Apple stock peaked back in April at a per share value of $134.54, which has now fallen to $106.03 per share as of Friday representing a collective loss of $160 billion in value. Based on a perceived decline in demand for iPhones, Apple is at a risk of posting its worst year since 2008.
Kristen Scholer wrote in The Wall Street Journal blog, “Shares have turned south. They’ve declined in five of the past six months and the year-to-date performance dipped into the red in recent days. Apple is now down 3.9% for 2015. If Apple’s stock closes lower for the year, it would mark the first annual decline for the company’s shares since 2008.”
Scholer wrote “analysts have been sounding the alarm about what they see as indications of underwhelming iPhone sales. Some analysts are even projecting a decline in sales for the fiscal year ending in September.”
Let’s take a closer look at the smartphone sales trend using data published in August by IDC in its Worldwide Quarterly Mobile Phone Tracker report.
IDC researchers found a slowdown in growth of smartphone purchases in China, a very important growth market for Apple and its signature iPhones, are slowing.
“IDC expects to see a noticeable slowdown in smartphone shipments in 2015 as China joins North America and Western Europe in a more mature growth pattern,” the report noted. However, steadily falling average selling prices will fuel steady growth through the end of the forecast period, with global shipments reaching 1.9 billion units in 2019.”
The IDC analysis continued to note, “China remains the focal point of the global smartphone market in 2015, although the results haven’t been as positive as in previous years. As the largest market for smartphones – China consumed 32.3% of all new smartphone shipments in 2014 – its importance remains great even if its growth has begun to slow. Shipments are forecast to grow just 1.2% year over year in 2015, which is down from 19.7% in 2014. China will remain the largest market for smartphone volumes throughout the forecast period. However, its share of the overall market is expected to drop to 23.1% in 2019 as high-growth markets like India continue to expand.”
The report concluded that although the iPhone is hugely successful, the fact remains Android OS-based smartphones have an 81% market share projected to continue until 2019.
IDC program director Ryan Reith said India could supplant China in terms of market growth.
“It’s not the market with the most potential upside,” Reith said. “The interesting thing to watch will be the possibility of manufacturing moving from China and Vietnam over to India. We’ve begun to see this move as a means to cut costs and capitalize on financial benefits associated with localized India manufacturing. It is the local vendors like Micromax, Lava and Intex that will feel the most pressure from international competition within its market.”
