Apple recently lowered its Q1 sales forecast, especially in the world’s largest smartphone market, China. It is quite apparent that the new iPhones are not performing well in the country, and a number of big retailers have begun slashing the prices of the devices.
Experts believe one of the reasons Apple’s iPhone sales is doing poorly in China is because the local smartphone brands such as Huawei are giving it a fierce competition. This competition is not just limited to China. Apple is facing a surging Huawei competition across its Asian, African, and the Americas. Except for the USA where the government went out of its way to caution consumers against purchasing Huawei alongside other Chinese devices.
Other than stiff competition, Apple has also been accused of lacking innovation with the release of its recent flagship devices. It appears like there is not much forthcoming in terms of innovation from the firm’s R&D department. It appears consumers think the flagship have nothing much to offer from their predecessors.
Retailers slashing iPhone prices
Retailers are sending a clear message to Apple that their products are wrongly priced; skewed to the upper limit than the optimum level. So they have taken it upon themselves to drop their prices below that recommended by Apple.
For instance, Suning, one of China’s largest retailer has dropped the 128GB version of the iPhone XR from $1,036 to $858. Another retailer has dropped the 256GB version of the iPhone XS Mas from $1,628 to $1,436. Interestingly, the same phone retails in the U.S. at just $1,249.
Apple CEO Tim Cook earlier this month admitted the company is finding the Chinese market no longer easy as before. He pointed out the slowing Chinese economy as the cause, and the rising trade wars between the country and the U.S. Though experts interviewed by the CNBC are of the view Apple’s trouble lies squarely on their incorrect pricing.
“The trade war is background noise and more of a scapegoat excuse, with the real issues being iPhone XR demand and a mispriced product in a competitive Chinese market,” said Daniel Ives, the managing director of equity research at Wedbush Securities, during an email interview with CNBC.
Huawei is a growing pain for iPhones
Experts also believe that China’s local brand smartphone like Huawei have made a big dent in Apple’s traditional market in the country. The Chinese brands keep coming out with innovative features at much more pocket-friendly prices, while Apple’s devices are deemed less innovative and priced way beyond their true worth.