That's part of it, but the bigger issue is China is rapidly slowing down. Otherwise Apple would be seeing shrinking sales in other regions, which according to Cook has not been the case.
WSJ today posted this alarming chart of Chinese consumption-tax revenue:
> Otherwise Apple would be seeing shrinking sales in other regions
Apple does see shrinking sales in other regions:
"iPhone shipments in India have dropped 40 percent so far in 2018 when compared with 2017"[1]
China and India are the 2 largest developing economies in the world. It's no surprise that Apple's high price strategy has struggled there. Charging $1,000 for a phone might be viable in developed economies, that's not the case in developing countries like China & India.
"Huawei posted 33% global gains y/y, versus flat for Apple, and for Q3 in China,
where Apple is reporting struggles, Huawei sales rose 13%. Have rising trade tensions created anti-American Sentiment???"
I think the bigger problem is that the Chinese high-end market is tapped out for anything except newer-looking models (i.e. non-S updates), and that local Chinese brands are eating the low and medium end. Which Apple shouldn't want to dabble in anyway, as the margins are very thin.
And here's the passage that describes what goods are affected by that consumption tax:
> Consumption tax in China is imposed on luxury goods such as high-end cosmetics and jewelry, and items deemed environmentally unfriendly, like cars and gasoline.
I still have a had time finding the source of those data shown in the graph. Something isn't right. And remember those big drop are all happening in November and December period, because that is when Chinese are saving up for their Lunar New Year spending.
I don't buy the story of Apple down 50% YoY only because of Macros. If that was the case it would have shown in 17, and 18 as well. If Macros were worst other part of Services Sector would have shown. Single Days wouldn't break record, Mi, Huawei, Vivo, OnePlus, Oppo wont affected domestically.
1. China is the second biggest market for Apple
2. The cellphone competition in China is hotter than other regions, and the local players manufactured cheaper and competitive phones, like Huawei, OPPO/Vivo, Xiaomi
3. The whole economy situation is not good, the consumer would be more cautious for expensive consuming.
Thanks for sharing this. I'd rather see meaningful explanations for ongoing trends rather than read people complain about phone prices. Sometimes the latter can explain the former.
Apple does see shrinking sales in other regions:
"iPhone shipments in India have dropped 40 percent so far in 2018 when compared with 2017"[1]
China and India are the 2 largest developing economies in the world. It's no surprise that Apple's high price strategy has struggled there. Charging $1,000 for a phone might be viable in developed economies, that's not the case in developing countries like China & India.
[1]https://appleinsider.com/articles/18/12/18/declining-iphone-...