“Perhaps the most important number in Apple’s quarterly release on Tuesday came from China, and it’s not the good news Apple makes out. The company’s over reliance on the Chinese market is starting to hinder its progress despite management’s attempts to give it a positive spin,” Leonid Bershidsky writes for Bloomberg View. “During Tuesday’s earnings call, Apple chief executive Tim Cook sang the praises of the Chinese market, saying it will one day be Apple’s largest. In fiscal 2015, which ended for Apple on Sept. 26, Greater China provided 25 percent of the company’s revenue, for the first time overtaking Europe, responsible for just 21.6 percent of Apple sales. An economic slowdown? Not according to Cook.”
Frankly, if I were to shut off my web and shut off the TV and just look at how many customers are coming in our stores regardless of whether they’re buying, how many people are coming online, and in addition looking at our sales trends, I wouldn’t know there was any economic issue at all in China. And so I don’t know how unusual we are with that. I think that there’s a misunderstanding, probably particularly in the Western world, about China’s economy, which contributes to the confusion. That said, I don’t think it’s growing as fast as it was; but I also don’t think that Apple’s results are largely dependent on minor changes in growth. – Apple CEO Tim Cook, October 27, 2015
“The statistics Cook cites in support of this view are impressive: 87 percent growth in iPhone sales year-on-year in Greater China (which includes Hong Kong, Taiwan and Macau) despite the entire market’s 4 percent growth; revenue almost twice as high in the last quarter as a year ago; and the iPhone 6 now the bestselling smartphone in China, with the iPhone 6 Plus at number three. These numbers are less relevant, however, than two others: a drop in quarter-on-quarter sales in Greater China and an erosion of Apple’s overall market share there,” Bershidsky writes. “Cook is wrong to say the Chinese slowdown isn’t affecting his company’s sales. The effect has been immediate and quite obvious.”
“Cook is banking on the future growth of the Chinese middle class, and that’s an obvious long-term bet to make, but under the current economic conditions, this growth is not likely to be explosive. Besides, Apple won’t even be able to grow its sales at the same rate because many Chinese consumers will opt for better-value devices from local producers, as they’re already doing, judging by the market share data,” Bershidsky writes. “There are no more miracles coming out of China, however, and no more technological rabbits coming out of Apple’s hat. It’s time for some stagnation and retrenchment — at least by this company’s remarkably high standards.”
Read more in the full article here.
MacDailyNews Take: As if the claim that there are “no more technological rabbits coming out of Apple’s hat,” is not enough of a neon sign flashing “baseless FUD,” there are other issues besides just ignorant anti-Apple fomenting to address. For example: There were only two days of iPhone 6s/Plus sales during the 2015 quarter versus none days of iPhone 6/Plus sales in the 2014 quarter.
That explains Bershidsky’s little “China Syndrome” chart above, even if it doesn’t explain why he’s labeled the quarters so perplexingly. Labeling a bunch of different quarters seems less than intellectually honest, even if he did label them correctly, which Bershidsky didn’t. Why are there only two quarters between Q414 and Q415 when there were, in reality, three? Shady.
We’ve iCal’ed this article for future reference.