Apple is finally back to growth in China.
The company has broken a run of sales decreases that stretches back six quarters thanks to promising early signs for the newly released iPhone 8, according to a new report from Canalys. The analyst firm recorded 40 percent annual growth for Apple in Q3 2017 with 11 million shipments during the three-month period. It noted also that the iPhone 8 accounted for a higher proportion of iPhone sales than the iPhone 7 did last year.
Apple’s revenue from China is down by more than 50 percent from two years ago, according to its most recent Q2 earnings, so growth is much-needed. However, despite progress, the firm ranked only fifth in the Canalys report.
Beyond the raw data there are a few notable takeaways worth digging out.
Firstly to Apple, which Canalys believes is not out of trouble in China.
The impact of the iPhone X, the much-anticipated device that goes on sale November 1, isn’t reflected in this report but already limited supply around the phone and its expensive price tag — which starts at $1,000 for the most basic model — may mean the phone doesn’t deliver stellar growth that the U.S. firm saw in China when it released the iPhone 6, its first larger sized device.
“Apple is unlikely to sustain this growth in Q4,” Canalys’ Mo Jia said in a statement.
“While the iPhone X launches this week, its pricing structure and supply are inhibiting. The iPhone X will enjoy a healthy grey market status, but its popularity is unlikely to help Apple in the short term,” Jia predicted.
Beyond Apple — which is so often the focus when studying smartphone sales in China, given its importance to the company — it is clear that a few brands now dominate the Chinese smartphone market.
The top five sellers in Q3 2017, according to Canalys’ numbers, accounted for a massive 75 percent of all devices shipped in China. The analyst firm is predicting that Xiaomi may break into the top three thanks to its usually impressive performance on China’s major online shopping day — 11/11 — and offline retail, but, that side, it is hard to see any others making headway on the top players at this point.
That’s particularly important because data suggests that growth in the Chinese smartphone market is topped out.
The Canalys report estimated that the market dropped by five percent year-on-year to 119 million shipments. That’s a second successive quarterly drop.
China remains the single largest market for smartphone firms on the planet, but the declines explain why many firms have expanded their focus to cover fast-growing markets like India, which overtook the U.S. on shipments numbers in Q3, and Southeast Asia.
These regions do not yet rival China but, when competition is tough and the market is shrinking, they represent more accessible opportunities for revenue.