Wednesday, 16 January, 2019

China Takes Wind Out Of Apple iPhone Sales

China Takes Wind Out Of Apple iPhone Sales Apple Cuts Revenue Forecast on Weak China Sales 
Ginger Lawrence | 12 January, 2019, 18:27

Apple usually proves these rumors and rumblings wrong, sometimes by the narrowest of margins. The company even allowed iPhone users to turn the throttling off if they so desired.

Well, wait no longer.

The reckoning came in a letter from Apple CEO Tim Cook to the company's shareholders released after the stock market closed on January 2.

Apple has acknowledged demand for iPhones is waning, fulfilling the worst fears of investors concerned the company's most profitable product has lost some of its lustre. Apple originally forecast revenue of between $89 billion and $93 billion.

Apple now expects revenue of $84 billion for the period.

But the main reason for weaker sales of major products, such as the iPhone, was blamed on trade frictions between Washington and Beijing. The Chinese economy has been slowing down and Apple faces formidable opponents such as Xiaomi and Huawei.

Regardless, whatever happens, one shouldn't expect the cost of the iPhone to go down in India which would mean that Apple will be unable to hit scale and will relatively be relegated to a premium boutique player in India where the average selling price of smartphones is lower than $400.

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There is also the factor of the tensions between China and the United States as President Trump has imposed tariffs on some Chinese goods, which does not include the iPhone.

China's "economy began to slow there for the second half", Mr Cook said during an interview with CNBC on Wednesday afternoon.

Hal Eddins, chief economist at Apple shareholder Capital Investment Counsel, said Cook's comments on the impact of the US trade tensions with China "might be a dig at (US President Donald) Trump, but mostly he may be using the trade turmoil as an excuse for some missteps they've made over the previous year".

Apple has claimed that the lowered revenue outlook is due to several reasons, including a weakening economy in China, launch timing of the iPhone XS and iPhone XS Max compared to the iPhone X, supply constraints due to the number of new products, economic weakness in developing countries and the strength of the United States dollar.

Cook said that, in its earlier projection, Apple had "expected economic weakness in some emerging markets". The company has been able to wriggle out of such spots in the past but they do have a lot of cards stacked against them.

The price gap is one reason Huawei surpassed Apple in smartphone sales from April through September a year ago to seize the No. 2 spot behind industry leader Samsung, according to the research firm International Data Corp. You can also comment on our MeWe page by joining the MeWe social network.