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Apple's iPhone Shipments Plunge in China as Huawei Tightens Grip

103 points by Leary 8y ago

dis-sys 8y ago
According to a recent study, Chinese iPhone users are more likely to be low income/undereducated. https://www.scmp.com/tech/article/2174310/research-highlights-class-divide-between-poor-apple-iphone-and-rich-huawei https://www.scmp.com/tech/article/2174310/research-highlight...
- msh 8y ago
  That does not really sound like a study, more like propaganda. I don't know if it's true but that article is not that credible.
- thaumasiotes 8y ago
  From personal experience (highly biased), it's easy to find iPhones belonging to everyone from elite university students to convenience store clerks. That doesn't say anything about whether iPhone owners are more likely to be low-income or high-income, but there are a lot more low-income people than there are high-income people...
  - oblio 8y ago
    In the US, maybe :)
    - thaumasiotes 8y ago
      What are you talking about?
      - oblio 8y ago
        > it's easy to find iPhones belonging to everyone from elite university students to convenience store clerks. In the US, maybe. The average world GDP per capita PPP is $17k. The US GDP per capita PPP is $59k, almost 4x the world. In most of the rest of the world, including other developed countries, "convenience store clerks" definitely don't have iPhones.
        thaumasiotes 8y ago
        I'm just telling you what I see in China. Convenience store clerks do have iPhones, regardless of how you feel about it.
- kumarvvr 8y ago
  I suspect a lot of money in the China flows illegally, out of the sight of the tax man (black money, money that is off the books), so having an iPhone could be one of the ways to spend such money, as it can't be deposited in banks or other track-able outlets. Perhaps it's a status symbol too, shows that you are well to do and financially stable.
  - kwizzt 8y ago
    I don't think the black money you proposed is very likely. If I have several thousand dollars of black money, that's not much and no one cares. OTOH, if you have a lot of black money, let's say in millions of dollars, buying a single iPhone doesn't really help at all. Yet buying a bunch of iPhone's seems to be very inconvenient unless you are selling them to someone else. Status symbol was more likely 5 or 10 years back. Nowadays not a lot of people actually care about what phones you are using (at least the ones I know, potential selection bias there). My guess is that people simply don't care about having an iPhone vs an Android anymore. Especially so when Android phones don't suck or can be better than iPhone now.
- deleted 8y ago
  [deleted]
eastendguy 8y ago
Next headlines: 2020: European Car Shipments Plunge in China as XXX(#) Tightens Grip 2025: Tesla Car Shipments Plunge in China as YYY(#) Tightens Grip (#) Any local company currently in favor with the ruling party.
- entity345 8y ago
  That's simplistic. People forget, or simply don't know, that Chinese are extremely patriotic and that they remember how "the foreign powers" treated them in the past. Considering what's happening between the US and China, and about Huawei, we can't discard the possibility that Chinese consumers reacted by supporting their country.
  - ekianjo 8y ago
    > that Chinese are extremely patriotic Like in most countries where education is tightly controlled by the government, patriotism is a result of state propaganda. > how "the foreign powers" treated them in the past. The worst thing that happened to Chinese was not the way foreign powers treated them, but what came after under their own ruling party.
    - entity345 8y ago
      Talking about propaganda, you must have been subjected to massive quantities to write such a reply that provides no counter arguments and that is completely ignoring the points made, not to mention how ignorant it is. Sad, really.
      - ancorevard 8y ago
        > The worst thing that happened to Chinese was not the way foreign powers treated them, but what came after under their own ruling party. Does one really need references for this? Aren't everyone aware of the massive socialist experimentations Mao executed on China's people? The lowest estimate available is that 50 million people were killed (high end estimate closer to 80 million dead) due to political purges (cultural revolution etc.) and starvation (socialize farming, great leap forward, etc.).
cm2187 8y ago
I’d expect the same to happen in a recession in the western world. People do not buy luxury products in a recession and if they absolutely need to replace a device, will pick one half the price that’s good enough. Though the business model of tech giant is new, for most, the market in which they evolve isn’t. Facebook and Google’s revenues are essentially advertising, another source of revenues that is very pro-cyclical. Amazon is retail sales, also quite pro-cyclical. I don’t know how a cloud business would behave in a recession. Plus the cloud is still in high growth phase, kind of like smartphones or online advertising were in 2008, making the economic context less relevant.
- alkonaut 8y ago
  Manufacturers will ensure phone companies ensure customers buy new phones. In the odd event that my iPhone lasts the 24months without having a major hardware hickup (such as being shattered), somehow all the rebates disappear from my plan. A rep from my phone company calls me and says I can get a new 24 months plan WITH a new iphone, and since the new one would get the rebates I just lost, it's effectively the same monthly cost including the new phone. Being the sucker that I am, I accept and I have a new phone. I'm sure I could find a company that sells me a plan that would become cheaper instead of stripped of all rebates once my 24 months are over. But I'm also lazy and don't want to switch mobile networks as my current network has the best coverage in the rural areas I need to go to. It's a plan plan that is both simple and clever: instead of lowering the prices for buying new phones, what they do is just raise the price of NOT buying a new phone.
  - pjmlp 8y ago
    That only works in countries that are contract driven, in those where pre-pay rules, not so much.
nakodari 8y ago
iPhones have become just too expensive for people in Asia to buy. It's simple as that. If they bring down the price to $599 like it was for the original iPhone and keep the price constant every year, Apple will double or even triple their existing market share. It will still be profitable for Apple knowing that service revenue will increase when more people are using iPhones around the world.
- baybal2 8y ago
  No, the simple explanation for their sales tanking is simply because they got their market saturated. Plainly and simple. Huawei on other hand has rather different marketing plan - they make somewhat expensive products for ordinary people, even thought some of their phones can cost more than $1000 USD in maxed out configuration (leather and hand made editions) Apple on another hand has really little appeal to this demographic, on both brand identity front, and product match. That surely sounds unusual to a Western person, but that how it is. Huawei buyer is a well off working man in late twenties or early thirties with few more things to care about in his life than his phone. Car analogy: Huawei - a nice full size sedan, a show of success for a common man; Apple - an "economy supercar" like Black Badge edition RR Ghost, something what broke millionaire wannabees buy
