Apple Suppliers Cutting Sales Forecasts Amid 'Extraordinary' Decline in Chinese Demand

[kakinc]

I loved Apple, but as someone who is moving back to Hong Kong soon.
There is really no reason to stay with Apple in Hong Kong/China.
We pay the same price if not higher, but get less supports.
Hong Kong is one of those region where return or exchange are not an option.
(Exchange only if Apple deem defective, eg. No exchange for bent fresh out of the box iPad Pro)
Yes, I know that frauds and scams are an issue, but shouldn't be an excuse for providing less for legitimate customers.

Conclusion is, Apple wasn't providing exceptional service to differentiate themselves from other competitors.
So, when stuff like recent events happen, it's easy for Chinese to switch to another ecosystem.

*PS. iTunes Store was never attractive to the average Chinese, it has little Chinese contents...
But they do have crap tons of region locked licenses paid movies, music and TV apps like Netflix and Spotify... with foreign and local contents. (They are legit, as long as you use it within China. Excluding Hong Kong)

 

[dazz87]

Chinese are just smart with their money.....

 

[44267547]

Chinese are just smart with their money.....

.....Or, economic conditions puts the consumer in a position where they _have_ to be smart with their money, not just because they are smart with their money. Two different things here.

 

[gugy]

Not just the iPhone or China sales.
It's about all Apple products/prices and behavior.

I see myself and family as a good example.
I am holding on my iPhone 7+ for another year.
I am holding on my MBP 2015.
I am holding on my iPad Pro 2016
I am holding on my MacPro 2011.

and a bunch of other devices that still perform well and I see no need to upgrade and pay Apple's exorbitant prices.
This past year the only thing I purchased was my Apple Watch Series 3 and my son MBP 13". I could update a bunch of other devices but will not due to the fact Apple strategy of stifling customers is a terrible one. I hope all the negative news lately will get them to clean their act.

 

[vicviper789]

What if it’s actually because ios12 battery management doesn’t slow peoples phones down like they wanted it too lol

 

[jeremiah256]

Because the US just hit record revenues and don't need a price drop. Again, the shortfall was over 100% China related. Apple didn't lie to investors.

You may not like the pricing, but many developed markets are paying the prices as usual. China did not. At least not up to the Apple standard.

But, don't you think that China may be an economic warning of what's to come? If China is contracting as much as is being reported, I suspect the western world will soon follow (even ignoring the other crap that's going on globally). If the global middle class becomes concerned about the near to mid-future, luxuries (like iPhones) will feel the impact of their spending decisions.

Apple will probably have to react to several more quarters like this while at the same time fending off some very competitive (in specs and price) phones set to debut at Mobile World Congress next month. Fair or not, the drumbeat about price is not going away for Apple. They seem to have anticipated this and that's why the lower spec'd and lower priced iPhone XR exists, but it does not seem as if it was a fully satisfactory response on Apple's part.

 

[boast]

What about Watch, iPad and Mac sales? I guess those are doing great?

 

[ThaRuler]

I am holding on my iPhone 7S+ for another year.

Apple never made a 7S+

 

[ikramerica]

China gets a price drop and the U.S. gets a trade-in. Why not include us in a price drop?


LOL, MR did it again!

But I can trade in my Apple watch toward a new one! Perfect condition (Apple replaced it recently due to battery bulge). So how much will generous Apple give me? $25.

 

[robjulo]

Fast and loose with the facts. This post you say it is 100% China. Your prior post said "almost entirely China".....neither of which is what Tim Cook said.

Because the US just hit record revenues and don't need a price drop. Again, the shortfall was over 100% China related. Apple didn't lie to investors.

You may not like the pricing, but many developed markets are paying the prices as usual. China did not. At least not up to the Apple standard.

 

[Wags]

When Tim started talking about great ‘services’ in the pipeline makes me wonder/worry where they are going in the future with their hardware.

