20150917applestorelogoback100615218orig

Apple stumbles in the world's biggest smartphone market

Last year, Apple was on a gravy train in China. Sales of the iPhone were booming, and the country looked poised to overtake the U.S. in its contribution to Apple’s business. Suddenly, things don't look so rosy.

Apple reported Tuesday that its first quarter revenue from Greater China declined 26 percent from the same period in 2015, a turnaround that contributed to Apple's first year-over-year revenue decline in more than a decade.

In a conference call with financial analysts, CEO Tim Cook blamed a variety of factors. Hong Kong was the biggest culprit, he said, because its currency is pegged to the strong U.S. dollar. Sales in mainland China were down only 11 percent.

Cook also noted that Apple's revenue in China soared 81 percent this time last year, making for a tough year-over-year comparison.

Still, it was a marked reversal of fortune, compounded by the fact that China's once red hot smartphone market has been cooling off as well.

Apple continues to invest in the region. The company added seven more retail stores in China during the quarter, and plans to open another five this quarter, bringing the total to about 40.

Still, there’s bad news embedded in another of Apple’s focus areas: its “services” revenue, which includes subscriptions to Apple Music and sales from the iTunes Store. As Apple starts to reach a point of having sold an iPhone to everyone who can afford one, it’s focused on squeezing more money out of people who already own its devices.

Unfortunately for Apple, the Chinese government just shut down iTunes Movies and the iBookstore inside China last week. Those digital storefronts aren’t the cornerstone of Apple’s services revenue plan, but the shutdown still hurts the company, especially given the size of the Chinese market.

IDG Insider

PREVIOUS ARTICLE

« IBM lines up all-flash storage to help power cognitive computing

NEXT ARTICLE

FBI won't share its iPhone hack with Apple because it's unfamiliar with the code »
author_image
IDG News Service

The IDG News Service is the world's leading daily source of global IT news, commentary and editorial resources. The News Service distributes content to IDG's more than 300 IT publications in more than 60 countries.

  • Mail

Recommended for You

International Women's Day: We've come a long way, but there's still an awfully long way to go

Charlotte Trueman takes a diverse look at today’s tech landscape.

Trump's trade war and the FANG bubble: Good news for Latin America?

Lewis Page gets down to business across global tech

20 Red-Hot, Pre-IPO companies to watch in 2019 B2B tech - Part 1

Martin Veitch's inside track on today’s tech trends

Poll

Do you think your smartphone is making you a workaholic?