  - Synaesthesia 8y ago
    Within China, Apple doesn't compete on price. Yes Huawei has expensive phones, but for example you can buy a Mate 20 Pro for $650 there whereas an iPhone XS costs $1,270 for the entry level model. https://www.gizmochina.com/2018/10/26/huawei-mate-20-and-mate-20-pro-chinese-pricing-vs-other-regions/ https://www.gizmochina.com/2018/10/26/huawei-mate-20-and-mat...
    - baybal2 8y ago
      > iPhone XS costs $1,270 for the entry level model. Indeed, but they also have the "3rd world iPhone" models - respins of previous generations and "C" model which were to supposedly cater to this market. They greatly overestimated willingness of locals into buying "poor man's Rolce Royce editions"
ancorevard 8y ago
China's economy is looking scary at this point. Also from Bloomberg: Chinese consumer tax receipts down 70% in November. https://www.bloomberg.com/opinion/articles/2018-12-31/china-s-economic-slowdown-is-worsening-stop-dithering-beijing https://www.bloomberg.com/opinion/articles/2018-12-31/china-...
- adventured 8y ago
  The corporate bond defaults [1] are also interesting as a tell on their real situation. I'll be curious to see if the central government relents and unleashes a far larger stimulus as it appears there isn't going to be a trade deal near-term. Granted, you've also got Germany in a de facto recession and the UK inching toward one [2]. If the US can maintain a 2.5%+ GDP growth pace for 2019 against all of that, it'll be surprising. Projections on S&P 500 Q1 earnings have turned from 6-7% growth to an expected contraction. The market will weaken further with earnings growth disappearing, which is guaranteed to force the Fed to pause rate hikes and then cut. [1] https://www.bloomberg.com/news/articles/2019-02-11/two-large-chinese-borrowers-are-said-to-miss-bond-payments https://www.bloomberg.com/news/articles/2019-02-11/two-large... [2] https://www.bloomberg.com/news/articles/2019-02-11/u-k-economy-wilts-as-brexit-jitters-hit-business-investment https://www.bloomberg.com/news/articles/2019-02-11/u-k-econo...
  - paganel 8y ago
    > Granted, you've also got Germany in a de facto recession Added to that, Deutsche Bank's recent "funding woes" (to quote the FT) personally give me a bad vibe, not sure if we're at the "summer 2007 phase" of Northern Rock's troubles [2] or if we're already in the "early September 2008 phase", i.e. a couple of weeks before Lehman fell. The nastier news is that, afaik, Deutsche is (was?) seen as being supported by the German government (the same as Volkswagen, for example), even more than the Wall Street investment banks were supported by Washington, and if Deutsche falls that will reflect very, very badly on the perceived financial soundness of the German government and hence of Europe as a whole. [1] https://www.ft.com/content/cb739552-2c5d-11e9-8744-e7016697f225 https://www.ft.com/content/cb739552-2c5d-11e9-8744-e7016697f... [2] http://news.bbc.co.uk/2/hi/business/6996136.stm http://news.bbc.co.uk/2/hi/business/6996136.stm
baybal2 8y ago
People in the West don't get a lot about Chinese society, nor do ones who come and go to China on few year long stays in better parts of China. Yes, China has fake Prada, tons of fake Prada, but you don't really get a lot of people going for Pradas invariably of its genuineness. Same for iPhone users - there are extreme cases of idiots selling their organs to buy one, but to most people - the brand may be near invisible, moreover to people outside of megacities. China's rich don't necessarily come from big cities. There are way more millionaires outside the Beijing/Shanghai/Guangzhou trio than inside. In fact, mid-tier cities have more millionaires per capita than megacities. It's only natural that marketing of big foreign brands that primarily target megacities gets what is sows - a very proletarian, working class demographic. I want to add that Amazon got a hunch of that recently - Amazon China was a joke up until their last few campaigns that were targeting almost exclusively second tier cities. To everybody's surprise, that move made them to near double their business here in around one year.
potatofarmer45 8y ago
I think what a lot of commentators are missing is that even without a trade war, IPhone shipments would have fallen in China. In the past, the android phones kept focussing on features (remember the s3 ads about how it had all these features missing in the 4/4s). Now, especially with Huawei, they've really mastered the art of branding and messaging on their products. When Huawei listed a phone with 3 cameras and cost more than an iphone, I knew that was a home run. The higher price reinforced the image of the premiumness of Huawei which benefitted all their products down the line as evidenced by their sales numbers. They've finally realized the Xiaomi (same quality at a lower price), actually doesn't work on an emotional level with consumers. Instead, Huawei have gone to the extreme (Leica partnership lenses + 3 cameras). They've been doing this for a while, and results just take time to show and now they have.
- JohnJamesRambo 8y ago
  What do the 3 cameras do?
  - addicted 8y ago
    Make it seem that literally the only feature regular phone users upgrade for is a lot better on the Huawei.
  - baybal2 8y ago
    Supposedly better than 2 cameras, but not as good as 5 or 7 cameras. Still, you can proudly tell people "my phone has more cameras than yours" :)
    - Haga 8y ago
      My phone finds others nearby photographing and recombines those willing into one giant parallax camera.. Beat that
  - ninedays 8y ago
    It doesn't really matter as long as it creates a sense of uniqueness for the consumer. Remember all these octo-cores smartphones that were supposed to perform way better than the two-cores smartphones? It's only there to tell you "3 cameras are better than 2" even though no one understands what it does. Same with cores : "wow 8 cores? 8 is such a big number compared to 2 cores therefore it must be way better/faster"
andy_ppp 8y ago
Doesn't help that even I can't keep track of the differences between their phones and which lower end models they still sell and what the hell the iPhone XR is meant to be. Feels like Apple have a really weird phone line up right now. There used to be 3 models - iPhone classic (the previous gen maybe with a few tweaks), iPhone massive (better camera and battery) and iPhone awesome expensive high tech edition (new stuff). Now it seems to be 5 or more models in China, how can this make sense? Just stick to those three models and price them correctly and they'll get more sales.
- close04 8y ago
