Chinese phones pose threat to iPhone

San Francisco, Nov 15 

A raft of profit warnings from Apple Inc suppliers this week has fuelled investor concerns that iPhone sales, in terms of volume, have hit a wall that could spell trouble for the company's plans to make services its main pillar of growth.

For the past year, investors had largely been willing to overlook stagnating unit sales of the iPhone because average selling prices kept rising. But it now faces fierce competition from mid-priced phones from makers such as Xiaomi Corp .

Apple has often stated its plan to increase its revenue from paid services, such as Apple Music and iCloud. That, at least in part, requires a growing base of device owners driven by its iPhone, which analysts believe accounts for about two-thirds of the 1.3 billion Apple devices in use around the world.

Wall Street analysts have expressed concerns that slower overall smartphone sales will make it harder for Apple to hold smartphone market share as people put off buying its generally more expensive phones. 

Without volume growth in promising overseas markets such as India, Brazil and Russia, the worry among analysts and investors is that Apple has at least parts of its strategy wrong with too much emphasis on its premium brand and the high prices that go with it. — Reuters