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Apple

Apple to blame for its own woes, not China

  • The rare sales warning by the smartphone giant sent markets into a tailspin, but instead of pointing the finger at a decline in mainland demand for the headsets, it should try to rediscover the Steve Jobs’ spirit
PUBLISHED : Tuesday, 08 January, 2019, 9:53pm
UPDATED : Tuesday, 08 January, 2019, 9:53pm

When a bellwether company like Apple issued a rare sales warning, stock markets went into a tailspin. Chief executive Tim Cook blamed it on a decline in demand for luxury handsets in the Chinese market. That fed into the larger concern among investors that the world’s second largest economy is showing signs of a slowdown amid a trade war with the United States.

However, like other people, company bosses like to blame external factors beyond their control when things are not going their way. Cook’s assessment is not entirely groundless, but it’s too simplistic to be taken at face value. Simply put, the maker of iPhones is facing much greater competition from domestic rivals in the Chinese smartphone market. Among the top five vendors in China, Huawei, Vivo and Xiaomi showed significant growth last year. Only Oppo and Apple suffered a sales decline.

Apple shares plunge after blaming weak revenue on China slowdown, trade war

Worldwide, Huawei’s gain is even more phenomenal. This is despite a concerted push by several major Western governments, led by Washington, to ban its 5G network products from their markets. It shipped 54.2 million units in the latest published quarter, to move into second place with a record high market share of 15.8 per cent. It’s still behind Samsung but has pushed ahead of Apple.

To be sure, Apple is still the king of the most lucrative premium market. But Huawei is quickly improving the quality of its products with much more competitive prices. Apple’s latest model is widely considered as too expensive while the pace of innovation at the Cupertino, California-based company has slowed. While it still enjoys a healthy lead at the top end of the market in the US and Europe, that may be partly the result of Huawei products being denied market access on the grounds of security concerns.

Admittedly, the Chinese market showdown is a significant factor, but iPhones are too expensive. The era of their market dominance may be coming to an end. But that just means competition is good for consumers and the industry, not least for those in the mainland market. Apple still enjoys advantages in technology and design but the gaps are closing fast. Instead of blaming China, it needs to rediscover the Steve Jobs spirit – the wow factor – for its products.