In Apple’s Q1 2020, iPhone Rebounds and Wearables Soar

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Thanks to the iPhone 11, Apple’s iPhone product segment saw a return to growth in Q1 2020, while iPad and Mac sales were off. Meanwhile, the Wearables and Services categories continue to grow.

Apple has lowered its guidance due to reduced Chinese production and demand caused by COVID-19 (aka coronavirus).

Long-term, this doesn’t seem like it will be a big deal, and it’s something that lots of companies that manufacture or do business in China are dealing with.

Another reason Apple should reduce its reliance on China.

Agreed. A temporary supply shortage won’t kill the pent-up demand for product. So there will be a shortfall this quarter followed by a windfall next quarter, with everything averaging out (more or less) what it would have been.

It would require a significantly extended shortage to convince customers to switch to competing products, since the competing products are not interchangeable with Apple products.

Companies making Android phones/tablets and PC computers may find it more difficult because their competition makes products that can be drop-in replacements. For them, a supply shortage may mean lost business that won’t come back when the shortage ends.

I think Tim Cook is being overly optimistic. He implies that it’s only a short term supply problem Apple will be having with China due to the coronavirus, I think there’s more to it than that. China had a significant economic slowdown that it hasn’t nearly recovered from, and until this past quarter, it badly affected Apple’s sales. Add in continuing bad publicity about US and China trade relations, and though Apple did report sales growth in China, but it came after a bad stretch:

China is the biggest mobile phone market in the world, in addition to being the world’s supply source for iPhones. It’s a double edged, supply and demand, sword. And the US/China trade war isn’t helping either.