China Bans Key Apple (NASDAQ:AAPL) Service, Growth Dampened

China Bans Key Apple (NASDAQ:AAPL) Service, Growth Dampened

China’s blocking of Apple mobile entertainment services in presents fresh challenges for the giant tech company as it prepares to report its 1st-ever fall in iPhone sales. specifically Apple movies and book store were shut down by the government.

The news on Thursday that Apple’s online book and film services had gone d”dark” in China came at a bad time for the company. Apple executives said that iPhone sales will fall for the 1st time in Q-2, and the results for that Quarter will be released Tuesday. Investors are sensitive to any signs of trouble in China, the company’s 2nd-largest market by revenue after the US.

Apple executives flagged the growing services business as a potential Key source of revenue as sales of the company’s flagship gadgets fall off pointing to the importance of its Chinese market.

Last Thursday it was reported that a Chinese state regulator demanded Apple halt the service. The move came after Beijing introduced regulations in March imposing strict curbs on online publishing, particularly by foreign firms.

The outage is very troubling if it persists.

Apple said in a statement on Thursday that it hopes to make the services available to customers in China as soon as possible.

This the beginning of more pressure on Apple by the Chinese government?

The company released its book and movie services in China late last year, the regulators halted it early this year.

“People who are buying iPhones in China aren’t buying them for iTunes,” said an Apple senior executive. “They are buying it for the status and the cachet of owning an Apple product, and that is really more about the hardware.” Do not be so sure, as Apple is losing some its cachet throughout its markets.

Chinese consumers’ appetite for iPhones is Key to Quarterly earnings. Apple is expected to report a fall in iPhone sales, to about 50-M units, reflecting a saturated global market for Apple products.

Wall Street expects adjusted EPA to drop 14% to 2.00 and revenue to drop 10% to $52.0-B.

Have a terrific week.

Paul Ebeling