The United States ban on Chinese WeChat App could cause massive iPhone sales collapse by 30% says analyst
After the TikTok App, the United States government has banned transactions on another Chinese App WeChat. WeChat is the Chinese equivalent of WhatsApp and much more. It can be used for multi-purpose messaging, social media, and mobile payments and is developed by Tencent. WeChat has been described as China’s “app for everything” and a “super app” because of its wide range of functions.
The US administration says that the WeChat instant messaging App collects users’ data and shares it with the Chinese government. For this reason, President Donald Trump through an executive order recently banned U.S. transactions with WeChat and parent company Tencent.
How Apple’s iPhone will be affected by the United States WeChat ban?
Though there is no direct connection between Apple’s iPhone and Chinese WeChat App, analyst Ming-Chi Kuo feels it could impact iPhone sales. In a note to the investors, Kuo says that that banning the WeChat app in the App Store for the global market would have a devastating effect on Apple iPhone sales. Kuo says he expects iPhone sales to drop by as much as 30 percent just for this reason.
Kuo bases his reasoning on the fact that WeChat is extremely popular in China and banning the WeChat App on Apple’s App store could force Chinese iPhone buyers to discard Apple’s brand in favor of some other smartphone brand.
“Because WeChat has become a daily necessity in China, integrating functions such as messaging, payment, e-commerce, social networking, news reading, and productivity, if this is the case, we believe that Apple’s hardware product shipments in the Chinese market will decline significantly. We estimate that the annual iPhone shipments will be revised down by 25–30%, and the annual shipments of other Apple hardware devices, including AirPods, iPad, Apple Watch, and Mac, will be revised down by 15–25%,” Kuo explains.
Kuo also added that Apple sales could drop by up to 6 percent if WeChat is banned only in the US.
History proves Kuo wrong
There is nothing called absolute necessity. Banning WeChat cannot be the end of the world for iPhone sales as Kuo suggested. Historically, the vacuum created by banning/removing any App software has been filled in by a better version. Once upon a time, Netscape Navigator was heralded as the Internet gateway for PC users. However, Microsoft used its dominant market position to kill Netscape Navigator by bundling its own Internet Explorer. Over the years, Netscape and IE have been forgotten and we have browsers like Chrome and Firefox. This has happened with MySpace, Orkut, Google+ as well. The tech services industry is one of the most dynamic sectors in the world where a newer idea often pushes out the old.
Even if Apple bans WeChat from the App Store, there are plenty of alternatives available to iPhone users. In fact, WhatsApp is slowly and surely moving into the mobile payments space. Therefore Kuo could be wrong in his predictions. For now, however, specifics on the ban are still pending, so it remains to be seen how Apple manages to deal with the whole thing if WeChat ends up being forbidden in global app stores.