uploads/2015/08/Smartphone-market-share-China-Q2-20152.png

Why Tim Cook is Confident about Apple’s Performance in China

By

Updated

Tim Cook assuages investors’ worries about China’s impact on Apple

In the previous part of this series, we discussed how the news of China’s slowdown led to Apple’s (AAPL) stock declining by 6% last Friday. Overall, Apple’s stock has declined by about 30% over the past month or so. To assuage the tech giant’s investors, Tim Cook, Apple’s CEO, sent a message to CNBC’s Jim Cramer that Apple is still growing strong in China, according to a report from CNBC.

In a rare mid-quarter announcement, Cook noted that iPhone activations and App Store business has shown strong growth in China (MCHI) over the past few weeks. He also mentioned that Apple’s overall business in China showed strong growth in July and August.

Article continues below advertisement

Apple’s position in China’s smartphone market deteriorated in 2Q15

The announcement of strong iPhone activations in China over the past few weeks is a surprise, considering the iPhone 6 and iPhone 6 Plus lost their novelty factors—these phones are 11 months old. Consumers are waiting for Apple’s new iPhone release, the iPhone 6S, in September. Another reason for this surprise is that Apple’s iPhone market share has declined over the past few months in China.

According to a report from IDC, Apple was the top smartphone player in China in 1Q15, followed by Xiaomi, Huawei, Samsung (SSNLF), and Lenovo (LNVGY). However, according to a report from Counterpoint for 2Q15, Apple now ranks third in the smartphone market in China, behind Xiaomi and Huawei. The above chart shows that Apple’s share in the Chinese smartphone market has declined from 17.8% in 1Q15 to 12.2% in 2Q15.

Following Cook’s statement, Apple’s senior vice president Eddy Cue told USA Today that July 2015 was a record month for Apple’s App Store. We discussed this aspect of the business in Apple Had a Record July for Its App Store Business, noting that Apple’s App Store is able to beat Google (GOOG) Play’s business in terms of monetization despite having fewer apps.

Advertisement

More From Market Realist