Apple Continues to Struggle as Huawei Flexes Might in Chinese Smartphone Market

A logo sits on the case of an iPhone X smartphone on the first day of sale Customers queue at a re:Store Apple Inc. retailer in Moscow Russia on Friday Nov. 3 2017. Supported by resurgent iPad and Mac sales the 10-year anniversary iPhone will help

A logo sits on the case of an iPhone X smartphone on the first day of sale Customers queue at a re:Store Apple Inc. retailer in Moscow Russia on Friday Nov. 3 2017. Supported by resurgent iPad and Mac sales the 10-year anniversary iPhone will help

In a letter to investors released last month, Cook acknowledged Apple's struggles in China.

Shipments of Apple iPhones to China slid around 20.0% in the final quarter of past year due to the slowing economy and the heavy price tag of the smartphone maker's iPhones, research house International Data Corporation (IDC) said in a report on Monday.

It wasn't just Apple that got whacked, though, as China's entire smartphone market shrunk almost 10% in the quarter, lending credence to Apple officials saying that the drop was related to overall conditions in China.

During the period, the USA tech titan reported revenue of $84.3 billion, which represented a 5% total decline - and a 15% decline in iPhone revenue - year-over-year.

Apple's latest iPhone models, which are mostly priced above US$1,000, face a tough challenge from Chinese-brand devices that cost about half or a third less.

When things started to go pear shaped for Apple the big US Company chose to no longer breaks out detailed numbers on iPhone shipments in its quarterly results, meaning that the latest IDC data is the clearest indicator of shifts in sales for Apple where the iPhone represents 62% of all revenue.

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Meanwhile there is intense competition between major manufacturers like Apple and Samsung and with local vendors like Huawei, Xiaomi, Oppo and OnePlus.

Chief Executive Officer Tim Cook pointed to China as a significant factor in a rare cut in the company's quarterly sales forecast last month.

In fact, sales of Apple handsets fell twice as fast as the rest of the smartphone market as a whole. Apple still provides total revenue by region, though, and its "Greater China" sales - including Taiwan and Hong Kong - were down 27% annually to $13 million, according to CNBC. The Chinese slowdown was the driving factor behind Apple's first revenue outlook cut in nearly two decades. Both companies have seen a slump in shipments in China, and have been the worst performing among top five smartphone makers. Its unit shipments soared 23% in the December quarter, according to IDC. That's despite grappling with an unusually turbulent few months during which its finance chief was arrested on allegations of bank fraud, and the U.S. marshalled its allies to try and block the company from selling next-generation networking gear.

Apple missed its own revenue target during the quarter by about $7 billion, and attributed the miss to slow demand in China.

The industry is now counting on innovations such as foldable screens, 3D cameras and 5G-ready phones to revitalise the market.

"The domestic smartphone market environment in 2019 doesn't look very optimistic", IDC senior analyst Wang Xi said in the report.

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