iPhone prices are not the only reason why Apple is losing ground in China

iPhone prices are not the only reason why Apple is losing ground in China
The iPhone XS and XS Max are considered too expensive and not innovative enough in China

This may sound absurd to many people, but the company estimated to have ranked second in 2018 global smartphone shipments is seemingly going through an unprecedented crisis from a demand standpoint. Basically, iPhone sales numbers have started to decline, a worrying trend for Apple that analysts and industry pundits expect to continue for at least a little while longer. In fact, it's all but guaranteed that Huawei will eclipse Apple's overall handset volume this year after doing the same during Q2 and Q3 2018.

Setting aside the US market, where Huawei's modest presence has an obvious, politically charged reason, Apple has pretty much struggled to fend off the Chinese threat everywhere. Unsurprisingly, Huawei's homeland has proven to be a particularly tough nut to crack for iPhones, even back when global numbers were still rising. For instance, Apple ended 2016 in fifth place in China, according to Counterpoint Research, with a middling 10.4 percent slice of the world's largest smartphone pie, compared to third place in 2015 and a share of 11.3 percent.

As it turns out, hitting rock bottom was still a ways off, and there are two main causes for Apple's deepening Chinese crisis in recent years, as explained in a new Reuters report.

Yes, sky-high iPhone prices are definitely to blame


This is the easiest explanation, supported by 2017's introduction of the first mainstream mobile device with a four-digit starting price in the US. While the iPhone X was by no means a worldwide lemon, its reception in a market largely focused on value for money could only be described as ice cold. Apple's Chinese share didn't immediately plunge, but total smartphone shipments in the region began slipping.

 

Although the company held on to an 11.5 percent slice of the pie in the final three months of 2018, that actually translated into a modest 11.8 million iPhone unit sales, according to the IDC, down a full 3 million from Q4 2017. The natural response was to reduce local iPhone prices to try to better compete against inexpensive flagship models from Oppo, Vivo, and Xiaomi in addition to Huawei.

But multiple recent reports have hinted at the inefficiency of these measures. In fact, February sales are being deemed disastrous, despite the iPhone 8, for instance, costing now about 25 percent less than just three months ago in China. Which brings us to the second reason Apple is doing so badly in the region.

iPhones are simply not attractive enough for Chinese consumers


In case you haven't noticed, the world's largest smartphone market has matured and evolved, shifting its focus to features and innovation. Yes, reasonable prices still matter, but not as much as a few years back. As such, it seems sales of devices costing the equivalent of $600 and up have actually increased in 2018.

Instead of being good news for Apple, this transition has favored the likes of Huawei, Oppo, and Vivo as well. That's because the three brands have been upgrading the hardware specs of their high-end products in more dramatic ways. Whereas Apple remains concentrated on user experience refinements, these ambitious companies are constantly willing to experiment with radical redesigns and eye-catching features like triple rear cameras and in-display fingerprint sensors.


At least for the time being, the strategy is apparently paying off in a big way, as numerous local retailers and resellers claim iPhone owners are flocking to the competition. Huawei in particular is said to be snatching Apple's once devoted users thanks primarily to cameras that are considered superior. 

It sounds like Apple may need to step up its bezel-killing and photography-improving efforts in future iPhone generations if it doesn't want to be left behind. That actually applies to the entire world, not just China, but for what it's worth, the iPhone XI (or 11) is expected to deliver on at least one of those two fronts.

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26 Comments

1. Vancetastic

Posts: 953; Member since: May 17, 2017

It may be time to overhaul iOS some, too.

13. TheOracle1

Posts: 2151; Member since: May 04, 2015

The words that sum it up for me are smugness and complacency. Smugness that assumed customers would pay whatever they charged for their phones and complacency in continually introducing minor features annually without actually innovating. Cook and his team have also become risk averse. There is nothing Apple offers that is compelling and has a wow factor.

18. Vancetastic

Posts: 953; Member since: May 17, 2017

There won’t be a Jobs to save them this time. Hopefully they’ve learned a lesson.

22. Mike88

Posts: 230; Member since: Mar 05, 2019

The only reason is their patriotic Buddhist mission started by their govt,, its not just China, nearby countries would have the same story.

2. Cat97

Posts: 1804; Member since: Mar 02, 2017

On the other hand, Apple still has the smallest chins in the business. I was really hoping that the Chinese copycats would also copy this, but it seems that they are simply not able to, despite their best efforts :)

3. mahima

Posts: 726; Member since: Nov 20, 2014

Smallest chin with the biggest notch is still the worst

4. scarface21173

Posts: 647; Member since: Aug 17, 2014

Small chin with a big fringe

23. mootu

Posts: 1449; Member since: Mar 16, 2017

"On the other hand, Apple still has the smallest chins in the business." The Mi9 chin is smaller than the iPhones, it's only 0.1mm smaller but it is smaller. Plus you forget to mention the iPhones "small chin" extends all the way around the side and top bezels which virtually every Android phone beats hands down.