  > Doesn't help that even I can't keep track of the differences between their phones and which lower end models they still sell and what the hell the iPhone XR is meant to be. > Feels like Apple have a really weird phone line up right now. So Apple's sales are hurt because it's hard to keep track of their 3 models this year? Shouldn't the same logic basically kill Huawei's sales? Off the top of your head can you quickly tell me the differences between these Huawei models launched over the past year? Huawei Mate 20 Pro, Huawei Mate 20 Lite, Huawei Mate 20, Huawei P20 Pro, Huawei P20, Huawei Mate 10 Pro. And that's only counting the high-ish end. It would be a really long comment if I included all models.
  - andy_ppp 8y ago
    Huawei isn't a premium brand in the same way Apple is so keeping things clear and focused is less important for them. I think we all know many of the reasons discussed on here has contriibuted to the downturn in sales. I'm clearly not saying it's exclusively about one issue in my comment, but you decided to rephrase it to say that, which must have been fun for you. Edit: Changed "X" to be "one issue" for clairty, but thay makes the following comment confusing. Sorry about that.
    - close04 8y ago
      I said nothing about the X nor have I implied it, just about Apple’s lineup in general. Apple has a very narrow lineup that’s not that hard to follow. Huawei aims at high end and the prices confirm it. The lineup is far more complicated. And being less than high end shouldn’t really change this. If a complicated lineup kills sales it should do it for both Apple and Huawei. My only point is that the argument “lineup is complicated” doesn’t really have any merit. I see no point in attcking me for something that left very little room for interpretation.
robk 8y ago
If you look at market share though it seems to actually be holding solid or growing [1]. This makes me believe a more neutral narrative that it's due to people upgrading from lousy low end android to higher end android much faster than an existing iPhone user would upgrade. The top 25% of the population use iPhones and aren't leaving the Apple platform - the folks who bought a low end phone are upgrading to higher end much more rapidly. [1] https://www.statista.com/statistics/262176/market-share-held-by-mobile-operating-systems-in-china/ https://www.statista.com/statistics/262176/market-share-held...
- oblio 8y ago
  It's Windows vs Mac all over again, people just wouldn't believe it :) 1 company vs 100. All the 100 companies would have to be knuckleheads forever (which is super unlikely, it's basically: "you can fool some people all the time or all the people sometimes, but you can't really fool all the people all the time"). Android is moving up in the world, and except for the US, which was always a bit weird in regards to Apple, Android will make Windows' dominance look like a walk in the park. Look at what Google's doing with relatively weaker dominance of Chrome in the web browser world.
  - scarface74 8y ago
    Windows vs Mac is a very shallow interpretation. -the affluence level of iOS users dwarf Android users statistically. A person who can afford a $700 iPhone is much more valuable than a person buying a $220 Android phone (the average selling price of an Android phone) - Apple couldn’t keep up performance wise with the Mac because you had the entire PC industry funding Intel. Hardly anyone is making money selling Android phones. Apple is making 80% of the profit in the phone market. -iOS is doing well in most affluent countries https://deviceatlas.com/blog/android-v-ios-market-share https://deviceatlas.com/blog/android-v-ios-market-share
    - oblio 8y ago
      My personal opinion is that the future of technology isn't in the current affluent countries. Besides this, we already know that the vast majority of people stay within their ecosystems, once they start using them. Especially know that the differences in phone quality are going down (cheap phones are getting good; a cheap Android phone from 2010 was miles away from an iPhone, a cheap Android phone from 2020 will be comparatively much, much closer). So the future isn't looking very bright for Apple, considering that India, China and Africa are almost entirely Android territories :) Just keep in mind that Windows failed for 10+ years before having the smash hit that was Windows 95.
JackPoach 8y ago
Trade wars are a bitch
hevi_jos 8y ago
It is obvious. China debt bubble is bursting right now so they are sensible with prices and Apple just have raised them absurdly. China will experience a traumatic experience(growing pains) for getting to a service economy like the rest of the world had. If Apple continue raising prices they will lose the mass production advantage they have. Steve Jobs always created products that were affordable(like the iPod, or the inexpensive macbook) so it gave the expensive ones mass production components(like accelerometers, cameras, special glass, wifi chips, touch screens). It seems Tim Cook had the brilliant idea of eliminating low cost products in order to raise margins(that are obscene high right now at Apple), but people are not stupid and alternatives exist.
- tivert 8y ago
  > Steve Jobs always created products that were affordable....It seems Tim Cook had the brilliant idea of eliminating low cost products in order to raise margins... One of the smart things about Jobs's product structure is that it put people on a position to take a chance on Apple by buying a low-end product, then they could migrate into the more expensive end once they got used to Apple. There's a reason it's called the entry-level, and getting rid of it is foolish.
- positr0n 8y ago
  > margins (that are obscene high right now) https://wccftech.com/apple-iphone-profits-declining/ https://wccftech.com/apple-iphone-profits-declining/ This article (and everything else I've read online) reports that iPhone profit margins are declining.
glenrivard 8y ago
Not surprising and not only China. Problem is people are just replacing their iPhones less often.
puranjay 8y ago
Now that China profits have dried up, Apple will turn its attention to India. But they've really missed a trick with their retail strategy in India. They've partnered with local retailers to run "Apple stores". These stores are nowhere near the smooth, beautiful experience of a regular Apple Store. It feels preposterous to walk into a shoddily built store selling a phone for $1200 when you can walk next door to a Samsung or OnePlus outlet and get a similarly capable phone for half the price Apple needs to bump up its quality game. They've been losing market share here in India and for all purposes, this country is a lost cause to them. I wouldn't be a very happy Apple shareholder right now
- bwb 8y ago
  isn't that because of local laws they can't open stores directly? India has a ton of weird rules and super regulated.
  - puranjay 8y ago
    Yeah, but lots of foreign retailers team up with more competent partners who operate their brand stores. Gucci, Armani, and Versace can't operate directly in India either, but you wouldn't know it looking at their stores. Apple's Indian partners don't seem to care, nor does Apple that their partners are offering a sub-par experience.
- glenrivard 8y ago
  Apple has been trying in India for years without any success. Their share has actually decreased over the last year.
- hajile 8y ago
  I somewhat doubt India is a good target for them. Even FirefoxOS feature phones currently outsell Apple in India right now.
