Apple, a smartphone company that also makes computers, lost almost 10 percent of its stock value yesterday after the company lowered its earnings projections. Just a few months ago, the company became the first to reach a trillion-dollar valuation. Now it’s worth about $675 billion, having shed almost a third of its value since its summer high.
In a lengthy letter to shareholders explaining the change in expectations, Apple CEO Tim Cook mostly blamed China: The country has been a huge market for Apple, and quarterly sales there missed targets, a situation made worse by a U.S. trade war with the country.
But that’s not the whole story. Cook also revealed that “some developed markets”—that probably means the United States and Europe—were seeing lower iPhone upgrade rates. More people chose to replace their existing phones’ batteries or just keep older devices for longer, given the high price of the hardware and the decline of wireless-carrier subsidies. In other words, more people are hanging on to their phones rather than buying new ones.
Apple still sells a lot of hardware and makes a lot of money—$84 billion for the quarter that just ended, according to Cook’s new guidance. But that revenue had been growing so much, for so long, that investors expected it would continue, whether from iPhone sales or something else just as big that Apple would invent and bring to market. But nothing is as big a product as the iPhone, and the global market has reached a point where almost everyone who wants or needs a smartphone has one already.