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Apple has announced that their products are selling fine outside of China. Samsung warned on their China demand yesterday. >Samsung follows Apple warning, say

Apple has announced that their products are selling fine outside of China. Samsung warned on their China demand yesterday. >Samsung follows Apple warning, says Q4 profit likely sank 29% on weak China demand https://www.straitstimes.com/business/companies-markets/samsung-follows-apple-warning-says-q4-profit-likely-fell-29-on-weak-china https://www.straitstimes.com/business/companies-markets/sams... We've known that Chinese consumer demand has been plunging for months now. >DONGGUAN, China — China’s consumers and businesses are losing confidence. Car sales have plunged. The housing market is stumbling. Some factories are letting workers off for the big Lunar New Year holiday two months early. China’s economy has slowed sharply in recent months, presenting perhaps the biggest challenge to its top leader, Xi Jinping, in his six years of rule. https://www.nytimes.com/2018/12/14/business/china-economy-xi-jinping.html https://www.nytimes.com/2018/12/14/business/china-economy-xi... The situation in China is bad enough that local press coverage of the economic situation has been censored since last September. >BEIJING — China has long made it clear that reporting on politics, civil society and sensitive historical events is forbidden. Increasingly, it wants to keep negative news about the economy under control, too. A government directive sent to journalists in China on Friday named six economic topics to be “managed,” according to a copy of the order that was reviewed by The New York Times. The list of topics includes: ■ Worse-than-expected data that could show the economy is slowing. ■ The impact of the trade war with the United States. ■ Signs of declining consumer confidence https://www.nytimes.com/2018/09/28/business/china-censor-economic-news.html https://www.nytimes.com/2018/09/28/business/china-censor-eco... Sometimes a drop in consumer demand in a particular market is more a reflection of the local economic situation than an indictment of a product line that is selling fine elsewhere.

