Suggesting Apple won't recover in the country anytime soon, the company reportedly saw its worst decline in Chinese iPhone shipments of the past two years during the March quarter.
Shipments were down 30 percent to 6.5 million units, according to Canalys research estimates. That left the company in a distant fifth place, trailing behind the four leading local vendors — Huawei, Oppo, Vivo, and Xiaomi.
"Apple's performance in China is concerning, given that the worst quarter for iPhone shipments is usually Q2 or Q3, not Q1 when new devices are still fresh," wrote Canalys' Mo Jia. "Apple has acted to cut iPhone retail prices, which has largely relieved the pressure from its channel partners."
The analyst noted that while the iPhone still has a Chinese install base of over 300 million people, Apple is at risk of ceding ground to Android-based competition.
"Apple faces a challenge in China to localize its software and services offerings as quickly as in Western markets," Jia continued. "Its hardware is therefore more exposed to competition in China than elsewhere. Bringing up-to-date features, such as 5G, next year, as well as localized software is vital to prevent demand shrinking further."
The overall Chinese smartphone market shrank 3 percent to 88 million units in the March quarter. The only vendor to see growth in fact was Huawei, cementing its lead by rising 41 percent to 29.9 million units. Its marketshare advanced to 34 percent, in stark contrast with Apple, which sank from 10.2 percent to 7.4.
Earlier this month Morgan Stanley suggested that Apple was stabilizing in China, having suffered a serious blow in the December quarter. Worldwide iPhone revenue was down 15 percent in that period, something executives blamed primarily on China.
Apple may have encountered a perfect storm partly of its own devising. The company decided to launch its most expensive iPhones ever amid a plateauing smartphone market, a weak Chinese economy, and unfavorable exchange rates. Chinese phone makers have also begun to catch up to Apple in features without burdensome import expenses.
The company is set to release official March-quarter earnings later on Tuesday, but has stopped detailing iPhone unit numbers.
7 Comments
What a coincidence this comes out JUST before Apple's Q1 call, stock manipulation at it's finest and most vile!
Looking on the bright side there was no warning for this quarter so I imagine earnings will be in line with guidance. No severe price adjustments either.
Of course the iPhone business will be in for some scrutiny and the ride may be bumpy through to September but, as stated, this situation is largely of Apple's own making.
Ok, so Apple did better than expected, though not by a large amount. iPhone sales were down, but higher than expected. The stock is up after hours. I’m sure more will be available on this site shortly.
AAPL up almost 5% after hours, around $209. If it holds Apple might open above $T market cap once again.