China is the largest smartphone market in the world. Approximately 900 million people own them. It is also the battlefield for global sales because of its size and the number of large competitors. Apple Inc. (NASDAQ: AAPL) has done well with iPhone sales in China for years, but its fortunes took a considerable turn for the worse at the start of this year.
CounterPoint, the electronics research firm, reports Apple’s sales dropped 24% in China for the first six weeks of 2024. Sales across the industry in China dropped by 7% over the same period. That data was from the research company’s China Smartphone Weekly Sell-Through Tracker.
There has been concern for some time that each generation of iPhone is too similar to the one before. The iPhone 15 had better camera and processor speeds than the iPhone 14. The question is whether most consumers can tell the modest difference. CounterPoint Senior Analyst Mengmeng Zhang commented on iPhone sales data from China, “Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now.” (These are the 25 biggest product flops of the past decade.)
Apple investors should be additionally concerned that some rivals gained sales and market share in China during the period covered by the China Smartphone Weekly Sell-Through Tracker. Huawei, a market leader, posted unit sales that rose 64%. Sales of Honor phones rose 2%.
This news could not be worse for Apple. Its financial results were mediocre in the most recent quarter, particularly in China. Total revenue was up 2% to $119.6 billion. However, China’s revenue fell from $23.9 billion to $20.8 billion.
No wonder Apple’s stock is underperforming the market, and many expect this will continue.
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