  - puranjay 8y ago
    India's premium smartphone market is small, of course, but it is also growing, and it is also a market where Apple has lost massive market share. And let's be honest, anyone who can see even 10 years into the future would know that the next wave of growth will come from India
ohiovr 8y ago
The original iPhone cost $499 according to google search.
- robin_reala 8y ago
  …with a contract in the US.
  - ohiovr 8y ago
    People wouldn’t spring for the same exact deal at that price? Seems a lot of people are fine with throwing 70 dollars a month just on the service even with tons of alternatives that are a fraction of the cost.
ksec 8y ago
Roger McNamee seems to get it, the iPhone was probably the most successful technology product in history, and arguably the "most" successful in anything. It leads to a sea of other innovation across multiple spectrum. On the Notes of Retail, Apple had ~430 Stores in 2014, ~460 in 2015. As of end 2018 it is ~510, all the stores opened in 2015 were planned before Angela's arrival, so effectively she has slowed down the opening of new Apple Store under her tenure. During that time, Apple grew from ~800M Active Devices to 1.4B, that is 600M Devices increase, but less than 60 new Stores opened, if you are wondering why it is so crowed you cant even breath in Apple Store, that is why. In 2015 I made a prediction that Apple could be aiming at 1B iPhone users by 2020. It seems crazy at the time, and a lot of people did call me so. But as of 2019 Apple has 900M iPhone users, so the 1B iPhone users doesn't seems to far off. I also thought Apple should be aiming at 1000 Apple Stores world wide. Apple Retail were growing at approximately 10+% before 2015, it was possible to reach ~750 by 2020, now not only have they not accelerated, they slowed down. From reading all the latest Interview, it finally seems to me this luxury Apple idea didn't came from Angela herself. It came from Tim Cook ( or may be even Jonny Ive ), he wanted Apple to be more luxurious ( Apple Watch Gold Edition in 2016 ), and get Angela on board to try and help shaping the Retail part. Angela never wanted the job in the first place, but Tim Cook talked her into it. And one reason why her salary package were the highest in Apple. I hope having Deirdre O'Brien meant Tim Cook gave up this idea of luxurious Apple. At least not luxurious in the normal sense, Apple is an affordable luxury in tech world, and that is drastically different to clothing or Jewelry industry. iPhone needs After sales services, and you cant rely on a small number of Apple store to provide adequate services to its customers and loyal users.
- kettlecorn 8y ago
  Apple is not just chasing luxury, they’re chasing tech as fashion. They realized that when people carry their tech with them all the time it becomes fashion. That’s why they bought Beats, because it became a huge tech-fashion brand that threatened Apple. And with fashion people are willing to pay much higher prices.
  - TheOtherHobbes 8y ago
yonkshi 8y ago
Currently visiting China for Chinese New Year, and can't help but to notice the anti-US anti-Apple sentiment that arose recently. Although anecdotal, I think the nationalistic sentiment has a lot to do with the dip in sales. To put in perspective, most Chinese netizens are generally pretty critical of the Chinese gov. Chinese with higher educations usually look up to western culture and products. However after the Huawei arrest incident, the Chinese netizens were pissed at the American government, I've never seen such anger towards the US gov, and huge waves of boycotts began. They think that American gov is bullying a Chinese company into obeying US law even outside US, and their response is to boycott American products. During my two weeks here I've talked to a dozen random people at bars, friends gatherings and on the plane. Normally US-China politics never come up, but it has come up in almost every single conversation this trip. Most of these people mention that they recent switched to a Chinese phone or their next phone will be a domestic phone.
- free652 8y ago
  For some reason I doubt that you have the right perspective. Chinese are very nationalistic and every non immigrant Chinese I met is pro Chinese government. Netcitizens are even worse. American are persecuting a company that disobeyed American laws on American soil. No a single Chinese would blink an eye about persecuting American companies in China. China is having economic issues, that's the major reason in sales' dip.
  - iguy 8y ago
    Agree that sounds like the leading factor. There is a line of thinking that the trade war comes at a convenient time PR-wise for the Chinese got. It gives them a scapegoat for domestic economic issues, which they are only too happy to talk up. (But I don't really know anything, and welcome expert correction.)
  - deleted 8y ago
    [deleted]
  - ksec 8y ago
    The boycott of American products is very real. What we do not know is how large the impact really are. For example Hermes posted a record quarter in China again, doesn't seems to be hurt by whatever downturn there is in China.
mtw 8y ago
I am neither Chinese or American - The US targeting Huawei seems unfair. It is like suspecting a person of theft and then applying all sorts of punishments, without any strong proof. This is not justice. If I were Chinese, you bet I won't buy any American product.
GeekyBear 8y ago
It seems peculiar for stories to continue to ignore the economic situation inside China as a major cause for Apple's sales woes inside China, especially given the number of companies not named Apple that have also reported plunging sales there. We've had reports of a worsening job market and reduced consumer spending inside China since last year. >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. https://www.nytimes.com/2018/12/14/business/china-economy-xi-jinping.html https://www.nytimes.com/2018/12/14/business/china-economy-xi...
- dmix 8y ago
  The first bullet in their sub-headline does say: > IPhone’s high price tag is a major reason for the contraction That combined with lower consumer confidence could easily be the most obvious reason. With a small amount of nationalistic propaganda/marketing thrown in. The other big elephant in the room is WeChat becoming the primary Chinese mobile OS, diminishing the value of Android vs iOS. Which puts further pressure on the price of the phones, as they are more commodity-like. Apple raising prices, particularly in China, at this time might end up being the worst business idea they've made in a long time.
  - GeekyBear 8y ago
    If Bloomberg's theory were true and the price of Apple's devices was the major issue here (and not the Chinese economy) then we would expect to see similar sales drops outside of China, and we have not. Also, we wouldn't expect to see falling sales in China across all of the device manufacturers (even those selling budget devices) inside China as shown in even this article. The reality is that the major factor here is that Chinese consumers are cutting way back on spending due to economic uncertainty inside China. It's something that has been discussed in the media since last year.

