UBS: Apple’s iPhone unlikely to recover damaged Chinese marketshare

“CEO Tim Cook once envisioned China as Apple’s next big market, set to eclipse even the U.S. in revenue,” Roger Fingas reports for AppleInsider. ” That dream has taken a raincheck in the past two years, with iPhone units down 8 to 11 percent — and Apple is unlkely to bounce back, an analyst suggested in a memo obtained by AppleInsider.”

“Wall Street analysts were previously looking for a 15 to 60 percent unit recovery in Apple’s fiscal 2018, but several obstacles are now in the way, said UBS’s Steven Milunovich,” Fingas reports. “Apple’s primary iPhone market — the high end, above 4,000 yuan — is claimed to be ‘fairly saturated’ in China, even though it consists of about 200 million to 300 million people.”

“Even then Apple is facing stiff competition from local giant Huawei, and increasingly long customer upgrade cycles,” Fingas reports. “Chinese iPhone sales will likely remain flat, with relatively little long-term growth, Milunovich predicted. Non-local smartphones — mostly from Apple —saw their shipments decline 16 percent in the March quarter, according to government data.”

Read more in the full article here.

MacDailyNews Take: If only we had a nickel for every erroneous analyst prediction, supposition, or exposition.

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  1. Bottom line, China protects their own market and industry first.

    Sure, they will dangle the carrot in front of all the naive CEOs so you give up your IP to them, but bottom line, Apple will never ever, ever have the market they want in China. The China give will never allow that to happen no matter how many times Cook kisses their ass.

  2. Apple will do quite nicely sticking to the high end as it has always done. Everyone realizes the Chinese government is into “protecting and promoting” its own companies. No surprise.

    China also wants to watch every citizen’s moves full time, which is antithetical to Apple’s goals, so we should not be surprised that their officials will continue to make it tougher for foreign companies like Apple to sell in China.

  3. “Tim Cook once envisioned China as Apple’s next big market”

    Yeah, I heard that many times.
    Pipeline Tim’s pipe dream with mere wishful thinking without solid research, then failed to execute. The same old predictable results.
    What’s new?

    I honestly wait for a messiah. We need a new CEO.

    1. F NO!


      Tim is the BEST and the most dedicated CEO on this planet. We the owners of the company want you to short the AAPL ass much ass you can!!

  4. Here we go again.

    Please sell ALL of your AAPL stock now and PLEASE short it!!! Ass much you can!!

    Apple and Tim can’t comment anything between Q1 and when the results are ready to be published.

    Every year the same dance goes round and round. Playing the AAPL down at this time with SHITTY NEWS ™ you make tons of money by trading some body elses stock. (Transaction fees).

    Never mind. Please sell and short it!!

  5. The problem in China is Apple’s problem worldwide. The market for high priced Smartphones is limited and Apple has already captured most of the easy market share in those places. Changing that market share is going to prove to be difficult if not impossible in any short term view.

    Apple simply does not play in the bottom end of the market where Android and other OSes rule the market. Apple’s fat profits are dependent upon maintaining those margins and there are not many new markets of size that will sustain growth in raw numbers of sales- leaving only average selling price as a path to growth in phones.

    The iPhone accounts for roughly 70% of Apple’s profit by their own reports- everything else is 30% and that includes the Macintosh, the iPad, Apple Music, iCloud, Software, warranties, service, accessories, Beats, the Apple TV and the HomePod. This is precisely why I have repeatedly called Apple essentially a one trick pony.

    The iPhone was developed to diversify Apple from being a company dependent upon Mac sales and the phenomenon of the Smartphone has mainly transitioned Apple from a company dependent upon Mac sales to one dependent upon iPhone sales. Make no mistake- the overhead at Apple could not be long sustained by everything OTHER than the iPhone.

    The introduction of the $1000 iPhone X was in my opinion a test of demand destruction- a test to see if Apple could jack up the average selling price of a substantial part of the iPhone business without killing sales. Now that pent up demand is largely satiated, we should soon be able to see if the overpriced phone will be able to keep profits growing with essentially stagnant unit sales.

    Apple is with iOS today where Microsoft was with Windows XP on the desktop- a place where many non-enthusiast users were content to remain and did not see any great value in trading in or up. The smartphone as it exists today is mostly a mature technology and there do not seem to be many high leaps in capability in the pipeline. Add in the fact that many customers in the Smart Phone market are becoming more price conscious than in the past.

    China and India were to be the last big whales for Apple and so far that has not proven to be the case. Apple needs to get more diversified from dependence upon the iPhone and the clock is running.

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