Apples iPhone is popular in China, but many profitable services have not been implemented

 Apples iPhone is popular in China, but many profitable services have not been implemented

Although standard iPhone services such as IMessage can be used in China, a number of paid services that help Apple earn recurring revenue from devices have not been launched in China.

For investors, this is a concern because Apple relies on services to drive future performance. If the company cannot sell these products in a large Internet market, it will be more difficult for it to maintain growth. About 10% of Apples service revenue comes from China, which accounts for about 18% of iPhone sales, said Dan ives, an analyst at wedbush securities. The missing piece of Apples services business is China.

Older services, such as the app store store, applepay, applemosic, and icloud, are available in China.

Other apple apps are also accessible in the country, but sometimes they lack the features available in other countries, such as the apple podcast app.

In fiscal 2015, thanks to the booming iPhone sales, Greater China generated $59 billion in revenue and became Apples second largest market. But iPhone sales have slowed in recent years, with the company turning some of its focus to services. Its a $46 billion business a year, and apple expects it to be a major source of growth for the company in the future, with revenues of more than $50 billion by 2020. As a result, apple faces more risks in China due to the unavailability of some service products.

However, at last weeks fourth quarter conference call, cook was optimistic that Apples service business in China was growing at a double-digit rate.

Some analysts are also optimistic about the long-term outlook for Apple services in China. To some extent, it will be the economic forces that will drive Apples services business, which will be a major benefit for apple and other companies currently restricted from entering China. Ivan feinseth, chief investment officer of Tigress financial partners, said.

He added that Apples app stores and other services have great potential, and while some services are not available to Chinese consumers, the company has the ability to grow.

Some analysts believe that to maintain growth in China, apple either needs to launch more services in China or look for the next hardware explosion beyond the iPhone.

Apple still has opportunities in hardware, especially future iPhone models, airpods, applewatch and other wearable devices. Said Munster. (ROBOM)

Source: Wang Fengzhi, editor in charge of Netease Technology Report