103 points by Leary 8y ago

According to a recent study, Chinese iPhone users are more likely to be low income/undereducated. https://www.scmp.com/tech/article/2174310/research-highlights-class-divide-between-poor-apple-iphone-and-rich-huawei https://www.scmp.com/tech/article/2174310/research-highlight...

msh 8y ago
That does not really sound like a study, more like propaganda. I don't know if it's true but that article is not that credible.
thaumasiotes 8y ago
From personal experience (highly biased), it's easy to find iPhones belonging to everyone from elite university students to convenience store clerks. That doesn't say anything about whether iPhone owners are more likely to be low-income or high-income, but there are a lot more low-income people than there are high-income people...
- oblio 8y ago
  In the US, maybe :)
  - thaumasiotes 8y ago
    What are you talking about?
    - oblio 8y ago
      > it's easy to find iPhones belonging to everyone from elite university students to convenience store clerks. In the US, maybe. The average world GDP per capita PPP is $17k. The US GDP per capita PPP is $59k, almost 4x the world. In most of the rest of the world, including other developed countries, "convenience store clerks" definitely don't have iPhones.
      - thaumasiotes 8y ago
        I'm just telling you what I see in China. Convenience store clerks do have iPhones, regardless of how you feel about it.
kumarvvr 8y ago
I suspect a lot of money in the China flows illegally, out of the sight of the tax man (black money, money that is off the books), so having an iPhone could be one of the ways to spend such money, as it can't be deposited in banks or other track-able outlets. Perhaps it's a status symbol too, shows that you are well to do and financially stable.
- kwizzt 8y ago
  I don't think the black money you proposed is very likely. If I have several thousand dollars of black money, that's not much and no one cares. OTOH, if you have a lot of black money, let's say in millions of dollars, buying a single iPhone doesn't really help at all. Yet buying a bunch of iPhone's seems to be very inconvenient unless you are selling them to someone else. Status symbol was more likely 5 or 10 years back. Nowadays not a lot of people actually care about what phones you are using (at least the ones I know, potential selection bias there). My guess is that people simply don't care about having an iPhone vs an Android anymore. Especially so when Android phones don't suck or can be better than iPhone now.
deleted 8y ago
[deleted]

eastendguy 8y ago

Next headlines: 2020: European Car Shipments Plunge in China as XXX(#) Tightens Grip 2025: Tesla Car Shipments Plunge in China as YYY(#) Tightens Grip (#) Any local company currently in favor with the ruling party.

entity345 8y ago
That's simplistic. People forget, or simply don't know, that Chinese are extremely patriotic and that they remember how "the foreign powers" treated them in the past. Considering what's happening between the US and China, and about Huawei, we can't discard the possibility that Chinese consumers reacted by supporting their country.
- ekianjo 8y ago
  > that Chinese are extremely patriotic Like in most countries where education is tightly controlled by the government, patriotism is a result of state propaganda. > how "the foreign powers" treated them in the past. The worst thing that happened to Chinese was not the way foreign powers treated them, but what came after under their own ruling party.
  - entity345 8y ago
    Talking about propaganda, you must have been subjected to massive quantities to write such a reply that provides no counter arguments and that is completely ignoring the points made, not to mention how ignorant it is. Sad, really.
    - ancorevard 8y ago
      > The worst thing that happened to Chinese was not the way foreign powers treated them, but what came after under their own ruling party. Does one really need references for this? Aren't everyone aware of the massive socialist experimentations Mao executed on China's people? The lowest estimate available is that 50 million people were killed (high end estimate closer to 80 million dead) due to political purges (cultural revolution etc.) and starvation (socialize farming, great leap forward, etc.).

cm2187 8y ago

I’d expect the same to happen in a recession in the western world. People do not buy luxury products in a recession and if they absolutely need to replace a device, will pick one half the price that’s good enough. Though the business model of tech giant is new, for most, the market in which they evolve isn’t. Facebook and Google’s revenues are essentially advertising, another source of revenues that is very pro-cyclical. Amazon is retail sales, also quite pro-cyclical. I don’t know how a cloud business would behave in a recession. Plus the cloud is still in high growth phase, kind of like smartphones or online advertising were in 2008, making the economic context less relevant.

alkonaut 8y ago
Manufacturers will ensure phone companies ensure customers buy new phones. In the odd event that my iPhone lasts the 24months without having a major hardware hickup (such as being shattered), somehow all the rebates disappear from my plan. A rep from my phone company calls me and says I can get a new 24 months plan WITH a new iphone, and since the new one would get the rebates I just lost, it's effectively the same monthly cost including the new phone. Being the sucker that I am, I accept and I have a new phone. I'm sure I could find a company that sells me a plan that would become cheaper instead of stripped of all rebates once my 24 months are over. But I'm also lazy and don't want to switch mobile networks as my current network has the best coverage in the rural areas I need to go to. It's a plan plan that is both simple and clever: instead of lowering the prices for buying new phones, what they do is just raise the price of NOT buying a new phone.
- pjmlp 8y ago
  That only works in countries that are contract driven, in those where pre-pay rules, not so much.

nakodari 8y ago

iPhones have become just too expensive for people in Asia to buy. It's simple as that. If they bring down the price to $599 like it was for the original iPhone and keep the price constant every year, Apple will double or even triple their existing market share. It will still be profitable for Apple knowing that service revenue will increase when more people are using iPhones around the world.

