High prices are killing iPhone in China

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Chinese iPhone shoppers have gone from thrilled to shocked at prices, leaving Apple crying.
Chinese iPhone shoppers have gone from thrilled to shocked at prices, leaving Apple crying.
Photo: Apple/Cult of Mac

The Chinese phone market cratered in the final quarter of 2018, but iPhone sales in the country did even worse.

This poor showing is primarily a result of the high prices Apple charges for its handsets, according to an industry analyst.

Linda Sui, Director at maker-research firm Strategy Analytics wrote today:

“iPhone shipments dropped 22 percent annually and this was the firm’s worst performance since early 2017. Apple iPhone has now fallen on a year-over-year basis in China for 8 of the past 12 quarters. Apple has been under pressure in China for the past three years. Ongoing patent battles with Qualcomm are a distraction, while Apple is being heavily criticized for its expensive retail prices.”

It’s hard to argue that last point, considering that the iPhone 7 Plus started at $769 when it became Apple’s top-tier model in 2016. Fast forward a couple of years and its successor, the iPhone XS Max, started at $1,099. That’s a $330 increase in only two years.

Sui has a dire warning: “Apple is in danger of pricing the iPhone out of China.”

Tabulating Apple’s performance in Q4 2018, there were 10.9 million iPhones shipped in China, according to new data from Strategy Analytics. That’s down from 14.0 million in the same period of 2017. For all of 2018, Apple shipped 34.2 million units, down from 36.7 million in the previous year.

Not just Apple

To be clear, other companies besides Apple are having problems in China. The entire phone market in that country tumbled 11 percent last quarter year-over-year, shipping 13.4 million fewer units.

Even Chinese companies Oppo and Xiaomi saw declines. Samsung didn’t make it into Strategy Analytics top 5 list, but we’ve already heard that this Korean companies has its own struggles in China.

In a related problem, Apple’s prices are also reportedly hobbling its efforts to break into the Indian phone market.