Why the iPhone is selling less well? Apple's justifications and unspoken truths

Tim Cook has frightened the market following the mail sent to its shareholders. The iPhone is selling less well than expected, and the CEO of Apple evokes many reasons. Even if his justifications are valid, he omits essential elements.

Tim Cook sent a letter to Apple investors, the latter was published on the site Newsroom manufacturer. The CEO of Apple mentions a revision of the forecasts for the first fiscal quarter of the company (which corresponds to the last quarter of 2018), an extremely rare event for one of the largest companies in the world.
Tim Cook warns: he has sold less iPhone than expected. For the first quarter of 2019, the expected turnover is 84 billion dollars (74 billion euros), the gross margin does not change: 38 to 38.5%. The estimated turnover was $ 93 billion. Apple has reduced its revenue forecast for the first time in 16 years.
For Tim Cook, it's because of the battery replacement program and the late arrival of the iPhone XR
As a reminder, the XS and XS Max were launched in the fourth fiscal quarter of 2018, the iPhone XR was launched in the first quarter of 2019. The offbeat launch of the iPhone XR would be one of the first causes of the decline in sales.
The other reason cited by the boss of Apple is the decline of the US dollar against other currencies including the yuan (China) and the euro (Europe).
US Dollar (US) and Yuan (China) in 2018
Euro (Europe) and US dollar (US) prices over one year
Third point: there were too many products launched at the end of the year, with the new MacBook Air, the Apple Watch Series 4, the iPad Pro, the Mac Mini … the list is indeed long. Apple had several launch campaigns to carry out: advertising campaigns, promotions on the Apple Store, sales training and so on.

Finally, one of the reasons given is also the replacement program for old iPhone batteries. Indeed, Apple has launched an extensive program to allow customers to change the battery of their iPhone for only 29 dollars. Apple had issued a letter to its customers apologizing for the misunderstanding, after recently admitting that it had deliberately slowed down older iPhone models to compensate for battery degradation. A very well-received program for consumers who have been able to increase the life of their device for a small fee. Obviously, hardware and labor included, this change does not display at all the usual gross margin of Apple. In addition, this program encourages consumers to … consume less iPhone.
But these are not the only reasons for this drop in sales.
The price of the iPhone and the few changes between the two generations
The iPhone X was available in 64 GB version for 1 159 euros, the iPhone XS in 64 GB is at 1 155 euros. The price of the iPhone XS has not therefore theoretically increased.
On the other hand, the iPhone XS offers new options of additional storage since it is available in version 64 GB, 256 GB (1,327.68 euros) and 512 GB (1,557.68 euros). There is also the arrival of the XS Max whose bill is even higher, which obviously has a psychological impact on the consumer. The iPhone XS Max is sold at 1,657.68 euros in 512 GB.
Where to buy the Apple iPhone XS at the best price?
    Where to buy the Apple iPhone XS Max at the best price?
Finally, as we can see in our comparison, the iPhone XS introduces few new features compared to the X.
What does an iPhone X user gain from changing their smartphone for an iPhone XS? According to Apple, he will have the right to refinements: a face a little faster ID, a NFC a little faster and improved wireless recharging. The biggest change comes from the processor built into the smartphone, the Apple A12 Bionic seems on paper radically more powerful than the Apple A11 last year. The question is: what are the applications that bring an iPhone X to your knees today? Difficult to find, and difficult to justify a more powerful processor. Even for the gains in photography, they are minimal.
China sulks iPhone and Donald Trump does not help
Difficult to find the exact reasons but the Chinese market is starting to lose interest in the iPhone. Trade tensions and volatility in global markets have certainly weighed on Chinese consumers and Apple's profits.

New York Times
Tim Cook discusses the disruption of the Chinese economy, it is not quite wrong. The Chinese economy is losing momentum after decades of expansion. Growth in 2018 is expected to be the weakest since 1990.
But what's true for American companies, like Starbucks or Ford, which are also expecting a slowdown in their respective sales, is not true for US companies.
In recent weeks, following the differences between the Chinese and American governments, Chinese consumers are turning more and more to Chinese brands. China's recent decision in the legal cases between Apple and Qualcomm did not help Tim Cook's company. Indeed, Qualcomm was able to obtain the ban on the sale in China of all iPhone before iPhone XS, XS Max and XR.
Chinese brands are rising all over the world (except in the United States)
It is impossible to ignore the ever-increasing progress of Chinese manufacturers, from superlative cameras to ultra-fast loading, to on-screen fingerprint scanners. The Oppo Find X and the Huawei Mate 20 Pro are perfect examples, not forgetting the Xiaomi Mi Mix 3, the OnePlus 6T but also the Honor View 20.
Apple posted roughly stable global iPhone sales growth in the third quarter, while Chinese rival Huawei jumped 33 percent from the same period a year earlier, according to Counterpoint. Huawei is now the number 2 worldwide ahead of Apple and behind Samsung in the smartphone market.
Oppo launched in France in 2018, but so is the giant Xiaomi. Moreover, the Lei Jun company has already managed to become unavoidable in the Spanish market but also to win the wearables market in Europe, Asia and Africa.
All these Chinese brands have significantly increased the quality of the devices marketed, while adopting an aggressive pricing policy vis-à-vis Samsung, LG, Sony but also and of course Apple.
What we will remember: the iPhone will perhaps no longer be the cash cow it was in the last decade. 2019 will be a year full of surprises.



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