iPhone Sales Slow in China

Apple really isn’t a stock we talk about here, but TTD is, and it’s betting big on China. Tim Cook talks about seeing China’s economy begin to slow in the second half of 2018 which has affected iPhone sales.

I personally think the slowing iPhone sales are specific to the iPhone and mobile phone industry in general, but as other companies that deal in China report earnings, we will find out.

This will probably cause a sell-off in anything related to China (including TTD), but I’m going to wait until we see something material from TTD before selling any shares.

https://www.cnbc.com/2019/01/02/apple-warns-on-q1-results.ht…

This could easily become a politicized thread. PLEASE DON’T TAKE IT THERE.

I posted because of the potential effects on one of our China-dependent companies. Let’s keep the discussion centered around that.

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Apple raised iphone prices and they arent subsidized by carriers in China like they are in US.

TTD helps US companies use data to target chinese consumers.

If Clorox wants to sell stuff in china, they need to keep advertiaing.

I get that there may be a sympathetic market/TTD hit due to Apple face-planting, but these are really different approaches to China, imo.

Dreamer

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Great points Dreamer and I agree. TTD brings money INTO China. They shouldn’t see a hit from this.

Another important topic at hand.

Apple is still at least somewhat a hardware company. As Saul points out so often, they have to continue producing and selling widgets to more and more people. Granted, Apple has been an INCREDIBLE investment for the past 20 or so years, but eventually, that model reaches saturation.

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Congratulations Austin, you grabbed post number 50000 for our board!:grinning:

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Apple is well past its ‘sell by’ date.

Global smartphone shipments are in decline; there is intense competition in the developing world (i.e. Oppo, Vivo, Xiaomi, Huawei etc) and Apple’s phones aren’t selling there.

Apple recently jacked up ASPs for iPhones and more recently, the company announced that it will no longer publish unit sales numbers - these are bad signs and show the business is trying to hide its inevitable fall from grace.

Services are still only a small proportion of total revenue and that is unlikely to change anytime soon; Apple is predominantly a hardware/devices business.

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All reasons I finally sold out of AAPL last month, at $166. My wife needs a new iPhone, and I just can’t see a reason to spend the money they are asking. The 7 Plus, or the 8, still looks like a great phone. And if Apple wants to push services they need to drop the price of HW. Who are they going to sell these services too after all?

I used to work at Apple (mobile GPU development, it went into the iPhone 6). My experience is they are relatively confident what they are doing is great and innovative and important. And they have no idea how much they are missing the market. :frowning:

bjurasz

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Apple is well past its ‘sell by’ date. Global smartphone shipments are in decline; there is intense competition in the developing world and Apple’s phones aren’t selling there. Apple recently jacked up ASPs for iPhones, and more recently it announced that it will no longer publish unit sales numbers - these are bad signs and show the business is trying to hide its inevitable fall from grace. Services are still only a small proportion of total revenue and that is unlikely to change anytime soon; Apple is predominantly a hardware/devices business.

Thanks GrowthMonkey, I couldn’t have said it better myself. I love Apple products and all my cell phones and computers are Apple, but to hold on to the stock because you love your iPhone is not rational investing.
Best,
Saul

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I’ve owned AAPL since 2013, so I cannot complain at all when I finally sell out of my position in the next two days.

I was patient. Was hoping for better news as over the years just about every time all the naysayers starting talking AAPLs demise, it always turned out to be a buying opportunity.

If I had listened the dozen or so times, I would have been out of the stock a long time ago and missed the great return I made. This time they were finally right.

I don’t believe Tim Cook when he blames China. His antics about stopping unit sales reporting should have been my major warning sign. I blew it, but again, I made a great deal of money on this core holding.

It’s now time to move on, take that cash and deploy it to companies with better upside.

Chris

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Xiaomi Mi 8 Pro

Essentially an iPhone x clone for half the price.
If I were Chinese, this would be a no-brainer unless I was a real apple fanatic and price didn’t matter.

Lack of real innovation in the last few years is catching up to Apple as competitors have caught up and can create a ‘good enough’ phone, selling far cheaper than Apple. The Hardware conundrum!

If you are an Apple user, then their ecosystem is still great. You’re locked in, sure, but if money doesn’t really matter, you’ve got no better place to be. But to most people, money does matter.

Funny how Apple is only recently Buffet’s highest owned stock. Woops!

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Buffett does not understand technology.

His IBM bet was a disaster and in my opinion, he is too late to the Apple party.

Why invest in a smartphone maker when its target market (developed world which can afford its high-end products) is already saturated and global smartphone shipments have peaked?

Unless Apple can invent another amazing device/gadget or start an entirely new category, it will continue to trade at a very low multiple and barely outperform the S&P500 Index.

Too many high-growth businesses with better visibility out there for my investment dollars…

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No. of Recommendations: 0
Xiaomi Mi 8 Pro

Essentially an iPhone x clone for half the price.
If I were Chinese, this would be a no-brainer unless I was a real apple fanatic and price didn’t matter.

