SAN FRANCISCO (Reuters) – A series of earnings warnings from Apple Inc (AAPL.O) This week, suppliers have fueled investor concerns that iPhone sales, in terms of volume, have hit a wall that could cause problems for the company's plans to make services its main pillar of growth .
FILE PHOTO: A customer compares the size of the new iPhone XS and iPhone XS Max at the Apple Store in Singapore on September 21, 2018. REUTERS / Edgar Su / File Photo
Over the past year, investors had been largely willing to bypbad sales of stagnant iPhone units because average selling prices continued to rise. But now the fierce competition of mid-priced phones from manufacturers like Xiaomi Corp (1810.HK) has become difficult to ignore.
Apple's vision of becoming a company driven by paid services such as Apple Music and iCloud is based on building the largest possible base of device owners, with the iPhone as a fundamental anchor.
Without volume growth in promising foreign markets such as India, Brazil and Russia, the concern is that Apple has at least parts of its strategy wrong, with too much emphasis on its premium brand and the high prices that accompany it.
A trio of Chinese smart phone manufacturers, Xiaomi, Oppo and Vivo, accounted for about a quarter of the global market in the first half of 2018, according to data from the research firm IDC, an increase of 8.9 percent in all 2014 .
But with the exception of fiscal year 2015, Apple has not increased its market share. It had 13.6 percent of the world market in the first half of this year, compared to 14.8 percent in 2014, although its share generally increases with the results of the whole year due to strong sales in December.
Apple currently has what it calls an active installed base of 1.3 billion iPhones, iPads and Macs, which serves as the pool of potential customers for its services, a business that reached $ 37.1 billion in revenue for the most recent fiscal year.
That accounted for 14 percent of Apple's overall revenue, an increase of 8.5 percent in fiscal year 2015 when sales of iPhone units reached their historic high.
But IDC expects the global smartphone market to grow only 2.4 percent in a composite form to 1,600 million units by 2022, indicating a saturated market in which the Cupertino, California-based firm will fight rivals for each customer. .
Xiaomi, in particular, is earning fans quickly. In India, where Apple has only a minor presence, Xiaomi in some sectors has beaten Samsung Electronics Co Ltd (005930.KS) will become the country's leading telephone vendor and is also in the ranking of European markets where it is opening retail stores.
"This is the case where it's very different in other parts of the world," said Ryan Reith, vice president of IDC's mobile device tracking program.
"A lot of those brands do not play (in the United States), but they're playing in places where they've never played before."
In its latest earnings this month, Apple surprised investors with a lower-than-expected sales forecast for the Christmas shopping quarter and with the announcement that it would stop reporting unit sales for its hardware products as has been the case during the past few months. last 20 years.
Underscoring the flattening of sales of iPhone units, he also said he sold 217.7 million iPhones in his most recent fiscal year, virtually unchanged from the previous year and well below a high point of 231.2 million in fiscal year 2015.
The price of its shares, reached at the time of the forecast, has extended the losses after profit warnings from suppliers such as Japan Display Inc (6740.T), The British chip maker IQE Plc (IQE.L) and Lumentum Holdings Inc (LITE.O). The stock has now fallen 8 percent from its gains on November 1.
Apple declined to comment on market movements. But its supply chain is vast, and company executives warned investors in the past against fixing scattered data points. And Apple has insisted for more than a decade that its devices should not be judged solely by its specifications, an argument that sales data suggests Apple made successfully. The company also has satisfaction and customer loyalty rates that are unparalleled in the mobile phone industry, said Ben Bajarin, badyst at Creative Strategies.
Apple's newer models, such as the iPhone XS and the iPhone XR, are becoming popular among their most loyal followers in the rich economies. But they have a price of up to $ 1,449, out of reach of many consumers in less developed markets.
Apple's strategy is to attract those consumers to its ecosystem with older models at cheaper prices. He has also emphasized that their phones are designed to last longer than the competition, expanded their repair options and created the latest operating system update to accelerate older devices.
But Chinese smart phone manufacturers have been packaging their phones with high-end chips and features like fingerprint sensors under the glbad that seek to attract consumers who might otherwise have a look at Apple phones.
These manufacturers are increasingly adopting those of Qualcomm Inc (QCOM.O) the most powerful mobile phone chips, said Cristiano Amon, the head of chip operations at the US chipmaker. UU., Which is caught in a bitter legal dispute with Apple.
Those phones were initially sold in China, but "we've also seen them gain participation outside of China, especially in areas like India and Europe," Amon said.
Also in its territory, Apple faces new challenges from at least one Chinese manufacturer, OnePlus, which is being introduced into the traditional pricing territory of the US firm. Although the processor chip of the iPhone 7 surpbades the OnePlus 6T in some speed tests published by the chip tracking company Geekbench, the OnePlus phone has a more contemporary design with thin bevels around the screen, similar to the newer models of iPhone
After years of being available in the United States only through an online store and developing followers among technology enthusiasts, the OnePlus 6T is being carried by T-Mobile US Inc (TMUS.O) stores.
At $ 549, it is between the iPhone 7 and the iPhone 8 in terms of prices. Kyle Kiang, North America general manager of OnePlus, said sales of the first model of the first day were 86 percent higher in the United States than in the previous OnePlus released there, although he did not disclose absolute figures for the unit. .
Report of Stephen Nellis in San Francisco; Edited by Edwina Gibbs, Nick Zieminski and Matthew Lewis