Apple's big trouble in little China: iPhone 7 sales are weak and revenue is down

Sales of the new iPhone are "tepid" and Apple's revenue is falling in the world's most populous country

By Matthew Rozsa
Published October 21, 2016 8:41PM (EDT)
  (Reuters/Damir Sagolj)
(Reuters/Damir Sagolj)

Continuing Apple’s run of bad luck in the Chinese market, early reports indicate that sales of the iPhone 7 in the world's most populous country have been “tepid.”

iPhone 7 interest [is] tepid ... [UBS China] distributor checks find that iPhone 7 sales are weaker than the 6s was out of the box [after launch]," wrote analyst Steven Milunovich of UBS in a note to clients on Thursday. "Apple [is] losing share to domestic handsets ... Apple's brand remains strong, but the App Store can be difficult to access and slow."

Weak iPhone 7 sales are part of a larger problem that Apple has faced in the Chinese market. It recently reported its first-ever decline in year-on-year revenue there, falling 26 percent to $12.5 billion, and in the process China lost its status as Apple’s second largest market.

China has also spent much of the year cracking down on many of the products Apple sells in its country. In April, the nation’s top media regulator called for iBooks and the iTunes movie store to be shut down. Then in June, a court ordered Apple to stop selling the iPhone 6 and 6 plus, arguing that they had copied the look of a similar product produced by a Chinese company known as the 100C smartphone.

Despite these developments, not all of the news for Apple in China has been bad. The nation remains the biggest source of revenue growth for the App Store, which produced $1.7 billion in sales this quarter.

Matthew Rozsa

Matthew Rozsa is a staff writer for Salon. He holds an MA in History from Rutgers University-Newark and is ABD in his PhD program in History at Lehigh University. His work has appeared in Mic, Quartz and MSNBC.

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