Apple’s iPhone Sales Slump Amidst AI Absence in China
The final quarter of last year saw Apple Inc. struggle to maintain its grip on the global iPhone market, with sales dropping by 5% compared to the previous year. This decline can be attributed to the company’s lack of Apple Intelligence in its largest market outside the US, China.
Global Market Share Takes a Hit
According to Counterpoint Research data, Apple’s iPhone slipped to 18% worldwide market share in 2024, down from 19% in the previous year. Meanwhile, archrival Samsung Electronics Co. also lost ground to faster-growing Android device makers from China, led by Xiaomi Corp. and Vivo.
A Challenging Year for Apple
The Cupertino, California-based tech giant marked a 2% sales decline for the full year, despite the wider market growing 4% globally. This decline is largely due to Apple’s slow adoption of artificial intelligence (AI) technology, which has given its Chinese rivals an edge in the market.
AI Enhancements Lag Behind in China
Apple’s suite of AI enhancements, which rolled out in stages following the launch of the iPhone 16 in September, are still not available in China. The company is struggling to secure local partners who can help provide features like AI writing assistance and image generation. This lack of AI capabilities has hindered Apple’s growth in the Chinese market.
Analysts Warn of Overly Optimistic Expectations
Some analysts have begun warning that investors may have overly optimistic expectations of AI features, which could lead to further disappointment. “Apple’s iPhone 16 series was met with a mixed response, partly due to a lack of availability of Apple Intelligence at launch,” said Counterpoint director Tarun Pathak.
Silver Lining in Non-Core Markets
Despite the challenges, Apple continued to grow strongly in its non-core markets like Latin America. The company saw an increased proportion of iPhone sales coming from its pricier Pro and Pro Max models, which accounted for more than half of all sales in China.
Chinese Rivals Gain Ground
Lenovo Group Ltd.’s Motorola and Shenzhen-based Huawei Technologies Co. and Honor Device Co. were the fastest-growing brands in the top 10, according to the researchers. China’s smartphone makers are all developing their own in-house AI tools and agents, including services that can perform tasks on a user’s behalf.
Share Price Takes a Hit
Shares of Apple declined as much as 2.8% to $230.20 after trading opened in New York on Monday, in line with a broader market pullback. As the company continues to play catchup on AI technology, investors will be watching closely to see how Apple responds to the changing market landscape.
Leave a Reply