Growth in China still firm as consumers embrace iPhone X
Apple Inc reported on Tuesday its results for the second fiscal quarter of this year ending on March 31, showing strong revenue and profit growth amid fears of a slowing global smartphone market.
The company's results showed growth in all geographical areas and all product segments.
Revenue growth of 21 percent in the Chinese market and 30 percent in the services segment contributed to push Apple's total revenue up to $61.1 billion, a 16 percent increase from the same quarter in 2017.
Shipments of the iPhone, by far Apple's most popular product, were up worldwide only by 3 percent to 52.2 million units, underscoring widespread fears of a slowdown of the global smartphone market.
However, total revenue from the iPhone was $38 billion, a 14 percent increase, driven by higher average prices.
Hattie He, an analyst with Canalys, told the Global Times that iPhone sales in China remained flat, with sales of about 9.3 million units during the quarter, but higher prices for the iPhone X increased Apple's revenue.
The company's new flagship smartphone, the iPhone X, sold for 8,388 yuan ($1,319) in the Chinese mainland market, 58.6 percent more than the previous flagship iPhone 7, which sold for 5,288 yuan.
"Apple's sales also showed a quite strong performance as the overall Chinese smartphone market contracted 21 percent in terms of shipments in the first three months of 2018, according to our research," she said.
"The brand is still quite strong in China, and the iPhone X has leading technologies such as Face ID or ARKit [augmented reality], which have brought new forms of interaction to consumers," said He.
James Yan from Counterpoint Research, speaking with the Global Times, agreed.
"Many iPhone users in China did not upgrade their iPhones last year because they thought the iPhone 7 was too similar to the iPhone 6. The iPhone X, however, with its new design, has been more attractive. Our figures show monthly sales of 2 million for the iPhone X in China."
An iPhone user in Beijing told the Global Times on Wednesday, "I bought an iPhone X as I'm already used to the Apple ecosystem. My previous phone was an iPhone 6 and it was getting slow, so an upgrade felt reasonable."
Apple's report also showed 30 percent growth in the services segment, which has rapidly become an important part of Apple's business. Sales of cloud storage, apps, movies and other content now account for 15 percent of Apple's revenue.
While Apple has had some issues bringing some of its services to China, analysts believe that growth in the segment is still strong.
"Apple gets a 30 percent cut of all in-app purchases done with iPhones, including videogames, which is a rapidly growing market in China. That also added to Apple's revenue growth," said Yan.
Apple CEO Tim Cook held a conference call with investors on Tuesday to discuss the quarterly results.
When asked about the brewing trade war between China and the U.S., Cook said, "China and the U.S. have this unavoidable mutuality, where China only wins if the US wins and the U.S. only wins if China wins and the world only wins if China and the US win."