Data suggests China's smartphone decline worse than expected, Apple's iPhone pushed out of...
The Chinese smartphone market was actually hit harder in the March quarter than a recent report suggested, dropping 21 percent year-over-year to 91 million units, according to a separate analysis.
Using animoji on a Chinese iPhone X.
Eight of the top 10 vendors saw their shipments fall year-over-year, with companies like Samsung and Meizu narrowing to less than half of Q1 2017 figures, wrote research firm Canalys. One of the exceptions was Xiaomi, which is said to have grown shipments 37 percent to 12 million, supplanting Apple in fourth place.
Canalys didn't immediately provide Apple's numbers, but noted that the top four brands -- Huawei, Oppo, Vivo, and Xiaomi -- represented over 73 percent of shipments.
"The level of competition has forced every vendor to imitate the others' product portfolios and go-to-market strategies," analyst Mo Jia added. "But the costs of marketing and channel management in a country as big as China are huge, and only vendors that have reached a certain size can cope. While Huawei, Oppo, Vivo and Xiaomi must contend with a shrinking Chinese market, they can take comfort from the fact that it will continue to consolidate, and that their size will help them last longer than other smaller players."
The Canalys data would appear to conflict with a report by Counterpoint Research, which not only suggested an 8 percent industry decline but that Apple held on to fourth place, with its shipments rising 32 percent. Much of this was attributed to the iPhone X, which despite being prohibitively expensive for most Chinese drew attention from the people that could afford it.
Earlier in April, UBS analyst Steven Milunovich suggested that Apple was "fairly saturated" in the country, and predicted relatively flat sales with small long-term growth.
A more conclusive picture should emerge when Apple formally announces its March-quarter results on May 1. Apple normally avoids publicizing iPhone sales data until its quarterly announcements, leaving researchers to gauge the product's performance by other means.
Using animoji on a Chinese iPhone X.
Eight of the top 10 vendors saw their shipments fall year-over-year, with companies like Samsung and Meizu narrowing to less than half of Q1 2017 figures, wrote research firm Canalys. One of the exceptions was Xiaomi, which is said to have grown shipments 37 percent to 12 million, supplanting Apple in fourth place.
Canalys didn't immediately provide Apple's numbers, but noted that the top four brands -- Huawei, Oppo, Vivo, and Xiaomi -- represented over 73 percent of shipments.
"The level of competition has forced every vendor to imitate the others' product portfolios and go-to-market strategies," analyst Mo Jia added. "But the costs of marketing and channel management in a country as big as China are huge, and only vendors that have reached a certain size can cope. While Huawei, Oppo, Vivo and Xiaomi must contend with a shrinking Chinese market, they can take comfort from the fact that it will continue to consolidate, and that their size will help them last longer than other smaller players."
The Canalys data would appear to conflict with a report by Counterpoint Research, which not only suggested an 8 percent industry decline but that Apple held on to fourth place, with its shipments rising 32 percent. Much of this was attributed to the iPhone X, which despite being prohibitively expensive for most Chinese drew attention from the people that could afford it.
Earlier in April, UBS analyst Steven Milunovich suggested that Apple was "fairly saturated" in the country, and predicted relatively flat sales with small long-term growth.
A more conclusive picture should emerge when Apple formally announces its March-quarter results on May 1. Apple normally avoids publicizing iPhone sales data until its quarterly announcements, leaving researchers to gauge the product's performance by other means.
Comments
Some Chinese people can afford Apple, but not all.
If you read the report from Counterpoint Research which lists the percentages by brand you will see that the top 5 smartphones hold 73% of all sales. It looks like Canalys specifically left out the Apple figure and added it to their group of four. The total can’t be exactly the same for the top 4 in one report and the top five in the other. There is obviously an unintentional or intentional error. Why would Apple not be mentioned? Perhaps someone is trying to effect the stock before the results are announced next week.
AAPL down ~$15 over last 5 or 6 sessions with all these ‘analysts’ guessing on weak sales of the X. Apparently Apple only sells 1 model in the analyst world.
Guessing yr over yr revenue and profit will be up over last year. The q3 guidance will come in below the street expectations. Stock will drop. Will hit $155 or so then magically rise into the high $170’s or low $180’s till the next earning call where doom and gloom will re-appear. Rinse, repeat.
In a country of about 1.2 Billion, I suspect the percentage of China's population that can afford an iPhone (starting price USD399) is ~15%. That means an addressable market of ~180,000,000 (about 2X the US addressable market), with 9% able to afford the latest model (addressable market ~100,000,000). So what's iPhone share in these segments?
When discussing iPhone share, analysts and the media neglect to point out that Apple doesn't make, nor is it interested in the commodity (under USD400) market. And as the article pointed out, only the largest (translation: most profitable) will survive in a saturated market. By most profitable, I'm referring to more than handsets. I'm referring to other products Chinese handset buyers are likely to buy from the same manufacturer. Currently, none of the top Chinese handset makers have a viable ecosystem to lock customers into, certainly, they don't have the hardware/services ecosystem that Apple does.
Your first statement regarding 'analysts' guessing is spot on. I have been tracking analyst (41) unit sales, revenue and EPS estimates for more than 10 years. The spread between high and low estimates is big enough to drive a very large truck through (without scraping paint). The percentage of analysts that consistently comes close is 10%.
Apple guided revenue (bottom of range) at $60 Billion. Since FQ3/2012 (when Oppenheimer replaced Anderson as CFO), Apple has never failed to achieve its bottom of revenue range. That's never in 23 quarters (almost 6 years). Apple's average revenue beat (bottom of the range) during the aforementioned period is 5.76%. Running Apple's guidance numbers results in YoY Net Income growth of 19%.
I don't know about this august group, but I'm inclined to believe the people most likely to KNOW, then a bunch that is guessing.
BTW, a lot of Chinese while rich aren't as sophisticated as Americans. They like headphone jack so Apple hasn't done well lately because they are putting out less features in a pricier package. Most Chinese don't care about 3D touch or FaceID, they like simple PIN code. I rarely see a wealthy Chinese unlock via touchID, they like simplicity. FaceID was supposed to be that solution but it doesn't always work. There's nothing as simple as PIN code unlock, since touch ID and face ID both have higher failure rates than just entering a code.
I don't expect a blowout quarter for Monday (it wouldn't make sense) but even the slightest dip will send the share price tumbling. As a non shareholder, I can relax though.