The iPhone 7 has officially arrived, but it won’t stop Apple’s flagging momentum in China.
The Cupertino, California-based smartphone maker is banking on the latest iPhone to revive sales in the Greater China area, the most important growth driver that once accounted for 30% of the company’s total shipments. But the lack of changes in the iPhone 6S lines, coupled with fierce competition from local companies such as Huawei and OPPO, recently led consumers to lose interest in the company’s flagship products. Sales in the Greater China area, which
And new features incorporated in the iPhone 7 – notably the decision to eliminate the headphone jack – are likely to further deter many Chinese buyers.
The company confirmed a year-long rumor yesterday in San Francisco that it will ditch the standard 3.5 mm headphone jack in favor of new wireless headphones called AirPods, which requires charging every five hours and will go on sale in October for $159. Standard headphones can still be used through an adapter that is plugged into the iPhone lightning charging port.
Other changes include a home button that sends vibrations when touched and a dual-lens camera on the rear of the larger iPhone 7 Plus model, which offers different focus choices.
The company said it had taken “courage” to eliminate the headphone jack.
Like users elsewhere, Chinese consumers were quick to take to social media to mock Apple's move, with many saying the small but expensive wireless headphones are hard-to-use and easy-to-lose.
“Apple will probably make an app called Find My AirPods next,” user WangXinyo wrote in a post. “I don’t need to buy earphones anymore because I can just pick up AirPods accidentally dropped on the ground.”
“People used to gather to play Pokémon GO,” another user Miaoxiaoxuan mi wrote. “In the future everyone will gather to try to find their AirPods.”
And the small, wireless headphone isn’t what Apple’s core Chinese customers need. Chinese elites, who used to regard the pricey iPhone as a status symbol, now favor Huawei because its sleekly-designed products come with dual SIM card slots and enhanced battery lives – features that business executives need for frequent travels and conference calls.
They will be put off by the extra step needed to use standard headphones and the frequent charging of the new AirPod, says Nicole Peng, a research director at market research firm Canalys.
The dual-lens camera won’t be a big attraction either because a number of local players, including Huawei and the fast-rising OPPO, already put phones with enhanced camera functions on the market. The iPhone 7 did little to differentiate itself, Peng says.
Apple’s share in its most important market segment in China – market where smartphones are priced above $500 - fell to 38% in the second quarter this year compared with 67% a year ago, according to Canalys. The drop is mainly due to rising competition from Huawei, Peng says.
The company fell to the fifth place in China’s smartphone market in the second quarter, shipping 8.6 million units, according to IDC. Last year, it once became the largest smartphone brand in the country, thanks to the initial success of the larger screen iPhone 6 Plus.
This year, shipment of iOS-based smartphones in China will decline by 12% to 47.2 million units from 53.5 million units last year, according to Canalys forecasts.
What makes the situation worse is the company’s lack of ecosystem services in China, says Travis Wu, a research director at advisory and research firm Forrester. Apple’s popular iBook Store and iTunes Movie services have been banned in the country since April, with authorities offering no explanation on why they were taken down.
“Apple can use iTunes services to propel sales in Europe and North America,” Wu says. “But such a strategy doesn’t work in China due to high regulatory risks.”
“The company faces several challenges here, and they can’t be solved by iPhone 7,” he adds.
