Apple's Q1 figures show precipitous 26.7 percent revenue drop in China

Posted:
in AAPL Investors edited January 29
Apple on Tuesday detailed what CEO Tim Cook only hinted at earlier this month, acknowledging a 26.7 percent drop in its December-quarter Chinese revenues.

Beijing China


Net sales shrank from $18 billion to $13.17 billion in the region, Apple said in consolidated statements alongside quarterly results. The company saw much smaller declines in Japan and Europe, and slight gains in the Americas and the broader Asia Pacific market.

Earlier this month Cook warned about "lower than anticipated iPhone revenue, primarily in Greater China," saying it accounted for "all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline." The company today reported $84.31 billion in overall revenue, slightly better than its January warning but well below the $89 billion to $93 billion it forecast in November. iPhone sales plummeted from $61.104 billion to $51.982 billion.

Cook said that factors affecting iPhones included "foreign exchange headwinds," "economic weakness in some emerging markets," and even its discounted battery replacement program, which generated about 11 times more traffic than anticipated.

The iPhone has taken a beating in the Chinese smartphone market -- mostly because local vendors like Huawei and Xiaomi are selling competitive phones that cost hundreds of dollars less than Apple's offerings. Compounding matters has been a strong U.S. dollar, a weak Chinese economy, and the effects of the U.S.-China trade war.

In its Tuesday results call, the company did note that over two-thirds of Chinese customers who bought a Mac or iPad in the quarter were doing so for the first time.

Comments

  • Reply 1 of 10
    The iPhone has plateaued. The market is saturated in almost all of the developed world where there are substantial numbers of people who can afford them.

    beowulfschmidt
  • Reply 2 of 10
    Not unexpected, so... next! :)
  • Reply 3 of 10
    Outside of first world Apple's going to have to decide. Premium pricing, high margins and very low sales and thus low services or some other strategy. 
    edited January 29
  • Reply 4 of 10
    macxpressmacxpress Posts: 4,792member
    Thanks Trump!
    magman1979badmonk
  • Reply 5 of 10
    jimh2jimh2 Posts: 119member
    Outside of first world Apple's going to have to decide. Premium pricing, high margins and very low sales and thus low services or some other strategy. 
    It's a tired argument that pops up every time sales are off are not above the huge bar set by the analysts. the race to the bottom is a disaster. Just ask every other phone manufacturer how low prices have worked out for them. Being an obtainable (or almost obtainable) premium product is the place to be. There are plenty of premium products people want, but they are not obtainable by most. The super rich and Hollywood types use iPhones and if you want to be like them you can own the same phone they do, whereas you will never live in their neighborhood, own a jet, own a super car, have the same watch, have a made etc. A quick look at Facebook will show you this is the way a lot of people think.
    fastasleepmagman1979lolliver
  • Reply 6 of 10
    @davgreg wrote:
    The iPhone has plateaued. The market is saturated in almost all of the developed world where there are substantial numbers of people who can afford them.

    You mean aside from the 75 Million new active iPhone users last year, right?
    lolliver
  • Reply 7 of 10
    China will dominate the Chinese market.

    Apple will dominate the American market.

    The fight will be over the other markets, Europe, South America, Asia, India, and Africa.

    China will eventually dominate those markets, too! 

    Let's thank all the short-sighted (More foreskin than foresight!) American CEO's that moved our businesses to China over the last 30 years! :(


  • Reply 8 of 10
    k2kwk2kw Posts: 1,699member
    macxpress said:
    Thanks Trump!
    Yep Cook should get down on his knees and thank Trump for the low tax rate especially on all the Cash they brought back from overseas.   It’s not Trump that Apple is so dependent on China.
    muthuk_vanalingam
  • Reply 9 of 10
    tzeshantzeshan Posts: 1,888member
    k2kw said:
    macxpress said:
    Thanks Trump!
    Yep Cook should get down on his knees and thank Trump for the low tax rate especially on all the Cash they brought back from overseas.   It’s not Trump that Apple is so dependent on China.
    If it is not for China there will not be so many billionaires today. US government cannot run deficits to twenty trillions dollars. Because there will not be enough cheap goods to buy. 
  • Reply 10 of 10
    jimh2 said:
    Outside of first world Apple's going to have to decide. Premium pricing, high margins and very low sales and thus low services or some other strategy. 
    It's a tired argument that pops up every time sales are off are not above the huge bar set by the analysts. the race to the bottom is a disaster. Just ask every other phone manufacturer how low prices have worked out for them. Being an obtainable (or almost obtainable) premium product is the place to be. There are plenty of premium products people want, but they are not obtainable by most. The super rich and Hollywood types use iPhones and if you want to be like them you can own the same phone they do, whereas you will never live in their neighborhood, own a jet, own a super car, have the same watch, have a made etc. A quick look at Facebook will show you this is the way a lot of people think.
    Not saying they should race to the bottom. However, if Apple is switching it's profit model to Services and it's services only really work on Apple products the two strategies are the antithesis of each other. To increase Service numbers you need more devices. To keep hardware profit margins high you all fewer devices.  Now in the US, Europe etc Apple's premium products work and sell enough that Services do well too. In China, India and other third world countries where disposable income is nowhere near what it is here, premium products aren't going to do as well. Combine that with most Chinese not really benefiting from the Apple ecosystem with their specialty apps they use and government control of everything you need a different strategy. Not saying play to the bottom but what they're doing isn't going to work in most parts of the world where people don't already have smart phones. 
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