Apple Inc. fell after influential technology analyst Ming-Chi Kuo warned that the company expects lower demand for iPhones in 2024. Shares fell 2% on Tuesday. The tech giant has cut 2024 iPhone shipments of key semiconductor components to around 200 million units. The analyst wrote in a report citing its latest supply chain survey. This will reduce shipments of the iPhone 15 and the upcoming iPhone 16 by 10% to 15%, he said.
China is a particular area of concern. Apple's weekly shipments in the country have fallen 30% to 40% in recent weeks compared to the year-earlier period, and Kuo expects the trend to continue. Apple declined to comment.
Apple shares fell to $187.87 in New York, marking the biggest intraday drop in two weeks. In 2024, there was little change in the stock.
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The company reported results for its holiday quarter on Thursday, and investors are looking for signs of rising demand — especially for Apple's biggest moneymaker, the iPhone. Although the iPhone has faced headwinds in China, where the government has imposed some restrictions on foreign technology in office, the device is still gaining market share.
The iPhone was the best-selling smartphone in the country for the first time last year, according to market tracker IDC. Apple's overall revenue is expected to grow by just 1% in the first quarter of the fiscal year ending in December.
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Apple overhauls iPhone features, App Store in EU to appease regulators
Apple Inc. It has launched a historic overhaul of its iOS, Safari and App Store offerings in the European Union, aimed at appeasing regulators poised to impose tough new antitrust rules.
The update will allow users to download software from outside the App Store for the first time, the company said Thursday. They will also be able to use alternative payment systems and more easily choose a new default web browser — addressing two frequent complaints from developers and lawmakers.
The big changes — coming in March as part of Apple's iOS 17.4 operating system — are a direct response to the EU's new Digital Markets Act, which imposes tougher restrictions on the biggest tech firms and boosts the EU Commission's powers as the region's fiduciary enforcer. However, Apple is facing a legal challenge against the rules through the EU courts.
The announcement is a big moment for both Apple and the EU. The App Store's closed design is a founding principle of technology – aimed at ensuring security, protecting user experience and increasing revenue. For the EU, the biggest test will be whether Apple's changes can force meaningful reforms in how the world's biggest tech companies operate.
The announcement rattled investors, who sent the shares negative after earlier gains. At 2:08 p.m. in New York, the stock was down less than 1% at $193.83.
Apple executives warned on Thursday that the changes risk undermining the company's longstanding emphasis on consumer security.
“Apple had to create the technology to allow an app to install other apps, and there's a risk inherent in that,” Phil Schiller, the longtime Apple marketing chief who now runs the App Store, said in an interview Thursday. “This can be a major threat vector to the privacy, security and integrity of your device. So Apple is putting technologies and policies in place to minimize and mitigate that risk.
Schiller added that in a big election year around the world — as related threats of malware and malicious technologies spread — downloading apps from alternative app marketplaces that don't share Apple's security standards could pose “new risks for consumers.” Company does not extend its content-related guidelines to third-party marketplaces.
As part of the overhaul, developers will be able to create tap-to-pay apps using the iPhone's payment chip, as well as browsers with third-party engines and extensive game streaming services. They can also request deeper access to iPhone hardware and software features.
The new policy will eliminate the up to 30% commission that Apple has charged developers since the launch of the App Store in 2008. They now pay the company a 17% cut on app sales, and this drops to 10% for most. Developers and subscriptions after their first year. The company is not changing its commission structure outside the EU.
However, there are new costs for software manufacturers. The company introduced two additional fees: a 3% payment processing charge for apps using Apple's in-app purchase system and a €0.50 fee per app install through Apple's Store or third-party marketplaces – for software with more than 1 million installs. times in a 12 month period.
More than 99% of developers in the EU will see their payments to Apple drop or stay the same, and less than 1% will pay an app install fee, the company said. The move also means that apps sold outside the App Store will not require a higher commission than the €0.50 fee.
The change could hurt Apple's services revenue, a key area of growth for the tech giant in recent years. That category now accounts for more than 20% of the company's sales, down from less than 10% a decade ago.
Apple's in-app purchase system doesn't apply to software downloaded outside of the App Store — a process called sideloading. When developers distribute their software that way, Apple only charges €0.50. However, the apps will still need to be notarized and checked by Apple for security threats, the company said.
Additional adjustments include new developer tools to allow third parties to create their own app download stores and web browsers without using WebKit — an Apple standard requirement since the App Store's inception.
Third-party app stores can only be installed from the developer's website. Many software makers have already said they intend to launch their own stores to take advantage of the changes.
For the first time, banks and other financial services can compete with Apple Pay on the iPhone and create tap-to-pay apps. Apple customers can also set up a third-party payment app or App Store as their default option in their Settings. In another concession, users will be prompted to select a default web browser when they first open Apple's Safari in iOS 17.4.
Bloomberg News reported on Apple's plans in December 2022.
Microsoft Corp. And Apple is also responding to long-standing complaints by allowing developers like Nvidia Corp to build an application that can stream an unlimited number of games in a single app. That change will be available globally.
The Digital Markets Act, or DMA, makes it illegal for certain platforms to favor their own services over those of rivals. Companies are prohibited from combining personal data across their various services or from using information collected from third-party merchants to compete with them.
In a related matter, Apple faces a hefty fine from EU antitrust regulators over how its App Store rules prevent music-streaming rivals from offering alternative, cheaper subscription options. That research was initiated by European music streaming giant Spotify Technology SA. The fine is up to 10% of Apple's annual sales – EU fines rarely reach that level.
Across the Atlantic, there is also an antitrust focus on App Store abuses. In mid-January, Apple and Fortnite maker Epic Games Inc. clashed over an antitrust lawsuit over the App Store. The US Supreme Court declined to hear the appeals, ending the case.
The trial judge in that case found that Apple's App Store rules did not violate federal antitrust law. However, she ruled that the company's restrictions on developer communications violated California state antitrust law.
Tim Sweeney, chief executive officer of Epic Games, responded to Apple's new policies, calling the plan a “harmful compliance”.
“They're forcing developers to choose between App Store exclusivity and store rules, which are illegal under the DMA, or accept a new illegal anti-competitive scheme full of new junk fees on downloads and new Apple taxes on payments they don't process. ,” Sweeney wrote on X, formerly Twitter.
However, the game maker has vowed to bring back Fortnite and launch its own app store for the iPhone. “Fortnite will return to iOS in Europe in 2024, distributed through the upcoming Epic Games Store for iOS,” the company wrote in X, which “will continue to argue to courts and regulators that Apple is violating the law.”
In anticipation of Apple's announcement, Spotify said earlier this week that it would distribute companion apps to its core service via the Web and launch in-app purchases on its iPhone software.
Margaret Vestager, the EU's antitrust chief, said on Thursday that the main question with Apple's changes was whether they were an attempt to comply with the new rules or an attempt to get around them.
“This will be our test,” she said during a briefing with journalists. “Is this a way to circumvent the intent of the law?”
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