Apple is pivoting to services, but will that work in China?

Latest quarterly earnings show Apple’s services business grew 13% worldwide

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An Apple Store in Shanghai. (Picture: Qilai Shen/Bloomberg)

Karen Chiu

Published: 10:36pm, 31 Jul 2019Updated: 9:10am, 20 Sep 2019

This article originally appeared on ABACUS

Everyone’s waiting longer to upgrade their phones these days, so Apple has been focusing on bolstering services to boost earnings. The strategy seems to be having some success. The company’s latest quarterly earnings show services revenue grew 13% year-on-year.

Looking at Apple’s array of services, it’s easy to see how this strategy works in the West. But what about China? Is Apple’s pivot to services an effective move in a country that doesn’t have access to the iTunes Movie store and isn’t used to paying for music?

THE WECHAT EFFECT

For starters, one big barrier for Apple is WeChat.

WeChat’s multitude of features -- bolstered by an array of mini programs from third parties -- means it can handle almost every situation from inside the app itself. While outside China you might use one app to message someone, another to call a taxi and a third app to pay for dinner, inside China, all of that can be handled by WeChat.

Mini Programs: The apps inside apps that make WeChat so powerful

Since WeChat is virtually identical on iOS and Android -- and since people in China spend most of their time inside WeChat -- the differences between iOS and Android matter less in the country. In fact, it’s the one place where people are more likely to switch between iOS and Android. Recent data shows that more Chinese iPhone owners have been switching to Android handsets compared to a year ago.