July 14, 2020
AliExpress WW
IPhone sales in China fall in May after a recent recovery - but Apple shows signs of resilience

IPhone sales in China fall in May after a recent recovery – but Apple shows signs of resilience

AliExpress WW

On Tuesday, November 27, 2018, pedestrians walk past the sign for Apple Inc. at the Shanghai International Center (IFC) mall in Shanghai, China.

AliExpress WW

Tsilai Shen | Bloomberg | Getty images

IPhone sales in China fell in May, showing signs of weakening after Apple saw an initial recovery when the country reopened when the outbreak of coronavirus weakened.

But other business areas have grown, including expenses on the company’s App Store, which may indicate some resilience of the American technology giant in one of its largest markets.

Data compiled by CNBC from third-party sources indicate a mixed picture of Apple’s performance in China in May.

According to Shanghai-based CINNO Research, Apple sold 3.6 million iPhones in China in May, compared with 3.9 million in April. This is a 7.7% drop compared to April, but higher than the 3.05 million iPhone sold in May 2019.

This contrasts with a 160% monthly increase in April, when Apple benefited from unmet demand in China and saw a rebound as the country reopened its economy after closing a few weeks earlier this year.

IPhone sales in China fell 60% year on year in February this year. Apple was forced to close stores for several weeks as authorities tried to stop the distribution of Covid-19. By mid-March, all stores in China were reopened.

Meanwhile, according to preliminary estimates by another research firm IDC, in May the volume of so-called iPhone sales was just over 2 million. That’s about 25% less than a month, said Will Wong, research manager at IDC, at CNBC.

Sales refers to the number of iPhones sold by Apple to its retail partners in China, and can be used as an indicator for future demand.

Apple declined to comment on these numbers.

According to the China Academy of Information and Communication Technology (CAICT), a state-sponsored think tank in China, China’s total smartphone shipments in May fell by almost 20% from the previous month.

Apple released the second generation iPhone SE in mid-April, which went on sale in China the same month. This is the cheapest iPhone lineup that helped boost shipments in April when Apple handed the device over to retailers. But the company did not release a new device in May, which may partially explain the drop in supplies. But Wong warns that this could also be a sign of weak demand.

“The main reason (to reduce) is due to low consumer sentiment, due to work problems, and due to the economic downturn that has lowered consumer sentiment,” Wong told CNBC.

However, he noted that Apple is expanding its retail network to smaller Chinese cities, despite macroeconomic difficulties.

Signs of sustainability

At Almaba’s Tmall trading platform, Apple generated $ 136.9 million in revenue in May, WPIC, an e-commerce marketing and technology company that helps foreign brands sell in China, said. This is 7.2% more compared to the previous month.

Of course, Tmall is just one channel through which Apple sells its products. Others include rival Alibaba JD.com, as well as Apple’s own stores and retailers of bricks and mortars.

But Apple benefits from signs of life in online retail sales in China.

“Apple’s growth in 2020 is staggering given that these numbers include COVID-19,” WPIC CEO Jacob Cook told CNBC. “Ultimately, it is clear that Apple is a sustainable company, and we make sure that they continue to grow during the second half of 2020.”

Meanwhile, according to Sensor Tower, consumer spending on the Apple App Store in China in May was $ 1.71 billion, up about 11% from $ 1.53 billion recorded in April.

This money may not be directly on Apple’s top list, but it shows that more and more users continue to spend money through the Apple platform.

The app store is a key source of revenue for Apple’s increasingly significant service business, with sales of more than $ 46 billion over the past fiscal year.

5G boost?

A partial drop in iPhone shipments and sales in China could be due to consumers holding the 5G device. Apple plans to release one this year, although some analysts are worried about a possible delay.

Since China began rolling out 5G networks last year, the popularity of devices that can connect to this generation’s mobile infrastructure has been growing. According to CAICT, 46.3% of China’s total mobile phone shipments in May were 5G devices.

Daniel Ives, an analyst with Wedbush Securities, said in a recent report that he estimates that about 350 million of the 950 million iPhones used by Apple worldwide are ready to upgrade to the new iPhone, adding that the US tech giant can see the “5G supercycle” “. ”

However, IDC’s Wong believes Apple’s potentially high price for the iPhone 5G may hinder its success.

“Some consumers may be waiting for the iPhone 5G, but two potential restrictions may be pricing, while others may lack options,” Wong told CNBC.

Source

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