The comeback in China Tim Cook called out probably won’t last


  • TECH
  • Tuesday, 07 Nov 2017

Customers buy the new iPhone X at an Apple Store in Hong Kong, China November 3, 2017. REUTERS/Bobby Yip

Apple Inc has finally snapped its losing streak in China, thanks mostly to a dearth of splashy rival phones. But even the heavily hyped iPhone X may not help it keep – let alone expand – its share of the world’s largest mobile market given unusually stiff holiday-season competition. 

Riding a growing acceptance of local wares, China’s largest smartphone makers from Huawei to Xiaomi intentionally pit their latest flagship phones directly against the iPhone X in the final months of 2017. So when Apple CEO Tim Cook assured investors last week that Apple was staging a comeback in the world’s second-largest economy, he may have been prematurely optimistic. 

Apple’s revenue from Greater China, a region that includes the mainland, snapped six straight declines last quarter with a 12% increase. That helped it grow its market share to 7.7% of smartphone shipments, although it still lags far behind Huawei, Oppo and Vivo, who command more than half the market. Even fourth-placed Xiaomi sold almost twice as many phones, IDC estimates. The iPhone X’s record price tag – at 8,388 yuan (RM5,352) it’s almost a Beijinger’s monthly salary – along with cheaper devices such as the Mate 10 have conspired to curtail iPhone sales. 

“Apple’s growth this quarter is only temporary,” said Jia Mo, an analyst with researcher Canalys. “The hefty price of iPhone X is going to hurt sales in China, that’s the biggest reason that we’re not too optimistic about its performance in fourth quarter.” 

Apple briefly became the first US$900bil (RM3.80tril) American company on Nov 3, after growing signs of robust iPhone X demand buoyed the world’s most valuable stock. The handset, which boasts a facial recognition system, edge-to-edge display and the highest iPhone price tag yet has prompted Apple to predict record sales of at least US$84bil (RM355.02bil) during the Christmas quarter. 

Apple declined to comment. 

Jin Di, an analyst at IDC, is upbeat on Apple’s prospects and expects the iPhone X to find plenty of local users. 

“The top five vendors will see their market share grow in the coming quarters despite the slowdown,” said Jin. “Apple will see its shipments continue to grow this quarter comparing to a year ago. iPhone X is a very competitive device on the market.” 

That rosy forecast stems in part from a perception that things are turning around in China, the market that matters most to the Cupertino-based giant beyond its home country. Cook talked up its prospects on a conference call, pointing out that it wasn’t just iPhones. Sales of iPads jumped 25%, while Mac shipments notched a record in the country. 

“You can see that China rebounded,” he told analysts who peppered him with questions about everything from iPhone X pre-orders to services revenue in China. “Literally, we’re firing on all cylinders. And our new products give us great confidence headed into this holiday season that this is going to be the best holiday season yet.” 

The iPhone remains at the centre of Apple’s universe, given it yields two-thirds of its sales. And while China’s contribution to overall revenue is falling, it’s still the biggest foreign market. 

Canalys estimates Apple will ship around 13.5 million iPhones in mainland China in the fourth quarter. Zeroing in on the marquee device, Counterpoint’s James Yan similarly estimated iPhone X shipments – at about half of the overall total – of between 6 million and 7 million. That would be down markedly from around 15 million in the same quarter of 2016, when Apple offered a revamped version of the iPhone 7. 

Part of that was because of the price gap with other markets. The 256GB iPhone X sold in China is about 1,200 yuan (RM765) cheaper in neighbouring Hong Kong. 

In the longer term however, the US company still has no solution to its uniquely Chinese woes. Its iTunes Movies and iBooks services remain shut since regulators clamped down last year. Unlike other markets where it primarily battles Samsung Electronics Co, Apple has to contend with multiple savvy operators in the local market. 

James Yan, a Counterpoint analyst based in Beijing, said even the iPhone X is beholden to the two-year replacement cycle. The last big wave occurred in 2016, which suggests sales to swap out older devices likely won’t kick in till next year. 

”Replacement demand will be low this year, the next wave of replacements won’t come until the 2018 cycle,” said Yan. — Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
   

Did you find this article insightful?

Yes
No

Next In Tech News

CES’ 2021 virtual event got less traction on Twitter
Swiss text sleuths unpick mystery of QAnon origins
Facebook says starts process of appointing Turkey representative
Twitter suspends QAnon-linked Republican lawmaker’s account
SoftBank-backed WhatsApp rival Hike goes off the air in India
MCO: Selangor launches e-learning platform for SPM, STPM students learning at home
Exclusive: Southeast Asia's Grab considering U.S. IPO this year, sources say
The brain of Samsung’s new Galaxy S21 flagship series
MySejahtera app now provides SMS alerts to Covid-positive users
Health Ministry urges public to avoid purchasing fake Covid-19 vaccines online

Stories You'll Enjoy