The trade war between China and America has increased the struggles for Apple, the magnitude of which went beyond the expectations. The Chief Executive Officer of Apple Inc., Tim Cook addressed the problems faced by Apple in China in his letter to the investors and according to him, they were already aware of the problems caused by China but were unaware of its magnitude.
Apple witnessed a major setback in its revenue during last spring as the Chinese authorities stopped approving new games which brought down the service revenue of Apple. The major portion of the sales revenue comes from the sales of games in app stores in China. The Senior Vice President and Chief Financial Officer at Apple Inc., Luca Maestri stated this issue of the prohibition of games as temporary but affecting their business as of now.
Apple in China witnessed the decline in the sales of all of its major product lines that comprises of iPhones, iPads and MacBooks. But on a positive note, the revenue of Apple’s wearable products grew 50% in China. According to Cook, the consumer base of Apple in China was growing as more than sixty percent of the customers in China who purchased an iPad or a MacBook during the December quarter purchased those products for the first time.
“The Apple customers are sticking to their older version of iPhones a tad bit longer than earlier anticipated,” Cook said. The conversation didn’t include the specifics regarding the duration of upgrade cycle but it did acknowledge the changing scenario of the company’s business.
According to a survey, the customers are not upgrading to the newer versions of the iPhone because of their higher prices. Moreover, they feel like the latest features are not worth the price. “Apple’s second quarter revenue is estimated to fall due to the continuation of its decreased sales,” Maestri said.