Aloha 8y ago
I think you hit the nail on the head.
- dgzl 8y ago
  Truly. The economy in the other side is actually a mystery to the Western society. And here we are pretending we understand, and we place bets as if we know.
  - matwood 8y ago
    It's a mystery because any numbers coming out of a China or from Chinese companies are of questionable validity. The most accurate measures we have are proxy numbers from companies not based in China.
gggmaster 8y ago
Samsung ruined their reputation with their irresponsible reaction in China during the Note 7 scandal. It’s just that Chinese makers are gaining more market share.
- dschuler 8y ago
  Could be, but how does that relate to Apple? Has Apple’s reputation changed in China as an American company in the last year?
  - fisheuler 8y ago
    My chats with colleagues suggest that: with the increase price of the new iphones and there're many more cost performance phones made by local companies(Huawei,Xiaomi...)they have no motivation to replace the old ones,even if they have,they will first consider a local brand.
  - bun_at_work 8y ago
    I don't know how much anything Samsung does relates to Apple's reputation, but here is a good blog post on Apple's place in China right now: https://stratechery.com/2019/apples-errors/ https://stratechery.com/2019/apples-errors/
- tooltalk 8y ago
  Samsung smartphone market share peaked in 2013 and dropped to really nothing, well before the Note 7 scandal. It really has nothing whatsoever to do with the Note 7. http://english.hani.co.kr/arti/english_edition/e_business/839497.html http://english.hani.co.kr/arti/english_edition/e_business/83...
beforedawn 8y ago
So the massive share price drop is because of China? Go and buy an XR but don't try to lull us with your shaky 'crisis communication', the case Apple is crystal-clear.
- gamblor956 8y ago
  If it's every non-Chinese company doing business in China seeing slowed Chinese growth (or even reduced Chinese demand), then it's pretty clear that China's market is the problem and not Apple. In this case, it's not just Apple and Samsung. It's a great many other industries, especially luxury goods, that have seen large drops in Chinese consumer demand.
  - beforedawn 8y ago
    Then why hasn't Samsung's share price suffered as much as Apple's? Somebody tries to protect his Apple investment via forum spamming upvoted by voting rings. Btw, I am heavily invested in Apple but do not sugarcoat company-wide failure with China. Yes China is a problem but it's not Apple number one problem.
    - JumpCrisscross 8y ago
      > why hasn't Samsung's share price suffered as much as Apple's? Samsung’s and Apple’s stocks are apples and oranges. iPhone is a principal value driver for Apple. Small swings in iPhone demand mean big swings in Apple value. Samsung, on the other hand, is a diversified conglomerate. Moreover, Apple is—corporate structure-wise, for an investor—simple. Single Delaware corporation priced in U.S. dollars and traded in New York. Samsung is a chaebol. Lots of interlocking entities and agreements, parts of which are listed in Korea.
- scarface74 8y ago
  Share price and a company doing well is only slightly correlated.
- nthuser 8y ago
  China is a big part of Apple's growth strategy.
pjmlp 8y ago
There are quite a few European, South American and African markets where Apple products aren't selling just fine.
- scarface74 8y ago
  - Apple products have never sold well in African markets. - You don’t know how well iPhones are selling in other markets compared to previous years until Apple releases their numbers for the quarter. - Even with the new guidance, it’s only about 5-10% lower than the initial guidance. Far from a catastrophe.
  - mtgx 8y ago
    Unless it's the beginning of a decline of course.
    - scarface74 8y ago
      You can’t predict a trend from one data point or better said by xkcd... https://xkcd.com/605/ https://xkcd.com/605/
      - kipchak 8y ago
        To be fair wouldn't it be two in this case? One for the projection expecting sales to be down, and another for the projection being 10% higher than it should have been.
  - pjmlp 8y ago
    Which pretty much invalidates the "Apple has announced that their products are selling fine outside of China." statement. Besides it is quite exactly to see that outside first tier countries, iPhones never sold well, no matter what. The numbers are easy to come by.
    - scarface74 8y ago
      And that’s where the money is. Apple isn’t trying to sell $40 phones with no profit margin.
webmobdev 8y ago
That is a valid excuse. And the abnormal price hikes of the new model of iPhones indicate that Apple was well aware of the possible economic downturn, and thus sought to compensate the anticipated fall in sales by squeezing higher profit margins. But what is their excuse for not penetrating the next biggest market in the world, one of the world's fastest growing economy, right next to China - India? To me, Apple's attitude in India, and many other countries, is akin to that of a spolied brat who won't do things unless he has his own way. Some examples - a) Apple management lamenting that India doesn't have a debt-based culture. (That's a broad view - the comment was more on how the cellular services providers don't sell their phones bundled with "plans" in India, and Indians and to buy their cell phones outright which obviously makes the iPhones to expensive and unaffordable to many). b) In the last 2 decades are so, India has witnessed a revolution in digital payments and seen various innovations in this area. This has made it very easy to do micro-transactions. And yet Apple in India REFUSES to integrate with the local financial infrastructure of the country, and only accepts credit cards / debit cards from Visa or MasterCard for Apple Pay or iTunes. (Note that this is deliberate because the indian options give more privacy to the user - for example, with a credit card, Apple can know our credit rating and better profile us, but with certain indian payment options they will be deprived of this valuable information). c) Objecting to certain policies of the government (this is understandable though from a capitalist point of view to maximise profit). d) Totally ignoring the way how Indians use their phones and their requirements. (For example, Indians have been demanding a dual SIM phone for many years, and it is kind of a de facto standard feature here. And yet, it took about a decade or so for Apple to respond to that). To summarise, Apple's management seems to lack creativity and the COURAGE to step out of thier comfort zone and try out new business models and / or new processes in other countries.
- npunt 8y ago
  They don’t have higher margins on the new iPhones, they are selling higher end phones that contain costlier components.
  - webmobdev 8y ago
    > Let’s start with Apple’s decision that it will no longer be reporting the sales numbers of the iPhone. Given the flat annual sales of the iPhone since the iPhone 6 and iPhone 6 Plus launch, the story about rising numbers no longer belonged to the actual unit sales, it belongs to the increasing margins and increasing average selling price. > If you’re going to sell success, you need bigger numbers. With the iPhone XS Plus clocking in at $1500 in some configurations the scope for larger margins and higher selling prices is pretty much priced out the market. Hiding the iPhone numbers means that the focus can be placed on the increasing revenue from software and services, rather than hardware revenue. [How Apple defied expectations, launched a $1,000 iPhone and made it more profitable than ever](https://www.forbes.com/sites/ewanspence/2018/11/12/apple-iphone-xr-sales-weak-low-danger-decision-revenue-margin/ https://www.forbes.com/sites/ewanspence/2018/11/12/apple-iph...).

Aloha 8y ago

I think you hit the nail on the head.

dgzl 8y ago
Truly. The economy in the other side is actually a mystery to the Western society. And here we are pretending we understand, and we place bets as if we know.
- matwood 8y ago
  It's a mystery because any numbers coming out of a China or from Chinese companies are of questionable validity. The most accurate measures we have are proxy numbers from companies not based in China.

gggmaster 8y ago

Samsung ruined their reputation with their irresponsible reaction in China during the Note 7 scandal. It’s just that Chinese makers are gaining more market share.

dschuler 8y ago
Could be, but how does that relate to Apple? Has Apple’s reputation changed in China as an American company in the last year?
- fisheuler 8y ago
  My chats with colleagues suggest that: with the increase price of the new iphones and there're many more cost performance phones made by local companies(Huawei,Xiaomi...)they have no motivation to replace the old ones,even if they have,they will first consider a local brand.
- bun_at_work 8y ago
  I don't know how much anything Samsung does relates to Apple's reputation, but here is a good blog post on Apple's place in China right now: https://stratechery.com/2019/apples-errors/ https://stratechery.com/2019/apples-errors/
tooltalk 8y ago
Samsung smartphone market share peaked in 2013 and dropped to really nothing, well before the Note 7 scandal. It really has nothing whatsoever to do with the Note 7. http://english.hani.co.kr/arti/english_edition/e_business/839497.html http://english.hani.co.kr/arti/english_edition/e_business/83...

beforedawn 8y ago

So the massive share price drop is because of China? Go and buy an XR but don't try to lull us with your shaky 'crisis communication', the case Apple is crystal-clear.

