CHINA FINAL (1)

Apple needs China like a fish needs water — but after a string of lawsuits, the shutdown of its iBooks and iMovies services and even the South China Sea dispute causing headaches, Asia’s largest economy has proved to be rough sailing for the tech giant in 2016.

In April, Apple reported a second quarter smartphone sales decline — its first in 51 quarters. The conventional wisdom is the proliferation of cheaper smartphones that still satisfy basic expectations are cutting into Apple’s sales figures. This is what makes China so important for the company.

Now, a new report from Apteligent, a San Francisco-based mobile app development company, says the company’s growth in China is flat.

The report analysed the usage rate for tens of thousands of mobile apps representing hundreds of millions of ‘launches’ (when a person uses the service). Apteligent says this data shows actual usage of the operating system as compared to simply a one-time download.

Also Read: Apple’s investment in Didi Chuxing and how it affects the Sharing Economy

Below is the logic that Apteligent used for the conclusion:

Growth data vs. Overall usage data

In the Table 3, we see expected peaks and valleys of old phones dying off and new phones seeing a massive increase in usage after launch.

Growth DATA (1)

The interesting data point is when compared with Table 1, which shows the overall usage of each iPhone generation as related to one another (starting with iPhone 4).

SE (1)

Apteligent pointed to the launch of the SE as evidence. Table 1 shows a growth of 2899 per cent (fantastic right?) but Table 1 shows overall usage is still only one per cent — below that of the iPhone 4S. Plus, despite the growth rate of the SE, Q2-Q3 growth either flattened or went negative across the board.

This is important for Apple because it launched the SE in March an effort to combat the less expensive Android phones saturating the market. This was highlighted by a 26 per cent drop in sales announced for the March quarter (data gathered before the SE launch).

In May, the company dropped to fifth in Chinese smartphone shipments and iPhones made up 10.8 per cent of total devices sold in the country, down from 12 per cent the year earlier, according to Bloomberg.

Apple’s big advantage

Another point Apteligent brought up is that iOS adoption rate is a bit less than the ‘surface’ numbers would suggest. Unlike Android, in which pushing updates across various brands like Samsung, Sony or Huawei creates a slow adoption rate, Apple pushes out one update to all its products at once.

Apteligent pointed out that even this is fragmenting.

In a slightly tongue-and-cheek comment, it pointed out that when the media write headlines such as, “90 per cent of iPhone users have adopted iOS 9!”, those headline-grabbing comments do not paint a full picture.

Also Read: A billionaire founder called Apple outdated, but he is wrong

In the chart below, you will see that only 72 per cent of iPhone users use the latest version of iOS 9.

APP USAGE (1)

“We believe many iOS users are fatigued by the frequency of updates and reports of bugs, which causes many to hold off on updates until they are absolutely certain all of the issues have been addressed by Apple,” the report read.

But while users might be weary of recurrent bug fixes, Apteligent says they are paying off in a big way. As compared with iOS 8, the latest version, iOS 9.3.2 experiences 27 per cent less crashes.

Apple will be releasing its Q3 earnings on July 26 and it will be fascinating to see if the hard business facts are in-line with the recent headlines and 3rd party reports.

Charts courtesy of Apteligent.

Feature image courtesy of Pixabay.