Strategy Analytics: iPhone China sales fell 22% in 2018

“Apple is in danger of pricing the iPhone out of China.” — S.A. director Linda Sui

From “China Smartphone Shipments Fell 11 Percent in Q4 2018,” quoting Sui:

Apple overtook Xiaomi and nudged up to fourth position with 10 percent smartphone marketshare in China in Q4 2018. However, iPhone shipments dropped 22 percent annually and this was the firm’s worst performance since early 2017. Apple iPhone has now fallen on a year-over-year basis in China for 8 of the past 12 quarters. Apple has been under pressure in China for the past three years. Ongoing patent battles with Qualcomm are a distraction, while Apple is being heavily criticized for its expensive retail prices. Apple is in danger of pricing the iPhone out of China.

Cue the spreadsheet:

iphone china strategy analytics

My take: The Chinese smartphone market is in recession and Huawei is the clear winner.

10 Comments

  1. David Emery said:

    Hmmm… Is this a ‘pricing problem’, or is it a cultural problem, i.e. iPhones are no longer cool/status symbols? I suspect the latter has a lot to do with it, contemporary China, from what I understand, is still very much a ‘conspicuous consumption society.’

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    January 25, 2019
  2. Peter Kropf said:

    Are there any market share reports on the Premium and Semi-Premium smartphones?

    I’d like to know if those markets, as a whole, shrunk illustrating a drift to cheaper phones. I’d also like to know whether Apple gained or lost market share versus comparatively priced or featured smartphones.

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    January 25, 2019
    • “Are there any market share reports on the Premium and Semi-Premium smartphones?”

      Good question. I’ll keep my eye out.

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      January 25, 2019
  3. Aaron Belich said:

    Without ASP and a model # breakdown, this is irrelevant.

    1
    January 25, 2019
    • Gregg Thurman said:

      Thank you Aaron. IPhone ASP is about $800 vs all other vendors ASR of (being generous) about $300.

      What I see in the spreadsheets is that out of ~400 million consumers >8% of them opted for the $800 iPhone vs the $300 Android.

      As the Android price wars continue to lower the ASP of iPhone competitors more and more feature phone users will “move up” to a smartphone. BUT, even that market will become saturated and growth there will come to a halt.

      Meanwhile Apple’s target market will continue to pay a premium for the iPhone.

      30+ Million units sold is NOT pricing the iPhone out of the market.

      iPhone is the only non-Chinese vendor in the identified top 5. If I was to be concerned about a specific vendor (or 2) it would be Samsung, the world’s largest handset manufacturer by volume and LG, neither made the top 5 cut.

      As shown Strategy Analytics data is meaningless. Kudos to Aaron for pointing that out.

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      January 25, 2019
      • Gregg Thurman said:

        Where is the analysis showing how many sales were pulled forward by last year’s iPhone X just as the iPhone 6 did?

        My guess is that pulled forward sales amounted to about 3.5 Million units for the December quarter. Without the pulled forward effect iPhone decline would be inline with the rest of the Chinese market.

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        January 25, 2019
  4. Fred Stein said:

    The biggest factor is the trade war. It all happened in Q4. iPhone units fell by 3.1M in Q4 but only by 2.5M for the whole year.

    Note also, SmartPhone sales overall dropped 12% for the year in China.

    1
    January 25, 2019
    • Turley Muller said:

      So that means iPhones only up 600K for other 9 months? I call BS because TC said iPhone units were up “very strong double digits” in June quarter, and China revenue was up double digits for all of FY18. Most likely iPhone units were up a lot more in the first 9 months and down a lot more in Dec quarter. I don’t trust SA anyway.

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      January 25, 2019
      • Gregg Thurman said:

        IPhone revenue could easily be up double digits with flat unit sales due to preference for higher priced models and increased ASP (YoY).

        1
        January 25, 2019
        • Turley Muller said:

          Gregg- That’s true. TC said in Sep Q that China iPhone revenue was up ” very strong, very strong double digits.” iPhone X had been the most popular phone too. But he specifically stated units for the June Q. I can’t believe that iPhone units were only up 600K for first 9M of CY18. Especially the easy compare to a soft CY17 in China. According to TC letter, appears China revenue down 5-6B. I agree higher ASP offsets lower units, but for Dec quarter, ASPs probably soft Y/Y due to the launch schedule being the reverse this year, which Apple mentioned in its guidance. So, if ASPs were soft in Dec due to XR release, then units would be even weaker.

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          January 25, 2019

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