gamblor956 8y ago
If it's every non-Chinese company doing business in China seeing slowed Chinese growth (or even reduced Chinese demand), then it's pretty clear that China's market is the problem and not Apple. In this case, it's not just Apple and Samsung. It's a great many other industries, especially luxury goods, that have seen large drops in Chinese consumer demand.
- beforedawn 8y ago
  Then why hasn't Samsung's share price suffered as much as Apple's? Somebody tries to protect his Apple investment via forum spamming upvoted by voting rings. Btw, I am heavily invested in Apple but do not sugarcoat company-wide failure with China. Yes China is a problem but it's not Apple number one problem.
  - JumpCrisscross 8y ago
    > why hasn't Samsung's share price suffered as much as Apple's? Samsung’s and Apple’s stocks are apples and oranges. iPhone is a principal value driver for Apple. Small swings in iPhone demand mean big swings in Apple value. Samsung, on the other hand, is a diversified conglomerate. Moreover, Apple is—corporate structure-wise, for an investor—simple. Single Delaware corporation priced in U.S. dollars and traded in New York. Samsung is a chaebol. Lots of interlocking entities and agreements, parts of which are listed in Korea.
scarface74 8y ago
Share price and a company doing well is only slightly correlated.
nthuser 8y ago
China is a big part of Apple's growth strategy.

pjmlp 8y ago

There are quite a few European, South American and African markets where Apple products aren't selling just fine.

scarface74 8y ago
- Apple products have never sold well in African markets. - You don’t know how well iPhones are selling in other markets compared to previous years until Apple releases their numbers for the quarter. - Even with the new guidance, it’s only about 5-10% lower than the initial guidance. Far from a catastrophe.
- mtgx 8y ago
  Unless it's the beginning of a decline of course.
  - scarface74 8y ago
    You can’t predict a trend from one data point or better said by xkcd... https://xkcd.com/605/ https://xkcd.com/605/
    - kipchak 8y ago
      To be fair wouldn't it be two in this case? One for the projection expecting sales to be down, and another for the projection being 10% higher than it should have been.
- pjmlp 8y ago
  Which pretty much invalidates the "Apple has announced that their products are selling fine outside of China." statement. Besides it is quite exactly to see that outside first tier countries, iPhones never sold well, no matter what. The numbers are easy to come by.
  - scarface74 8y ago
    And that’s where the money is. Apple isn’t trying to sell $40 phones with no profit margin.

webmobdev 8y ago

That is a valid excuse. And the abnormal price hikes of the new model of iPhones indicate that Apple was well aware of the possible economic downturn, and thus sought to compensate the anticipated fall in sales by squeezing higher profit margins. But what is their excuse for not penetrating the next biggest market in the world, one of the world's fastest growing economy, right next to China - India? To me, Apple's attitude in India, and many other countries, is akin to that of a spolied brat who won't do things unless he has his own way. Some examples - a) Apple management lamenting that India doesn't have a debt-based culture. (That's a broad view - the comment was more on how the cellular services providers don't sell their phones bundled with "plans" in India, and Indians and to buy their cell phones outright which obviously makes the iPhones to expensive and unaffordable to many). b) In the last 2 decades are so, India has witnessed a revolution in digital payments and seen various innovations in this area. This has made it very easy to do micro-transactions. And yet Apple in India REFUSES to integrate with the local financial infrastructure of the country, and only accepts credit cards / debit cards from Visa or MasterCard for Apple Pay or iTunes. (Note that this is deliberate because the indian options give more privacy to the user - for example, with a credit card, Apple can know our credit rating and better profile us, but with certain indian payment options they will be deprived of this valuable information). c) Objecting to certain policies of the government (this is understandable though from a capitalist point of view to maximise profit). d) Totally ignoring the way how Indians use their phones and their requirements. (For example, Indians have been demanding a dual SIM phone for many years, and it is kind of a de facto standard feature here. And yet, it took about a decade or so for Apple to respond to that). To summarise, Apple's management seems to lack creativity and the COURAGE to step out of thier comfort zone and try out new business models and / or new processes in other countries.

npunt 8y ago
They don’t have higher margins on the new iPhones, they are selling higher end phones that contain costlier components.
- webmobdev 8y ago
  > Let’s start with Apple’s decision that it will no longer be reporting the sales numbers of the iPhone. Given the flat annual sales of the iPhone since the iPhone 6 and iPhone 6 Plus launch, the story about rising numbers no longer belonged to the actual unit sales, it belongs to the increasing margins and increasing average selling price. > If you’re going to sell success, you need bigger numbers. With the iPhone XS Plus clocking in at $1500 in some configurations the scope for larger margins and higher selling prices is pretty much priced out the market. Hiding the iPhone numbers means that the focus can be placed on the increasing revenue from software and services, rather than hardware revenue. [How Apple defied expectations, launched a $1,000 iPhone and made it more profitable than ever](https://www.forbes.com/sites/ewanspence/2018/11/12/apple-iphone-xr-sales-weak-low-danger-decision-revenue-margin/ https://www.forbes.com/sites/ewanspence/2018/11/12/apple-iph...).