Apple’s China revenue dropped off a cliff this quarter

Apple’s revenue numbers for what it calls Q3 2016 are in, and there’s only one word for how the company did in China: ouch.

For this quarter, Apple reported US$8.85 billion in greater China (including Taiwan and Hong Kong) revenues. That’s a massive 33 percent drop year-on-year (Apple reported US$13.23 billion in greater China revenue in Q3 2015), and a 29 percent drop from last quarter. Last quarter was record-breakingly bad for Apple, so a further drop isn’t exactly good news.

This is the global overview of Apples revenues since 2013 for the five main geographies that it uses in its breakdown. Europe has edged past greater China to regain the number two spot:

And this is how it looks with the greater China region on its own:

Downer

Apple did get some good Asia news out of Japan. Japan revenues are actually up almost 23 percent year-on-year to US$3.53 billion. But the rest of Asia let the Cupertino company down, falling to US$2.38 billion – a 19.5 percent drop year-on-year. Apple’s total revenues from across Asia add up to US$14.75 billion, a 22 percent year-on-year drop.

Before last quarter, iPhone sales had never dropped year-on-year. Now it’s happened twice in a row.

iPhone, iPad, and Mac unit sales numbers all dropped year-on-year as well, and again it was the iPhone that had the biggest slump, with unit sales dropping 15 percent year-on-year.

Before last quarter, iPhone sales had never dropped year-on-year and total revenue hadn’t dropped since 2003. Now, both of those things have happened for two quarters in a row, and according to Apple’s Q4 guidance, investors should expect another year-on-year drop in Q4.

If there’s a silver lining for Apple, it’s that these results are actually less bad than investors initially anticipated. In fact, Apple’s stock actually jumped five points in after-hours trading following the release. Also, the company’s services business – which Apple expects to play an increasingly important role – grew 19 percent year-on-year, although it still accounts for less than 15 percent of the company’s total revenue.

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