Cheaper Rivals Eat Away at Apple Sales in China – WSJ (Feb 1, 2017)
This is a story that’s been going for a while now – China’s sales in China have been down, but ironically the quarter just reported was the first in quite a while in which its revenues in China itself were actually flat, per Tim Cook’s remarks on the earnings call yesterday. In other words, in China (as opposed to the Greater China region) Apple grew in constant currency by 6% year on year, its best performance in a year. However, as with other smartphone markets around the world, as the Chinese market continues to grow, more new users will choose cheaper Android phones than iPhones as their first phones, and those who prioritize price will always choose something other than an iPhone. The reason Tim Cook always emphasizes switchers and new users is that this is where future growth will come from, even as Apple’s market share falls – new users become upgraders in the next cycle, and as the market saturates, Apple’s share tends to rise. It’s too early to know yet whether that will happen in China, but that’s what Cook is banking on, not steadily increasing market share in a market that’s far from maturity.