After announcing its first-ever drop in iPhone sales on Tuesday, Apple Inc sought to reassure investors by saying its latest and cheapest model was in strong demand after being launched in late March. Some retailers and suppliers in Asia aren’t so sure.
In a Reuters survey of 10 retailers in Hong Kong, Beijing, Shanghai and Shenzhen, seven – including four Apple Stores – reported solid early demand, but three third-party retailers said sales were weak.
“I’ve been dealing with iPhones for five to six years now. This current quarter for Apple feels weak,” said an executive at a Taiwan-based company.
“Our current shipment situation for Apple is not like the last two years. There are more iPhone models, but the total volume of iPhones is falling.”
Such a mixed outlook from Greater China could be a major cause of concern for Apple. The company’s revenue from the region dropped 26 per cent in the March quarter.
Nonetheless, Apple’s chief financial officer Luca Maestri made upbeat comments on Tuesday: “The situation right now around the world is that we are supply-constrained,” he told Reuters, referring to the iPhone SE. “The demand has been very, very strong.”
The iPhone SEs are sold out in Apple’s own stores in mainland China and customers have to wait about three weeks to get the product delivered by Apple, according to Apple’s websites. The size of the original supplies to the stores is unclear.
Apple, whose shares dropped about eight per cent after it reported the disappointing first-quarter results on Tuesday, is under pressure to show that the decline in iPhone sales represents just a hiccup, rather than a permanent shift for the product that fuelled its meteoric rise.
The new phone was seen as an important offsetting influence in subsequent periods until Apple launches its iPhone 7 – widely expected around September.
Aided by strong market share gain in China, Chinese smartphone vendors shipped more smartphones globally than Apple and Samsung Electronics Co combined had supplied for the first time in the first quarter, according to research firm TrendForce.
Underscoring the surging growth for Chinese vendors, Huawei Technologies Co Ltd, third-largest after Samsung and Apple, reported earlier this month a 62 per cent growth in global smartphone shipments in the first quarter.
“Consumers who want to show they are rich enough, they will buy an iPhone... those who want to use something different, they will choose Samsung,” Joonsuh Kim, chief design officer of Huawei’s consumer business group, told Reuters, referring to consumers in China.
“But these days consumers are not that old fashioned. They are getting much smarter, and this is why we have much chance,” said the former Samsung mobile design director.