecedentedly fierce.

Launching one flagship mobile phone each year, Apple faces severe competition from Samsung, Huawei, Xiao, Oppo and others in China’s high-end mobile phone market.

SEE ALSO: Xiaomi Ranks Fourth Again: Shipments up 96.9% Year-on-Year

Apple has scaled back its iPhone X production plan from 40 million to 20 million units this year due to low sales prospects.

Ming-Chi Kuo, a leading analyst, said that Apple would halt the production of iPhone X in mid-June this year to launch a lower-priced iPhone in order to boost sales.

 

III

Apple’s income has become too dependent on the iPhone. Other hardware products, such as iPad Pro, and Apple Watch, and software services, such as Apple Music and Apple Pay, generate less revenue than expected in the Chinese market.

This is the biggest problem facing Isabel today. Apple China’s rivals in software service are BAT (Baidu, Alibaba and Tencent) and other leading giants.

Apple Music, which entered China later, has 27 million paid global subscribers over the past two years. In China, QQ Music, Kugou, and Kuwo, all of which are owned by Tencent Music, has captured 70 percent of the market. The rest of the market is shared between NetEase Cloud Music, Alibaba and Baidu.

SEE ALSO: NetEase Cloud Music and Tencent Music Reach Deep Copyright Agreement, but Competition Still Exists

This is in part because Apple Music is lacking in song selections. In China, QQ Music, Ocean Music Group and Alibaba Music have purchased the copyrights from main record companies. Exclusive copyright is the primary modus operandi between record companies and online music platforms. Chinese online music platforms will sub-license to each other to expand their libraries. Apple mainly collaborates directly with record labels and artists.

Apple Music additionally lacks ancillary features such as lyrics display and data plan.

Apple Pay offered the Chinese market a large-scale discount program during a one-week promotional campaign last July.

But following that week, Apple Pay disappeared from trending news. Apple increased their spending to gain Apple Pay a larger market share.

Analysts are not optimistic about Apple’s continued investment in this respect. “The Internet updates too fast in China. Apple will take on a certain risk if it invests too much in system services. Keeping an open mind and working with more companies is the best thing Apple should do in the next phase.”

Apple needs to take many steps in implementing a market capture strategy. For instance, Chinese users expect a Dual SIM Standby function which Apple has not delivered. The iPhone X is too expensive for the general public. The similarly styled iPhone 8 has also been criticized.

As for software, Chinese consumers hardly use Apple’s built-in apps such as Apple Pay, Apple Music, and iMessage.

Apple is also trying to better appeal to Chinese consumers.

Apple recently launched a short film called Three Minutes to celebrate Chinese New Year. Director Peter Chan shot the film with an iPhone X. In contrast to Apple’s usual clear and direct advertising messages, the film’s theme about family is more complex and fitting for Chinese culture.

https://www.youtube.com/watch?v=ySLn-2MZenU&t=4s

Apple employees think they have a lot of work to do in China. In the past six months under Apple Greater China’s new vice president, they have seen the possibility of change, as small as they may be.

An Apple employee in Shanghai said that he didn’t want to bump into Isabel in the elevator, like anyone who wouldn’t want to encounter the boss in the elevator. But he has since changed his mind and now wants to chat with Isabel.

This article originally appeared in Jiemian and was translated by Pandaily.