Apple's stubborn refusal to make a cheap iPhone resulted in its biggest sales decline in 3 years
- Apple saw its biggest iPhone sales decline in almost three years over the holiday quarter, according to new Gartner data.
- That ties in with an overall pattern of declining smartphones sales globally.
- But Chinese brands bucked the trend, with Huawei and Oppo boosting phone sales thanks to their broad appeal in emerging markets like China and India.
- Part of the reason Apple is losing market share is because it doesn't offer a cheap iPhone and relies on existing owners upgrading their phones.
Apple's refusal to produce a cheap iPhone for consumers in China, India, and other emerging markets has resulted in its biggest sales decline in three years, according to Gartner data.
Smartphone sales slowed for almost every phone maker during the crucial holiday quarter, but Apple was hit worst out of the five biggest smartphone makers. The change has cemented Samsung's lead over Apple as the biggest smartphone company in the world.Read more: A short trip to India showed me just how badly Apple is screwing up in the world's biggest democracy
The biggest surprise was third-placed Huawei which, despite a reputational battering towards the end of 2018, managed to boost its phone sales and market share.
Here are the numbers:
- Apple sold 64 million iPhones in Q4, down from 73 million in Q4 2017.
- Apple now has a global market share of 16%, down from 18% in Q4 2017.
- China was mostly to blame, with Apple's market share there slipping to 9%.
- Samsung saw a slight sales slowdown, and has a market share of just over 17%, down from 18% in 2017.
- Huawei sold 60 million phones in the fourth quarter, up from 44 million in Q4 2017.
- Huawei now accounts for 11% of the global smartphone market.
This is Apple's worst performance since the first quarter of 2016, according to Gartner. The figures tally with Apple's own first-quarter financials showing tanking iPhone sales.
The issue, according to Gartner analyst Anshul Gupta, is that Apple and Samsung mostly appeal to "replacement buyers" - people who already have an iPhone or Samsung smartphone and are going to upgrade.
Up-and-coming Chinese players appeal to first-time smartphone buyers in emerging markets like China, India, and Latin America because they offer a broader range of phones that are considerably cheaper than an iPhone."When it comes to basic phones, costing around $250, those continue to offer much better value for a smartphone buyer," Gupta told Business Insider. "You're getting the quad camera, there's an improved experience. People continue to buy [those] devices."
That suggests Chinese brands such as Huawei and Oppo can expect continued sales growth for the foreseeable future.
Apple probably isn't going to make a cheap iPhone just to boost sales
Apple has only released two "cheap" iPhones in its history, the ill-fated iPhone 5C and the much-loved iPhone SE. Neither are still available through Apple.
Gupta says it's unlikely that Apple will release a substantially cheaper iPhone just to appeal to budget-conscious consumers. "They have always tried to focus on the value share, rather than the market share," he said.
In other words, while Apple might not sell the same number of phones as Chinese players, it still makes more money per device than its rivals because the iPhone costs so much.
"If they started focusing on cheap smartphones, it might lower the aspirational factor associated with the iPhone," Gupta said. "They certainly enjoy some premium value."
Still, it may not be such a good idea to allow Chinese brands to dominate in the brand awareness and loyalty stakes. Apple, by refusing to appeal to emerging market consumers, is missing out on a whole demographic of users who are experiencing their first-ever smartphones - which aren't the iPhone.Huawei, by contrast, manages to appeal to both high-end consumers with its P series and budget-conscious buyers with the Honor brand.
"Huawei is capitalising on all these market trends in the best possible way," said Gupta. "They have really worked hard in the last three or four years to raise their brand visibility. They are respectable in the European market."