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Apple revenue falls $4.8 billion in China, wipes out gains

Apple-revenue-falls-4.8

During its 2018 holiday quarter, Apple bought in $13.2 billion in Greater China, down from nearly $18 billion during the same period the prior year

That nearly $5bn dip was more than enough to wipe out small gains in the Americas and the rest of Asia Pacific. Sales revenue also feel slightly in Europe and Japan, which together accounted for an overall $1bn annual decline.

Apple’s revenue saw declines in China across all of its leading products—iPhones, Macs and iPads—and reduced foot traffic in its stores. Fewer people chose to upgrade their iPhones this year as well, as stated by Apple CEO Tim Cook in a call with investors this afternoon. The company has also been having trouble getting Chinese approval to publish new games to the App Store, which according to CFO Luca Maestri, “clearly is affecting our business.”

The overall revenue decline was also largely due to “economic deceleration,” caused in part by “rising trade tensions” with the US, as Apple stated earlier this month. Apple isn’t alone in making the claim. Just yesterday, Nvidia projected a revenue miss that it blamed in large part on China’s weakening economy. Analysts said that China’s economy could be hurting Samsung as well.

While the revenue decline was much too big for Apple to ignore, the company is painting its business in China as generally well positioned for the future. Cook stated that Apple’s wearable business in China is now up more than 50%. The company’s active install base of users grew during the holiday quarter as well, with two-thirds of Macs and iPads being bought by first-time customers. According to Cook, the company’s full-year revenue in China was also slightly up.

While Apple hasn’t mentioned it explicitly, the company is facing increasingly stiff competition selling phones in China. Their shipments continue to be outpaced by Huawei, Oppo, Vivo and Xiaomi, all of which have been willing to sell phones more specifically designed for the market. In some cases, that’s by adding market-specific features like very high-resolution cameras; in others, it’s by offering phones at a variety of prices, including cheaper ones that Apple has chosen to ignore.

Apple has started making some changes to appeal to the Chinese market, with its latest phones offering a dual SIM option — something popular outside the US. There’s even a special China-only model that supports two physical SIMs.

The future of the company’s business in China—and elsewhere—as Tim Cook hinted, is in its other business segments. While the iPhone is declining, Apple still has its Watch, the HomePoc and an entire headphones business, Beats, that can sell products – and whose sales have seem to grown. Apple is also more concerned with active users than ever, as it looks for new people it can sell services too, like its in-the-works TV and movie steaming service.

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