Apple, which reported a second straight quarter of falling profits and revenue, saw continued weakness across most of Asia, which just a few quarters ago helped fuel record results.
Revenue in Greater China, which includes Hong Kong and Taiwan, plunged 33 per cent to $8.8 billion in its fiscal Q3 ending 30 June, while sales across the rest of Asia (except for Japan) fell 20 per cent to $2.4 billion. Those decreases were by far Apple’s largest declines by region – revenue was down 11 per cent in the Americas and 7 per cent in Europe.
The one bright spot was Japan, where sales rose 23 per cent to $3.5 billion.
Apple’s fortunes in China have soured over the past year, with its smartphone market share dropping to 10.8 per cent in May, putting it in fifth place, according to Counterpoint Research. The iPhone’s market share was 17.8 per cent in Q1 2015, when it was the top-ranked smartphone vendor in China.
Apple CEO Tim Cook, who visited China and India last quarter, said: “I am very encouraged about our growth prospects in those countries. We remain very optimistic about the long-term opportunities in Greater China and we continue to invest there. We opened our 41st Greater China retail store during the quarter, and we also made a $1 billion investment in Didi Chuxing.”
He said it faces some challenges in Greater China, as the economic environment has slowed down since the beginning of the year. The Cupertino-based company also has encountered a series of legal and regulatory hurdles in China over the past few months that continue to undermine its competitive position in a market that is its second largest.
Switchers and first-time smartphone buyers represented the lion’s share of its iPhone sales in the quarter, and its installed base of iPhones in China grew 34 per cent over the last year, he said.
The company doesn’t break out sales for India, but Cook said it is “one of our fastest growing markets. In the first three quarters of this fiscal year, iPhone sales in India were up 51 per cent year-on-year”.
Apple reported a 27 per cent drop in net profit in Q3 to $7.8 billion and a 14.6 per cent decline in revenue to $42.4 billion.