STREAMING NOW: Watch Now

Smartphone makers can no longer count on China for growth

Apple is not the only smartphone maker suffering from a slowdown in China.CEO Tim Cook partially blam...

Posted: Jan 3, 2019 12:06 PM
Updated: Jan 3, 2019 12:06 PM

Apple is not the only smartphone maker suffering from a slowdown in China.

CEO Tim Cook partially blamed weaker than expected iPhone sales at the end of last year on the country's slowing economy and its ongoing trade war with the United States. But Apple (AAPL) and its biggest competitors are also struggling against an overall decline in the world's biggest smartphone market.

Apple Inc

Asia

China

Companies

Continents and regions

East Asia

Business and industry sectors

Business, economy and trade

Consumer electronics

Consumer products

Electronics

Mobile and cellular telephones

Mobile technology

Smartphones

Technology

Smartphone sales in China declined 8% in the third quarter of 2018 compared to the same period a year earlier, according to Counterpoint Research. Canalys, another research firm, estimated an even steeper drop of around 15% in the same quarter.

The Chinese market suffered its first ever annual decline in 2017, when Canalys estimates smartphone sales fell 4%, and 2018 is shaping up to be even worse. The first quarter of last year saw the biggest slump in sales on record so far.

"We don't think this is a problem which is exclusive to Apple," said Kenny Liew, an analyst at research firm Fitch Solutions, pointing out that global rival Samsung (SSNLF) is shutting down one of its China factories.

The underlying reason for the slump is simple: better smartphones mean customers now wait longer to upgrade to new models. And China's smartphone market is getting saturated.

"Smartphone improvements are becoming ... evolutionary rather than revolutionary," Liew said. "The first-time pool of smartphone buyers in China has also dwindled significantly."

iPhone price is also a problem

And Apple's slice of that shrinking pie isn't a very big one. The company currently ranks fifth in China with about 9% of the market, according to Counterpoint, behind homegrown brands Huawei, Oppo, Vivo and Xiaomi.

Xiaomi and Samsung saw their share of the dwindling market fall by 16% and 67% respectively, compared with the same quarter of 2017, while market-leader Huawei is also facing slower growth.

Apple's competitors all sell devices that are far cheaper than iPhones, a gap Liew says the Silicon Valley giant will need to close in order to regain a foothold in one of its biggest global markets.

The high price point has also dragged Apple's growth in China's neighbor India, another huge smartphone market, where it accounts for barely 2% of sales.

"Apple is trying to counter plateauing sales by focusing on selling more premium, expensive devices," said Liew, adding that the company "needs to focus more on lower-cost products."

Article Comments

Mason City
Clear
60° wxIcon
Hi: 76° Lo: 54°
Feels Like: 60°
Albert Lea
Clear
66° wxIcon
Hi: 74° Lo: 54°
Feels Like: 66°
Austin
Clear
66° wxIcon
Hi: 76° Lo: 56°
Feels Like: 66°
Charles City
Clear
61° wxIcon
Hi: 75° Lo: 54°
Feels Like: 61°
Rochester
Clear
60° wxIcon
Hi: 73° Lo: 55°
Feels Like: 60°
Tracking sunny skies all this week
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Chris' PM Forecast 7/22

Image

Innovative City

Image

Historic Wet Weather

Image

Lawn Mower Safety

Image

Tree and Brush Removal

Image

Storm Damage Cleanup

Image

My Money: How to refinance your home

Image

My Money: When to start a college savings account

Image

Tracking Plenty of Sunshine for Monday

Image

Severe weather clean up in Olmsted County

Community Events