Apple had what some might call a good news/bad news situation in the fourth quarter of 2018. Surprisingly, the iPhone wasn’t the good news.
It is not a secret that the iPhone sales did not light a fire under people in the fourth quarter of 2018. Tim Cook had some thoughts on why that was after the company announced its first fiscal quarter of 2019 earning results last month. Part of the impact came from China, and now IDC has some insight on why that might be the case.
According to the strategic analysis company, smartphone shipments in China didn’t fare too well in general. Apple, for instance, saw its iPhone shipments in the region drop by 19.9 percent in the fourth quarter of last year. That compares to the overall industry shipments in China which fell 9.7 percent, down to 103 million units.
However, it’s worth noting here that Xiaomi actually fared much worse. According to IDC, that company saw its smartphone shipments decline 34.9 percent in the fourth quarter:
“Apple reported a 19.9 per cent decline in shipments in China in the fourth quarter, but climbed one place to No 4 in smartphone shipments after Xiaomi did even worse, tumbling 34.9 per cent during the same period, according to a report by research firm IDC published on Monday. Overall industry shipments for China fell 9.7 per cent to 103 million units.”
Meanwhile, Huawei saw a very impressive fourth quarter last year, gaining 23 percent in phone shipments over the same stretch of time. So it’s not all bad for all the companies trying to sell smartphones in China.
As to why Apple saw such a rough stretch of months? Analysts say Apple did not properly assess the constricting smartphone market in China before they decided to jack up the prices of its newest iPhone lineup:
“Analysts said [CEO Tim Cook] may have glossed over strategic missteps in the world’s largest smartphone market and the effects of fierce competition from fast-improving Chinese Android handset makers.
Cupertino, California-based Apple’s latest iPhone models, which are mostly priced above US$1,000, face a tough challenge from Chinese-brand devices that cost about half or a third less.
‘The imbalance between the increasingly severe domestic market environment and Apple’s high product unit price has led to the declines of iPhone shipments in Chinese market,’ IDC said in the Chinese-language research report shared on its official WeChat account.”
Apple, for its part, is already rethinking iPhone pricing in some markets and it is likely that China will be one of the markets where prices change in the coming months.
The good news for Apple is that while the iPhone may not be selling as many units as it used to year-over-year, things can always change in the future as long as Apple is willing to adjust for the realities ahead of it. On top of that, the company’s Services, Wearables, and other divisions are doing very, very well.