Apple’s (NASDAQ:AAPL) China sales in the third quarter dropped $2.2 billion from the January-March period to come in at just $5.7 billion, a change that was both unexpected and drastic. Experts say the disappointing numbers point to that the fact that some people are not content waiting for the next-generation iPhone, but will go for newer models of rivals like Samsung, which are already in the market.
Greater China, which includes Taiwan and Hong Kong, is Apple’s second-largest market and helped the company make up for its sales drops in the U.S. and Europe in the last quarter. But with still no confirmed news of the next iPhone’s launch time, and rival manufacturers coming up with new, flashy models, people are making the switch.
“The (iPhone 4S) model is a little bit too long in the tooth when compared to other phones with better specs,” IDC’s Beijing-based analyst TZ Wong told Reuters. “To put it plainly, consumers are getting a little bit tired of the look of the iPhone 4 and the iPhone 4S.”
Samsung clocked a record profit of $5.9 billion for the June-ending quarter based on stronger-than-expected demand for its latest Google (NASDAQ:GOOG) Android-based Galaxy S III model, while HTC’s One X also is also seeing huge popularity. Devices made by China’s Huawei Technologies, ZTE, and Xiaomi are also popular, because they are heavily subsidized by the country’s telecom carriers.
Apple chief executive Tim Cook told analysts in a post-earnings conference call that about half of the quarter-to-quarter decline was a result of “changes in the inventory channel.” He added that since iPhone 4S sales were very strong in China over the first three months, the following period probably saw a drop in demand.
The company is widely expected to release its next iPhone around October, and it will come with Mandarin and Cantonese language support for the voice-activated personal assistant program, Siri. That has given another reason for Chinese customers to hold off until the new phone is available, but will probably also give hope to Apple.
Apple’s results also hurt the stock of its Asian suppliers on Wednesday, with Taiwan’s Hon Hai and South Korea’s LG Display (NYSE:LPL) ending more than 4 percent lower. Japan’s Toshiba fell more than 7 percent.