baybal2 8y ago
No, the simple explanation for their sales tanking is simply because they got their market saturated. Plainly and simple. Huawei on other hand has rather different marketing plan - they make somewhat expensive products for ordinary people, even thought some of their phones can cost more than $1000 USD in maxed out configuration (leather and hand made editions) Apple on another hand has really little appeal to this demographic, on both brand identity front, and product match. That surely sounds unusual to a Western person, but that how it is. Huawei buyer is a well off working man in late twenties or early thirties with few more things to care about in his life than his phone. Car analogy: Huawei - a nice full size sedan, a show of success for a common man; Apple - an "economy supercar" like Black Badge edition RR Ghost, something what broke millionaire wannabees buy
- Synaesthesia 8y ago
  Within China, Apple doesn't compete on price. Yes Huawei has expensive phones, but for example you can buy a Mate 20 Pro for $650 there whereas an iPhone XS costs $1,270 for the entry level model. https://www.gizmochina.com/2018/10/26/huawei-mate-20-and-mate-20-pro-chinese-pricing-vs-other-regions/ https://www.gizmochina.com/2018/10/26/huawei-mate-20-and-mat...
  - baybal2 8y ago
    > iPhone XS costs $1,270 for the entry level model. Indeed, but they also have the "3rd world iPhone" models - respins of previous generations and "C" model which were to supposedly cater to this market. They greatly overestimated willingness of locals into buying "poor man's Rolce Royce editions"

ancorevard 8y ago

China's economy is looking scary at this point. Also from Bloomberg: Chinese consumer tax receipts down 70% in November. https://www.bloomberg.com/opinion/articles/2018-12-31/china-s-economic-slowdown-is-worsening-stop-dithering-beijing https://www.bloomberg.com/opinion/articles/2018-12-31/china-...

adventured 8y ago
The corporate bond defaults [1] are also interesting as a tell on their real situation. I'll be curious to see if the central government relents and unleashes a far larger stimulus as it appears there isn't going to be a trade deal near-term. Granted, you've also got Germany in a de facto recession and the UK inching toward one [2]. If the US can maintain a 2.5%+ GDP growth pace for 2019 against all of that, it'll be surprising. Projections on S&P 500 Q1 earnings have turned from 6-7% growth to an expected contraction. The market will weaken further with earnings growth disappearing, which is guaranteed to force the Fed to pause rate hikes and then cut. [1] https://www.bloomberg.com/news/articles/2019-02-11/two-large-chinese-borrowers-are-said-to-miss-bond-payments https://www.bloomberg.com/news/articles/2019-02-11/two-large... [2] https://www.bloomberg.com/news/articles/2019-02-11/u-k-economy-wilts-as-brexit-jitters-hit-business-investment https://www.bloomberg.com/news/articles/2019-02-11/u-k-econo...
- paganel 8y ago
  > Granted, you've also got Germany in a de facto recession Added to that, Deutsche Bank's recent "funding woes" (to quote the FT) personally give me a bad vibe, not sure if we're at the "summer 2007 phase" of Northern Rock's troubles [2] or if we're already in the "early September 2008 phase", i.e. a couple of weeks before Lehman fell. The nastier news is that, afaik, Deutsche is (was?) seen as being supported by the German government (the same as Volkswagen, for example), even more than the Wall Street investment banks were supported by Washington, and if Deutsche falls that will reflect very, very badly on the perceived financial soundness of the German government and hence of Europe as a whole. [1] https://www.ft.com/content/cb739552-2c5d-11e9-8744-e7016697f225 https://www.ft.com/content/cb739552-2c5d-11e9-8744-e7016697f... [2] http://news.bbc.co.uk/2/hi/business/6996136.stm http://news.bbc.co.uk/2/hi/business/6996136.stm

baybal2 8y ago

People in the West don't get a lot about Chinese society, nor do ones who come and go to China on few year long stays in better parts of China. Yes, China has fake Prada, tons of fake Prada, but you don't really get a lot of people going for Pradas invariably of its genuineness. Same for iPhone users - there are extreme cases of idiots selling their organs to buy one, but to most people - the brand may be near invisible, moreover to people outside of megacities. China's rich don't necessarily come from big cities. There are way more millionaires outside the Beijing/Shanghai/Guangzhou trio than inside. In fact, mid-tier cities have more millionaires per capita than megacities. It's only natural that marketing of big foreign brands that primarily target megacities gets what is sows - a very proletarian, working class demographic. I want to add that Amazon got a hunch of that recently - Amazon China was a joke up until their last few campaigns that were targeting almost exclusively second tier cities. To everybody's surprise, that move made them to near double their business here in around one year.

potatofarmer45 8y ago

I think what a lot of commentators are missing is that even without a trade war, IPhone shipments would have fallen in China. In the past, the android phones kept focussing on features (remember the s3 ads about how it had all these features missing in the 4/4s). Now, especially with Huawei, they've really mastered the art of branding and messaging on their products. When Huawei listed a phone with 3 cameras and cost more than an iphone, I knew that was a home run. The higher price reinforced the image of the premiumness of Huawei which benefitted all their products down the line as evidenced by their sales numbers. They've finally realized the Xiaomi (same quality at a lower price), actually doesn't work on an emotional level with consumers. Instead, Huawei have gone to the extreme (Leica partnership lenses + 3 cameras). They've been doing this for a while, and results just take time to show and now they have.

JohnJamesRambo 8y ago
What do the 3 cameras do?
- addicted 8y ago
  Make it seem that literally the only feature regular phone users upgrade for is a lot better on the Huawei.
- baybal2 8y ago
  Supposedly better than 2 cameras, but not as good as 5 or 7 cameras. Still, you can proudly tell people "my phone has more cameras than yours" :)
  - Haga 8y ago
    My phone finds others nearby photographing and recombines those willing into one giant parallax camera.. Beat that
- ninedays 8y ago
  It doesn't really matter as long as it creates a sense of uniqueness for the consumer. Remember all these octo-cores smartphones that were supposed to perform way better than the two-cores smartphones? It's only there to tell you "3 cameras are better than 2" even though no one understands what it does. Same with cores : "wow 8 cores? 8 is such a big number compared to 2 cores therefore it must be way better/faster"

andy_ppp 8y ago

Doesn't help that even I can't keep track of the differences between their phones and which lower end models they still sell and what the hell the iPhone XR is meant to be. Feels like Apple have a really weird phone line up right now. There used to be 3 models - iPhone classic (the previous gen maybe with a few tweaks), iPhone massive (better camera and battery) and iPhone awesome expensive high tech edition (new stuff). Now it seems to be 5 or more models in China, how can this make sense? Just stick to those three models and price them correctly and they'll get more sales.