Living in Singapore, there are a few Xiaomi stores around and their products are very good. A Friend bought their Robot vacuum and raved about it as well as their phones for their kids. I stopped in the store and was quite surprised at the quality of the vacuum, at least based on the weight and build for the price. Less then 50% of the Phillips one I had bought and seems much better quality.

As for the phones, now I think a lot of the parents are buying Xiaomi as they are cheap and pretty good quality. This is what the younger generation will know and I don’t think there will be perception that iPhones are a premium brand too much longer in this field.

Funny how Apple is only recently Buffet’s highest owned stock. Woops!

I don’t follow his portfolio closely but perhaps tech is not what he should do if Apple and IBM were his big buys when the best days were behind.

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iPhone sales are predicated in large part upon personal identity within an affinity group. In China, phone lemmings flock elsewhere rebuffing the great Satan.

We’ve all witnessed FB’s turning point as the “crowd” moves to new identities. With Cook at the head, AAPL’s charm cachet has tarnished. As with FB, users will peel off as they find themselves associated with a decaying identity.

First the unit sales debacle, now the China blame game. If AAPL truly offered a superior user experience neither of these crutches would be needed. Apple died with Steve Jobs. His momentum has receded, and along with that the future hope of a dying tech firm.

🆁🅶🅱

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This is a lot deeper than iPhone sales. The manufacturing index in China fell below 50 (into contraction) for the first time in 7 years. Growth has slowed and the general economy in China is being hurt by the tariffs. Auto sales in the number one auto market have also slowed. The Renminbi has lost value with respect to the dollar (now 6.7:1) and the BoC is taking steps to strengthen it. The BoC is taking additional steps to stimulate the economy including loosening credit. This is somewhat dangerous in that a lot of Chinese businesses and developers are already highly leveraged. China, being the #2 economy of the world, will have a lot of ripple effects elsewhere around the world.

Companies with business in China will not be the only ones to suffer. Companies with customers that have a lot of business in China will also see a downturn. Kevin Hassett, the head of White House Council of Economic Advisers so much as said so earlier today.

As for iPhones in particular, much remains to be seen. As others pointed out, there’s a lot of very good high end phones now available from Chinese makers, but they don’t have the same status as an iPhone. The Chinese are very status conscious, so the unraveling of the iPhone market in China may be a long time coming. The fall off in sales may just be belt tightening. I think Apple is a long way from reaching a saturation point in China. 1.3 billion is an awful lot of people. India, I read somewhere is the next target market for Apple, may be different. I don’t know, but India may well not share the same importance of status as the Chinese.

In any case, as I read the tea leaves we’re all in for a pretty rough ride over the next several months. My impression is that the markets have a remarkable ability to pretty much shrug off political events, but when the economy gets rocked, they pay attention. I’m not trying to make a political statement, just observations.

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Hi Brittlerock, I don’t think the issue in China is the economy. If a Chinese person wanted an iPhone for status sake he’d do without eating to be able to afford it. This is about status. As I understand it, due to the trade war we started, the Chinese government has made American status symbols like iPhones unacceptable in public, and patriotic Chinese will now buy a Chinese made phone. It’s in bad taste in China to take out an iPhone. Period, end of story.

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CEO Cathie Wood CEO and CIO of ARK Invest on Bloomberg.

  1. Thinks Apple priced iPhones too high (30% price increase this year)
    *tech prices usually go down not up over time

  2. American brands are under “attack” in China (what Saul said)

  3. Thinks wearables/health/services are Apple’s future.

  4. Not in this clip but she also said she feels the Chinese government is making strides such as tax cuts that will provide stimulus in China and that both Chinese and U.S. markets could swing big in a positive direction on good trade news (which she expects)

https://twitter.com/SheryAhnNews/status/1080905381923049472?..

Again, this is a bit macro, but it’s clearly affecting the entire market and dragging our IT/Cloud stocks which are relatively unaffected by China down with it.

Reaffirming that I’m staying the course.

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https://www.dailymail.co.uk/news/article-6487065/Chinese-com…

No one wins in a trade war. You hurt the Chinese economy you hurt all economies.

This is going to get a lot uglier if egos are not put aside and grown ups actually sit down and end this battle.

No one wins in chaos and that’s all I see right now.

Chris

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Alright… I think we’ve spent a good amount of posts discussing this. Probably good to end this thread now before it gets too political.

Thanks everyone for the great discussion.

Alright… I think we’ve spent a good amount of posts discussing this. Probably good to end this thread now before it gets too political.

Thanks everyone for the great discussion.

Nope.

Can’t

No yet.

Hitler.

Now its done.

Cheers
Qazulight

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Saul, I live in Hong Kong and have been here for 20 years.

The Chinese are staying away from the iPhone because they can find buy similar products from Xiaomi, Huawei, Oppo, Vivo, Sugar etc for a fraction of the price.

The really affluent are still buying the iPhone but the vast majority are not, and this is not due to an anti-American stance.

Plenty of other American brands are still doing fine here (Nike, Starbucks, McDonalds etc)

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