 

[ryanwarsaw]

When did Cook deny it? Jan. 2. Time's a changing, there is plenty of more recent support that the trade wars are effecting Apple and others. And he didn't deny there was any boycott going on, just not 'widespread', as in not government organized. But he DID say the trade was was an impact.

Cook added that “rising trade tensions with the United States” contributed to the downturn in China.

https://www.cnbc.com/2019/01/08/inf...--may-be-behind-apple-iphone-sales-slump.html

Not to mention...

https://appleinsider.com/articles/1...nese-firms-in-support-of-huawei-is-escalating

Lets not handpick comments to support the ever popular stand that Apple's products are priced too high and deny that the trade war is part of the equation. Like it or not, we are paying for Politics.

Tim Cook stated there was no boycott on January 2. I believe he said that the day he cut guidance by 4 billion bucks. He said it was due to trade tensions, strong dollar (basically price) and not a boycott. I agree lets not handpick comments because Tim said exactly that. Is there a boycott now? I have no idea but the phone sales in China were dire well before any indication of a boycott according to Cook. If they have plummeted additionaly because of a subsequent boycott that's bad news.

 

[bruinsrme]

Price price price.

Apple announced they were going to stop report on unit sales.
Perhaps they saw this coming sooner than the rest.

I worked in a store for the Xs release.
The only models the store ran out of was the ATT. Only because the ATT Next scammers snagged them.

 

[scottinlexky]

i was in the store today to have my phones battery checked. tech told me waste to spend $ on a new battery, but now is a great time to upgrade to an XR with trade in value so high. I told her nope, not happening as I wasnt sure I wanted another overpriced apple phone.

 

[Madmic23]

other product lines get maybe 1-2 years between refresh cycles (others 2x-3x that) I dont see the issue with Apple doing 1.5-2 year between iPhone releases. they're kind of stagnant at this point and I have not upgraded to any of the new X versions, not bad phones just seem forced and way too expensive even on a upgrade plan.

Maybe they can treat it like the Mac Pro and update the iPhone once every 5 years? Of course, they’ll still sell it for $1000+ for all five of those years....

 

[Baymowe335]

But, don't you think that China may be an economic warning of what's to come? If China is contracting as much as is being reported, I suspect the western world will soon follow (even ignoring the other crap that's going on globally). If the global middle class becomes concerned about the near to mid-future, luxuries (like iPhones) will feel the impact of their spending decisions.

Apple will probably have to react to several more quarters like this while at the same time fending off some very competitive (in specs and price) phones set to debut at Mobile World Congress next month. Fair or not, the drumbeat about price is not going away for Apple. They seem to have anticipated this and that's why the lower spec'd and lower priced iPhone XR exists, but it does not seem as if it was a fully satisfactory response on Apple's part.

I think if the trade tensions subside, China will roar back and everything will be fine.

China is not in a recession. They are still growing, but not as fast. I think American companies are frowned upon at the moment and it’s not good for Apple in China. I think it’s short term.

I do think Apple needs to react in China and I believe they are so that. The numbers are strong elsewhere, so probably just keep pushing sales hard until the facts change.

 

[pat500000]

I wouldn’t be suprised if macrumor article would title the next uarter report: “tim cook refused to share report for 1st quarter.”

 

[Baymowe335]

Fast and loose with the facts. This post you say it is 100% China. Your prior post said "almost entirely China".....neither of which is what Tim Cook said.

The actual y/y shortfall is over 100% China related but the softness was other emerging markets as well. It depends on if you just measure the y/y shortfall which was over 100% China according to Apple or the overall softness, which includes some other emerging markets.

This indicates if China were good, the emerging markets weakness would have been a non factor in the revenue reporting and guidance wouldn’t have needed to be restated. They only guided for 1% growth on the bottom end.

“In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline...”


This is why I’ve said it both ways. The revenue shortfall is a combined issue, still mostly China and over 100% of the decline y/y is China.

