Apple Is Failing in China

By Douglas A. McIntyre Published Oct 31, 9:20AM EDT

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Apple Inc. (NASDAQ: AAPL) just posted excellent quarterly results, which boosted the stock.
Yet, Apple’s performance in China is poor for two main reasons.

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Apple Inc. (NASDAQ: AAPL | AAPL Price Prediction) just posted excellent quarterly results. The stock rose 2%. It still lags most of the mega-tech stocks, including Nvidia, Microsoft, and Amazon. One reason may be its major failure to grow in China, the world’s largest smartphone market.

Apple’s revenue rose 8% in the quarter to $102.5 billion. It is the first time its quarterly income has risen above $100 billion. Per-share earnings rose 13% to $1.85. The company also said it expects strong results in the current quarter, which includes the holidays.

Additional positive news is that Services revenue rose from $25.0 billion to $28.8 billion. The Services business is considered a key to Apple’s future because of its large margins.

However, Apple’s revenue in China, which it calls Greater China, fell to $14.5 billion from $15.0 billion. It was the only region where revenue dropped. China has 975 million smartphone users, while the United States has 310 million.

Apple’s position in China is poor for two main reasons. The first is local competition. Competitors with double-digit market share include Huawei, Vivo, and Xiaomi, according to research firm Counterpoint. Apple lags these in market share.

Some experts believe that Apple lags in China because it does not have a strong artificial intelligence service in the iPhone. All of its competitors do.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.