Published: Thu, February 14, 2019
Business | By Eloise Houston

Apple’s Rough Quarter In China Hit iPhone Sales Hard

Apple’s Rough Quarter In China Hit iPhone Sales Hard

The overall Chinese market contracted by 9.7 percent in the quarter, but Apple declined at about twice that pace, research firm IDC said yesterday in a report.

Shipments decline by 11.7 percent to 36.3 million over the year, with a 20 percent tumble in the last quarter. As a result, Apple saw its sales in China tumble by almost 40% on year in the fourth quarter, while other local brands saw their sales drop about 20%.

However, Apple's woes are not just in China.

In the final three months of 2018, shipments of Apple's iPhone dropped 19.9 percent year-over-year while Xiaomi saw its shipments slashed by more than a third compared to the same period a year earlier.

Strategy Analytics, a global consulting firm, said Apple has an Asia problem, particularly in China. Chinese vendor Huawei Technologies gained market share at the expense of Apple, despite the arrest of its finance chief on allegations of bank fraud.

In a letter to investors released last month, Cook acknowledged Apple's struggles in China.

Huawei, which briefly surpassed Apple to become the world's second-biggest smartphone brand in 2018, remains the runaway leader at home.

IDC says the high prices of the new iPhones had a major impact on sales of Apple's smartphones. "De-subsidization has made the iPhone look much more expensive at the point of sale in China, causing iPhone demand to crash", he said.

In response, the company has announced that it will be introducing price cuts to markets which have been affected by a stronger United States dollar with China likely being one of these markets given that third-party retailers such as JD.com are already selling iPhones at 20% lower prices. To compensate for the loss, Apple is trying to replace phone sales with revenue from services. The company said China's move to pause approving new games for the App Store a year ago is affecting revenue in the segment. "The report also claims that Apple will introduce a 'new Green-ish" color option for the most affordable iPhone of 2019, which will be the successor of the iPhone XR, and will also kill off one of the existing colour options - Black, White, Yellow, Coral, Red and Blue.

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