After Apple’s downward revision of earnings, the Wall Street Journal published an in-depth look at the possible causes of the failure of the iPhone XR in China.

According to the Wall Street Journal, the iPhone XR is simply a ”
phone that’s failing Apple”, enough to call it a real “flop”. This model had to be the one of the revenge in the Chinese market, but the data confirm that Apple has not managed to hit the mark.

The price of 6,499 yuan, which is roughly $945, is too high for the Chinese market, although the iPhone XR is 25 percent cheaper than the iPhone XS.

In addition, the most important features such as Face ID, dual-SIM support and edge-to-edge design are present in many other smartphones available in China at much lower prices:

Li Derong, a Shanghai-based programmer, said he is thinking about changing his iPhone 7 to Huawei Mate 20 Pro. As he browsed at a mobile phone shop, Mr. Li said the iPhone is “overpriced,” even though he thinks its ecosystem is great. Huawei’s battery and camera perform well. The Mate 20’s chipset makes it good for playing games, he said.

The WSJ, citing data from Canalys also shows how Apple’s market share in China has declined over the years. As you can see in the chart below, this phenomenon is largely due to strong competition from Huawei and Vivo.

At the same time quoting analyst Tim Arcuri from UBS, the report also explains that Apple has produced too many units of the iPhone XR. The company has overestimated the demands of this model and now finds itself with several devices sitting on the shelves especially in China.

By analyzing procurement data and talking to suppliers, UBS analyst Tim Arcuri estimated as of October that Apple planned to have roughly 45% of all new iPhones made be XRs world-wide.

“They just built too many XRs and people just aren’t buying them, particularly in China,” he said.

“They just built too many XRs and people just aren’t buying them, particularly in China,” he said.

Among other things, Apple has increased the price of the iPhone XR in China to maintain the margins unchanged after the dollar rose against the yuan.

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