China is the issue here to put it concisely.

 

[Robocopper]

It's funny how they blame this and that... no, it's simple – iPhones are overpriced... I blame Apple, because they seem to be not aware of the current market and live inside their own bubble.

Totally agree. I am in the market for 2x iPhones at the mo, one for my wife and one for myself, but the prices are far too high in New Zealand and there has been zero movement since before Christmas.

 

[citysnaps]

Here's a thought: Apple's has had a fixation on the iPhone. Justifiably so, due to the fact that it's accounted for most of it's growth and profits in the past decade.
For the iPhone to stagnate somewhat might eventually convince apple to redirect more of their attention to other things, rather than just milking the cow that is the iPhone.

I look at them like Microsoft in the mid 2000's, when they were just milking the windows cow. It wasn't until windows no longer was giving Microsoft the same growth and profits that they re-directed their efforts and did some other cool stuff.

It seems you're not aware of the new markets Apple has been pursuing over the last five years.

 

[SeattleMoose]

Should have kept a cheap SE as the bottom of the line. Great phone and affordable...unlike all the new ones.

 

[Azelastine]

I wonder if there's real "Apple boycott" happening in China, as previously reported. When traditionally nationalist countries like them claim something like it, they really stand behind it. I hope it isn't one of those things.

No boycotting here, we simply just can’t afford it anymore.

 

[Woodcrest64]

They will probably just raise prices again to keep profit high with less sales.

ROTFLMAO, you know you have good point Though there is eventually a price where sales really start to decline and I think the Chinese market along with Apple's price increases haven't helped. Most people, except those looking for the latest thing, are happy with their phones especially with the option of battery replacements.

If prices were a lot less there would be more incentive for those to purchase a new phone. Its $2000 Canadian for iPhone Xs Max 512GB with taxes. Seems a little crazy Its not like the old days where you see big improvements and design changes year after year.

I get that you can sell off your old phone to help aid the purchase but it just seems nuts to paying that much for a phone that's outdated in a year. Not to mention we start getting rumours of the next device only a few months after a new model! lol!

 

[jeremiah256]

I think if the trade tensions subside, China will roar back and everything will be fine.

China is not in a recession. They are still growing, but not as fast. I think American companies are frowned upon at the moment and it’s not good for Apple in China. I think it’s short term.

I do think Apple needs to react in China and I believe they are so that. The numbers are strong elsewhere, so probably just keep pushing sales hard until the facts change.

But, that's the issue all companies have to plan for: will trade issues subside?

There is no easy way for a corporation to predict what will finally happen with the trade talks, because even when official representatives and proxies of the Trump Administration say one thing, the President has not hesitated to reverse what has been negotiated. So does Apple, who admits they underestimated the current economic climate (costing shareholders substantial loses) assume the worst or assume the best case scenario? From reports (cutting expectations, slowing hiring), Apple is preparing for the worst. Many of their suppliers are going to do the same.

China 'roaring back' means that they will be allowed to continue to have the success with exports they previously enjoyed and I don't see that being something the Trump Administration will look favorably on.

2019 is a bust and it'll probably carry over into 2020. There are too many major events going on, all putting downward pressure on the global economy. It happens. But one of Apple's specific problems is they are heavily dependent on the iPhone, and if they don't properly address the challenges they currently are facing, and will be facing over the next 2 or more quarters, they could see their standing, brand, and reserves impacted negatively.

 

[coolfactor]

We could blame the trade war, and wiggy is an easy target, but these phone prices have gotten out of hand and competition is making better devices for most people. Maybe wall st and its companies need to stop being such greedy jerks?

Don't forget the Consumer side of the coin, with consumers demanding that companies "innovate" year after year after year, all the while ignoring the amazing innovation that is already occurring. Consumer expectations have gotten way out of hand!

Today's phones are expensive because they are extremely advanced, complex pieces of tech that we take for granted.