Not just the slowing Chinese economy to blame for slower iPhone sales – other factors at play

While Apple chief executive Tim Cook blamed a weak Chinese economy for a downgrade in revenue guidance for the quarter ending December, analysts say he may be glossing over strategy missteps and the effects of fierce competition from fast-improving Chinese smartphone brands.

Attributing lacklustre sales to the economic downturn is one-sided as three of the top five smartphone brands, Huawei Technologies, Vivo and Xiaomi, all registered positive growth in the first three quarters of 2018, during which time shipments of Apple’s iPhone declined by about 12 per cent, Jia Mo, an analyst from research agency Canalys, said in a phone interview.

“In fact, Apple is doing a good job selling premium handsets, but it faces challenges selling cheaper and older iPhone models in China as consumers would opt for local Chinese brands instead,” said Jia, adding that in the third quarter the iPhone XS Max, Apple’s most expensive model, shipped more units in China than the US.

Cupertino, California-based Apple on Wednesday lowered its revenue guidance for the quarter ended December 29, citing tougher than expected Chinese market conditions and fewer iPhone upgrades.

In a letter to investors dated January 2, Cook wrote that the GDP growth figure provided by the Chinese government-for the quarter ended September was the second lowest in 25 years.