Consumers are finding fewer reasons to upgrade their iPhones, analysts said, with newer models offering only incremental improvements. The trend could continue this year, when Apple is likely to unveil a new slate of iPhones. The latest models, expected in September, are unlikely to work with the new fifth-generation, or 5G, wireless technology that offers far faster download speeds than current service. Apple is expected to have 5G iPhones for 2020, analysts said.
The other shrinking part of Apple’s business has been China. Sales in the region that includes China fell nearly 25 percent over the previous two quarters, sparking a sell-off of Apple shares in January. Apple blamed the drop in part on economic weakness in China.
In the latest quarter, Apple’s sales in the region fell 4.1 percent, while revenue specifically in mainland China grew. Timothy D. Cook, Apple’s chief executive, said on an earnings call that business had been lifted in part by Apple’s move to cut iPhone prices there and an economic stimulus program from the government.
“There were a lot of questions and uncertainty around China, so the fact that the year-over-year growth rate has improved is likely a relief for investors,” said Toni Sacconaghi, an analyst at Bernstein.
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The Chinese market, Apple’s third largest for sales, has emerged as one of the company’s greatest vulnerabilities. This month, Chinese officials disclosed that the country’s growth had fallen to its slowest pace in three decades. Apple also assembles most of its products in China, which has drawn the ire of President Trump, who has publicly pressured Apple to build more products in the United States.
Since 2013, Apple has made its top-of-the-line Mac Pro desktop computer in Texas. Doing so led to headaches that delayed the computer’s launch. In June, The Wall Street Journal and The New York Times reported that Apple would shift assembly of its new Mac Pro to China.
Last week, Apple filed requests with the United States trade representative’s office asking that components used in the Mac Pro, like power cables and circuit boards, be excluded from tariffs. Apple said in the requests that it could not find the products outside China.
Article source: https://www.nytimes.com/2019/07/30/technology/apple-earnings-iphone.html?emc=rss&partner=rss
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