Smartphone sales in China declined 8% in the third quarter of 2018 compared to the same period a year earlier, according to Counterpoint Research. Canalys, another research firm, estimated an even steeper drop of around 15% in the same quarter.
The underlying reason for the slump is simple: better smartphones mean customers now wait longer to upgrade to new models. And China’s smartphone market is getting saturated.
“Smartphone improvements are becoming … evolutionary rather than revolutionary,” Liew said. “The first-time pool of smartphone buyers in China has also dwindled significantly.”
iPhone price is also a problem
And Apple’s slice of that shrinking pie isn’t a very big one. The company currently ranks fifth in China with about 9% of the market, according to Counterpoint, behind homegrown brands Huawei, Oppo, Vivo and Xiaomi.
Xiaomi and Samsung saw their share of the dwindling market fall by 16% and 67% respectively, compared with the same quarter of 2017, while market-leader Huawei is also facing slower growth.
Apple’s competitors all sell devices that are far cheaper than iPhones, a gap Liew says the Silicon Valley giant will need to close in order to regain a foothold in one of its biggest global markets.
“Apple is trying to counter plateauing sales by focusing on selling more premium, expensive devices,” said Liew, adding that the company “needs to focus more on lower-cost products.”