close04 8y ago
> Doesn't help that even I can't keep track of the differences between their phones and which lower end models they still sell and what the hell the iPhone XR is meant to be. > Feels like Apple have a really weird phone line up right now. So Apple's sales are hurt because it's hard to keep track of their 3 models this year? Shouldn't the same logic basically kill Huawei's sales? Off the top of your head can you quickly tell me the differences between these Huawei models launched over the past year? Huawei Mate 20 Pro, Huawei Mate 20 Lite, Huawei Mate 20, Huawei P20 Pro, Huawei P20, Huawei Mate 10 Pro. And that's only counting the high-ish end. It would be a really long comment if I included all models.
- andy_ppp 8y ago
  Huawei isn't a premium brand in the same way Apple is so keeping things clear and focused is less important for them. I think we all know many of the reasons discussed on here has contriibuted to the downturn in sales. I'm clearly not saying it's exclusively about one issue in my comment, but you decided to rephrase it to say that, which must have been fun for you. Edit: Changed "X" to be "one issue" for clairty, but thay makes the following comment confusing. Sorry about that.
  - close04 8y ago
    I said nothing about the X nor have I implied it, just about Apple’s lineup in general. Apple has a very narrow lineup that’s not that hard to follow. Huawei aims at high end and the prices confirm it. The lineup is far more complicated. And being less than high end shouldn’t really change this. If a complicated lineup kills sales it should do it for both Apple and Huawei. My only point is that the argument “lineup is complicated” doesn’t really have any merit. I see no point in attcking me for something that left very little room for interpretation.

robk 8y ago

If you look at market share though it seems to actually be holding solid or growing [1]. This makes me believe a more neutral narrative that it's due to people upgrading from lousy low end android to higher end android much faster than an existing iPhone user would upgrade. The top 25% of the population use iPhones and aren't leaving the Apple platform - the folks who bought a low end phone are upgrading to higher end much more rapidly. [1] https://www.statista.com/statistics/262176/market-share-held-by-mobile-operating-systems-in-china/ https://www.statista.com/statistics/262176/market-share-held...

oblio 8y ago
It's Windows vs Mac all over again, people just wouldn't believe it :) 1 company vs 100. All the 100 companies would have to be knuckleheads forever (which is super unlikely, it's basically: "you can fool some people all the time or all the people sometimes, but you can't really fool all the people all the time"). Android is moving up in the world, and except for the US, which was always a bit weird in regards to Apple, Android will make Windows' dominance look like a walk in the park. Look at what Google's doing with relatively weaker dominance of Chrome in the web browser world.
- scarface74 8y ago
  Windows vs Mac is a very shallow interpretation. -the affluence level of iOS users dwarf Android users statistically. A person who can afford a $700 iPhone is much more valuable than a person buying a $220 Android phone (the average selling price of an Android phone) - Apple couldn’t keep up performance wise with the Mac because you had the entire PC industry funding Intel. Hardly anyone is making money selling Android phones. Apple is making 80% of the profit in the phone market. -iOS is doing well in most affluent countries https://deviceatlas.com/blog/android-v-ios-market-share https://deviceatlas.com/blog/android-v-ios-market-share
  - oblio 8y ago
    My personal opinion is that the future of technology isn't in the current affluent countries. Besides this, we already know that the vast majority of people stay within their ecosystems, once they start using them. Especially know that the differences in phone quality are going down (cheap phones are getting good; a cheap Android phone from 2010 was miles away from an iPhone, a cheap Android phone from 2020 will be comparatively much, much closer). So the future isn't looking very bright for Apple, considering that India, China and Africa are almost entirely Android territories :) Just keep in mind that Windows failed for 10+ years before having the smash hit that was Windows 95.

JackPoach 8y ago

Trade wars are a bitch

hevi_jos 8y ago

It is obvious. China debt bubble is bursting right now so they are sensible with prices and Apple just have raised them absurdly. China will experience a traumatic experience(growing pains) for getting to a service economy like the rest of the world had. If Apple continue raising prices they will lose the mass production advantage they have. Steve Jobs always created products that were affordable(like the iPod, or the inexpensive macbook) so it gave the expensive ones mass production components(like accelerometers, cameras, special glass, wifi chips, touch screens). It seems Tim Cook had the brilliant idea of eliminating low cost products in order to raise margins(that are obscene high right now at Apple), but people are not stupid and alternatives exist.

tivert 8y ago
> Steve Jobs always created products that were affordable....It seems Tim Cook had the brilliant idea of eliminating low cost products in order to raise margins... One of the smart things about Jobs's product structure is that it put people on a position to take a chance on Apple by buying a low-end product, then they could migrate into the more expensive end once they got used to Apple. There's a reason it's called the entry-level, and getting rid of it is foolish.
positr0n 8y ago
> margins (that are obscene high right now) https://wccftech.com/apple-iphone-profits-declining/ https://wccftech.com/apple-iphone-profits-declining/ This article (and everything else I've read online) reports that iPhone profit margins are declining.

glenrivard 8y ago

Not surprising and not only China. Problem is people are just replacing their iPhones less often.

puranjay 8y ago

Now that China profits have dried up, Apple will turn its attention to India. But they've really missed a trick with their retail strategy in India. They've partnered with local retailers to run "Apple stores". These stores are nowhere near the smooth, beautiful experience of a regular Apple Store. It feels preposterous to walk into a shoddily built store selling a phone for $1200 when you can walk next door to a Samsung or OnePlus outlet and get a similarly capable phone for half the price Apple needs to bump up its quality game. They've been losing market share here in India and for all purposes, this country is a lost cause to them. I wouldn't be a very happy Apple shareholder right now

bwb 8y ago
isn't that because of local laws they can't open stores directly? India has a ton of weird rules and super regulated.
- puranjay 8y ago
  Yeah, but lots of foreign retailers team up with more competent partners who operate their brand stores. Gucci, Armani, and Versace can't operate directly in India either, but you wouldn't know it looking at their stores. Apple's Indian partners don't seem to care, nor does Apple that their partners are offering a sub-par experience.
glenrivard 8y ago
Apple has been trying in India for years without any success. Their share has actually decreased over the last year.
hajile 8y ago
I somewhat doubt India is a good target for them. Even FirefoxOS feature phones currently outsell Apple in India right now.
- puranjay 8y ago
  India's premium smartphone market is small, of course, but it is also growing, and it is also a market where Apple has lost massive market share. And let's be honest, anyone who can see even 10 years into the future would know that the next wave of growth will come from India

ohiovr 8y ago

The original iPhone cost $499 according to google search.

