DUBLIN — It’s been a bad few months for Apple. Sales of its flagship product – the iPhone – are slumping due to a combination of factors. These include an economic slowdown in China, loss of market share to rising new competitors, and an increase in the length of time customers are going between upgrades. At the heart of the problem is a simple fact: smartphones are no longer special. When Apple released the first iPhone, it was a world-changing technology. No one had really seen anything like it and the iPhone essentially invented a new product category and spawned a new microeconomy (the app economy). It was a remarkable development and a remarkable product. But times have changed. These days, the iPhone isn’t really all that different from any other phone. I have an iPhone 8 and my husband slums it with an entry-level Huawei smartphone model. My phone takes better pictures, and my screen is bigger so games are more fun. But basically, the devices do the same stuff – they allow us to text, check social media, find our way around, listen to music, and, I guess, make phone calls (if it came to that). The tech inside smartphones has become cheap and ubiquitous and the gap in performance between the best phone and the tenth best phone has shrunk to a matter of a few pixels of screen and photo quality. In this market, Apple has done well to maintain and grow its giant margins. But the future for smartphones is going to be more competition, price wars, and less and less differentiation. When you buy a new toaster, you don’t stand in line all night for the latest model. That’s where phones are headed. Apple is making bets on other areas, from services to wearables. But the heady days of iPhone ascendancy are gone for good. – Felicity Duncan
Apple Loses Ground to Huawei as China Shipments Slump 20%
By Dan Strumpf
(The Wall Street Journal) HONG KONG—iPhone shipments in China slumped far more than overall smartphone shipments there last quarter, costing Apple further ground against local rival Huawei in the world’s biggest smartphone market.
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Apple’s smartphone shipments in China in the last three months of 2018 were down 20% from a year earlier, according to International Data Corp., putting a finer point on Apple’s shrinking sales in China late last year. Last month, Apple CEO Tim Cook blamed declining iPhone sales in China on the economic slowdown there.
That slowdown – and a global trend among phone owners of upgrading less frequently – contributed to a 9.7% drop in overall smartphone shipments in China in the quarter. Apple’s decline sent its China market share falling to 11.5% from 12.9% a year ago, according to IDC. Apple, now the fourth-biggest vendor in China, was the country’s top smartphone seller as recently as early 2015.
Huawei’s shipments were up 23%, giving it 29% of the market and cementing its position as the country’s top phone vendor, according to IDC, which reported Huawei also gained at the high end of the market long dominated by the likes of Apple.
“The high price point of the iPhone X in 2017 has lengthened the replacement cycle of users, while the new models of 2018 don’t have enough innovations to make users buy,” said Xi Wang, an IDC analyst in China. Huawei, by contrast, has taken technological strides that have made its devices more competitive in photography, gaming and business applications, he said.
Though its phones are virtually nonexistent in the US, Huawei’s global smartphone shipments were up a heady 44% in the fourth quarter, according to IDC, which ranks it the No. 3 vendor world-wide last year. It still trailed Samsung Electronics Co. and Apple in global sales for the year.
Fourth-quarter shipments in China were also up for other local brands, including BBK Electronics Corp.’s Oppo and Vivo. Chinese companies are succeeding by offering lower prices and technology geared toward local buyers, analysts say.
But shipments by China’s Xiaomi Corp. – which raised $4.7bn in a Hong Kong initial public offering last year – were down 35% in the fourth quarter, according to IDC, which pointed to too few new products and disappointing sales of its flagship Mi Mix 3 smartphone.
The smartphone success is a rare piece of good news for Huawei. In December, Canadian authorities arrested its CFO on charges relating to evasion of US sanctions on Iran. It is also fighting separate US criminal charges that it stole intellectual property from T-Mobile US Inc. Huawei has denied all charges against it.
Meanwhile, the US is lobbying allies to bar their telecom operators from buying 5G networking equipment from Huawei, which is the world’s largest maker of items such as base stations, routers and switches.
Huawei has pressed ahead with a series of high-end phone launches that have helped it gain ground on Apple. The unveiling of a foldable 5G-ready phone is widely expected at a mobile industry event in Barcelona late this month.
Write to Dan Strumpf at [email protected]