5. Poptart2828

Posts: 349; Member since: Jan 23, 2018

Apple still has the smallest chins is far from the truth. I so happen to own a Vivo nex dual display and got to actually compare the bezels to a iPhone xs max. From what I could tell, the iPhone has a smaller bezel only in the bottom whereas the other three corners the Vivo was the clear winner.

7. AngelicusMaximus

Posts: 643; Member since: Dec 20, 2017

You completely contradicted yourself with your statements.

6. Subie

Posts: 2324; Member since: Aug 01, 2015

"iPhones are simply not attractive enough for Chinese consumers" Wow, that's a complete 180 from the days when guys there might sell a kidney just for an iPhone 4...

8. PSAfromThisGuy

Posts: 144; Member since: Jan 16, 2017

its not just the Chinese that arent interested... Apple has a very long road ahead of them to make their phones stand out... Nothing has changed in ever with apple, and their phones quite frankly are, well, boring...

9. GreenMan

Posts: 2697; Member since: Nov 09, 2015

I think iPhones have transformed into modern day Blackberries of sort. Fast, productive, secure and possess long 'service life' but not nearly as awe inspiring as the competition. Cook is a great entrepreneur no doubt but he lacks vision. Well either that or he doesn't want to take bold risks. Not two but FOUR generations of iPhone look EXACTLY the same. From iPhone 6 all the way to iPhone 8. And the way he's recycling the ancient design with the new iPads is pretty telling about his vision, or the lack of it. If only Jobs was still here. I'm sure he'd have come-up with another groundbreaking technology! What can I say, other than he had a knack of revolutionizing technology while making loads of cash in the process! A genius, without a doubt. Oh well, G'Day!

10. JCASS889

Posts: 483; Member since: May 18, 2018

and what was this ground breaking technology?

12. cncrim

Posts: 1585; Member since: Aug 15, 2011

Do you think we still seat if we know what is it? Duhhhh. I can come up one for you how about give sense; touch, smell, taste through smart phone. There.

14. cncrim

Posts: 1585; Member since: Aug 15, 2011

Let’s me add how about 30 inches zoom in 4 inches screen (like a magnifying glass). Charge 4000Amh battery 0-100% in 20secs. Idea is unlimited, only limit by knowledge qnd imiginaton.

11. KingSam

Posts: 1402; Member since: Mar 13, 2016

He's just used to getting away with it. The design of the iPad is fine imo. The bezels could be a tad smaller just about enough to fit the fingerprint scanner but it's fine especially because android tablets are basically dead. I love my iPad but I left my iPhone for android. iOS is stale and needs a revamp. Apple needs to get a solid night mode out and some clean designs.

15. User123456789

Posts: 677; Member since: Feb 22, 2019

Sales started to fall since Apple brought iphones with notch ... 8 and 8+ are success in many locations.

16. midan

Posts: 2597; Member since: Oct 09, 2017

iPhone X has currently bigger share than 8 or 8 plus.

26. Vancetastic

Posts: 953; Member since: May 17, 2017

Does that somehow make the 8-8 Plus not a success in some areas? I get that you are compelled on a molecular level to defend Apple at all costs, but try to make sense.

17. DFranch

Posts: 526; Member since: Apr 20, 2012

Jobs was great at coming up with game changing new products. What has Apple come up with since his death ... earpods?

19. Shott3r

Posts: 19; Member since: Nov 28, 2017

It's not rocket science. The problem is not the prices specifically. It's about the VALUE. People have and will continue to buy expensive things that they perceive to give *value* for the price. This was especially true of Apple hardware of a decade ago. Now they are simply no longer good value, with their lazy design refresh schedule and general lack of meaningful innovation. They are very good phones (hell, I have one), but not great or exciting phones anymore. I'm bored AF with Apple's hardware and iOS and wish we had more choice and more features. There's no iPhone now worth more than $700-750 tops imo.

20. Leo_MC

Posts: 6935; Member since: Dec 02, 2011

Playing the price game in China makes you a looser. Playing any game that does not have the ok of the communists makes you a looser. Apple hardly plays either games so they loose in China and that could be a good thing on the long term.

24. wickedwilly

Posts: 640; Member since: Sep 19, 2018

Yet another article that says price is a factor in Apple falling iPhone sales, still holding out that price is not a factor?

21. tari4022

Posts: 11; Member since: Sep 19, 2016

That once a year release schedule is killing them they need to go to at least two a year with two oled's and than two cheaper lcd's introducing new features each time and be willing to adjust adapt and evolve faster

25. hjl2345

Posts: 86; Member since: Aug 11, 2018

The XS series was just plain bland compared to other iPhone releases in the past. Not a whole lot of features that really gives buyers any compelling reasons to switch to the XS. Many people just got the X.

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