robin_reala 8y ago
…with a contract in the US.
- ohiovr 8y ago
  People wouldn’t spring for the same exact deal at that price? Seems a lot of people are fine with throwing 70 dollars a month just on the service even with tons of alternatives that are a fraction of the cost.

ksec 8y ago

Roger McNamee seems to get it, the iPhone was probably the most successful technology product in history, and arguably the "most" successful in anything. It leads to a sea of other innovation across multiple spectrum. On the Notes of Retail, Apple had ~430 Stores in 2014, ~460 in 2015. As of end 2018 it is ~510, all the stores opened in 2015 were planned before Angela's arrival, so effectively she has slowed down the opening of new Apple Store under her tenure. During that time, Apple grew from ~800M Active Devices to 1.4B, that is 600M Devices increase, but less than 60 new Stores opened, if you are wondering why it is so crowed you cant even breath in Apple Store, that is why. In 2015 I made a prediction that Apple could be aiming at 1B iPhone users by 2020. It seems crazy at the time, and a lot of people did call me so. But as of 2019 Apple has 900M iPhone users, so the 1B iPhone users doesn't seems to far off. I also thought Apple should be aiming at 1000 Apple Stores world wide. Apple Retail were growing at approximately 10+% before 2015, it was possible to reach ~750 by 2020, now not only have they not accelerated, they slowed down. From reading all the latest Interview, it finally seems to me this luxury Apple idea didn't came from Angela herself. It came from Tim Cook ( or may be even Jonny Ive ), he wanted Apple to be more luxurious ( Apple Watch Gold Edition in 2016 ), and get Angela on board to try and help shaping the Retail part. Angela never wanted the job in the first place, but Tim Cook talked her into it. And one reason why her salary package were the highest in Apple. I hope having Deirdre O'Brien meant Tim Cook gave up this idea of luxurious Apple. At least not luxurious in the normal sense, Apple is an affordable luxury in tech world, and that is drastically different to clothing or Jewelry industry. iPhone needs After sales services, and you cant rely on a small number of Apple store to provide adequate services to its customers and loyal users.

kettlecorn 8y ago
Apple is not just chasing luxury, they’re chasing tech as fashion. They realized that when people carry their tech with them all the time it becomes fashion. That’s why they bought Beats, because it became a huge tech-fashion brand that threatened Apple. And with fashion people are willing to pay much higher prices.
- TheOtherHobbes 8y ago

yonkshi 8y ago

Currently visiting China for Chinese New Year, and can't help but to notice the anti-US anti-Apple sentiment that arose recently. Although anecdotal, I think the nationalistic sentiment has a lot to do with the dip in sales. To put in perspective, most Chinese netizens are generally pretty critical of the Chinese gov. Chinese with higher educations usually look up to western culture and products. However after the Huawei arrest incident, the Chinese netizens were pissed at the American government, I've never seen such anger towards the US gov, and huge waves of boycotts began. They think that American gov is bullying a Chinese company into obeying US law even outside US, and their response is to boycott American products. During my two weeks here I've talked to a dozen random people at bars, friends gatherings and on the plane. Normally US-China politics never come up, but it has come up in almost every single conversation this trip. Most of these people mention that they recent switched to a Chinese phone or their next phone will be a domestic phone.

free652 8y ago
For some reason I doubt that you have the right perspective. Chinese are very nationalistic and every non immigrant Chinese I met is pro Chinese government. Netcitizens are even worse. American are persecuting a company that disobeyed American laws on American soil. No a single Chinese would blink an eye about persecuting American companies in China. China is having economic issues, that's the major reason in sales' dip.
- iguy 8y ago
  Agree that sounds like the leading factor. There is a line of thinking that the trade war comes at a convenient time PR-wise for the Chinese got. It gives them a scapegoat for domestic economic issues, which they are only too happy to talk up. (But I don't really know anything, and welcome expert correction.)
- deleted 8y ago
  [deleted]
- ksec 8y ago
  The boycott of American products is very real. What we do not know is how large the impact really are. For example Hermes posted a record quarter in China again, doesn't seems to be hurt by whatever downturn there is in China.

mtw 8y ago

I am neither Chinese or American - The US targeting Huawei seems unfair. It is like suspecting a person of theft and then applying all sorts of punishments, without any strong proof. This is not justice. If I were Chinese, you bet I won't buy any American product.

GeekyBear 8y ago

It seems peculiar for stories to continue to ignore the economic situation inside China as a major cause for Apple's sales woes inside China, especially given the number of companies not named Apple that have also reported plunging sales there. We've had reports of a worsening job market and reduced consumer spending inside China since last year. >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. https://www.nytimes.com/2018/12/14/business/china-economy-xi-jinping.html https://www.nytimes.com/2018/12/14/business/china-economy-xi...

dmix 8y ago
The first bullet in their sub-headline does say: > IPhone’s high price tag is a major reason for the contraction That combined with lower consumer confidence could easily be the most obvious reason. With a small amount of nationalistic propaganda/marketing thrown in. The other big elephant in the room is WeChat becoming the primary Chinese mobile OS, diminishing the value of Android vs iOS. Which puts further pressure on the price of the phones, as they are more commodity-like. Apple raising prices, particularly in China, at this time might end up being the worst business idea they've made in a long time.
- GeekyBear 8y ago
  If Bloomberg's theory were true and the price of Apple's devices was the major issue here (and not the Chinese economy) then we would expect to see similar sales drops outside of China, and we have not. Also, we wouldn't expect to see falling sales in China across all of the device manufacturers (even those selling budget devices) inside China as shown in even this article. The reality is that the major factor here is that Chinese consumers are cutting way back on spending due to economic uncertainty inside China. It's something that has been discussed in the media since last year.