Ri­vals take bite out of Ap­ple as China sales fall 9.5 per­cent

China Daily (Hong Kong) - - BUSINESS - By MA SI masi@chi­nadaily.com.cn

Ap­ple Inc saw a nearly 10 per­cent de­cline in its China rev­enue in the lat­est quar­ter end­ing in July, as lo­cal con­sumers switched to newer do­mes­tic phone of­fer­ings and its 10th an­niver­sary iPhone edi­tion is yet to be re­leased to in­voke user en­thu­si­asm.

The US tech gi­ant’s rev­enue from China fell 9.5 per­cent to $8 bil­lion, amid mount­ing com­pe­ti­tion from brands such as in the world’s largest smart­phone arena.

The de­cline stands in sharp con­trast to Ap­ple’s over­all strong earn­ings re­port. Glob­ally, its profit climbed 12 per­cent to $8.7 bil­lion, and rev­enue in­creased 7 per­cent from last year to $45.4 bil­lion, beat­ing an­a­lysts’ pro­jec­tions.

“Sales in the Chi­nese main­land were ac­tu­ally flat year-over-year and, were it not for cur­rency fluc­tu­a­tions, would have been up 6 per­cent,” Ap­ple CEO Tim Cook told a con­fer­ence call with an­a­lysts.

The com­pany at­trib­uted the de­cline in China to weak sales in Hong Kong, which were af­fected by a re­duc­tion in tourism.

Neil Shah, re­search direc­tor at con­sul­tancy Coun­ter­point, said China re­mains the prob­lem child for Ap­ple partly be­cause of iPhone fa­tigue in the coun­try.

“Ap­ple is los­ing share in the $300-$500 price band, as older iPhones fail to com­pete with af­ford­able premium Chi­nese flag­ship mod­els,” he said.

The iPhone’s share of China’s smart­phone ship­ments fell to 9 per­cent in Jan­uaryJune, from a peak of 14 per- cent in 2015, ac­cord­ing to Coun­ter­point.

Ap­ple is ex­pected to un­veil its 10th an­niver­sary iPhone edi­tion later this year, a cru­cial prod­uct aim­ing to out­com­pete lo­cal play­ers, an­a­lysts said.

The fi­nan­cial re­port came as the Cu­per­tino-based com­pany is step­ping up in­vest­ments in China, in a move to boost rev­enue from ser­vices, af­ter its smart­phone mar­ket share slipped.

Ap­ple an­nounced in July that it will in­vest $1 bil­lion to build its first China data cen­ter in Guizhou province, to meet lo­cal con­sumers’ grow­ing de­mand for bet­ter cloud ser­vices.

CEO Tim Cook said on Tues­day that ser­vices in China “grew ex­tremely strongly” dur­ing the most re­cent quar­ter, con­tin­u­ing the ro­bust mo­men­tum in the Jan­uaryMarch pe­riod.

Jia Mo, an an­a­lyst at global con­sul­tancy Canalys, said Ap­ple’s ser­vice rev­enues were surg­ing, partly be­cause there was still a big user base for iPhones.

“Hard­ware is the cor­ner stone for Ap­ple’s business. As its China R&D fa­cil­i­ties start op­er­a­tions, Ap­ple can offer bet­ter lo­cal­ized prod­ucts,” Jia said.

Ap­ple is los­ing share in the $300-$500 price band...” Neil Shah, re­search direc­tor at con­sul­tancy Coun­ter­point

BLOOMBERG

A cus­tomer looks at an Ap­ple Inc iPhone at a Maxim Store in Buenos Aires, Ar­gentina.

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