Apple WWDC: The China Backdrop

Happy Monday.  

It’s 6/3/2019, thirty years on from 6/3/1989.

The New York Times has published an editorial explaining why China cannot erase the truth of Tiananmen. And Ian Johnson’s analysis explains that thirty years on, someone always remembers despite the government’s efforts to make them forget.

In some ways, the world is interacting with a different China in 2019. In others, the tiger hasn’t changed its stripes.

And as its annual developer conference gets going in San Jose later this morning, WIRED reminds us that Apple could be a likely target for Chinese retaliation in the increasingly chilly U.S-China trade “Cold War.”

WIRED observes that many in China view the “aggressive US measures” on trade and IP as designed to prevent China from rising further, and the multipronged campaign against Huawei “is largely perceived in China as a naked attempt by Washington to kneecap a serious competitor in everything from mobile devices to networking equipment and especially 5G.”

But China could respond in a way that could take a big bite out of Apple’s profitability:

Beijing could respond by increasing tariffs on US imports into China and by making it more cumbersome for US companies to do business in China, through such moves as permitting delays and holding up shipments in customs. But if China is truly looking for revenge, it need look no further than Apple. The Cupertino company has a vast global business, but China represents a real vulnerability.

China represents 19 percent of Apple’s worldwide sales, with the iPhone making up the bulk of that. While China is not as fruitful a market for Apple’s burgeoning services business, it is and has been a strong and generally growing market for Apple’s devices—until the past year.

Already, without the government doing anything explicit, Apple’s China sales have slowed precipitously. It had 10 percent share of the smartphone market at the beginning of 2018; it now has barely 7 percent. Almost all smartphone makers have seen shipments decline in China. The exception? Huawei, whose market share and sales have modestly increased while its competitors, ranging from Apple to Samsung to Xiaomi, have fallen.

Or, WIRED goes on, the Chinese government “could simply ban the sale of iPhones in China using the same justifications that the US is using against Huawei: national security and data security.”

But with the Google/Huawei Android license dispute looming with an August extension of the original deadline, one imagines Apple could be safe through much of the summer if, for no other reason, they serve as a viable smartphone OS hedge for the Middle Kingdom

So with that as the backdrop, what, exactly, are we hearing that could be announced, shown, unveiled, etc at Apple’s biggest developer event of the year?

Topline: Possibly a new and improved MacPro on the hardware side. macOS 10.15 and iOS 13 on the iPad, with more possible convergence between the Mac OS and iOS through Apple’s Marzipan project (including confirmed new apps that include Apple Music, Apple Podcasts, and Apple TV).

Also expect updates on tvOS and watchOS, new AR, and likely pricing on the Apple Arcade service.

And oh yeah, a Dark Mode for iPhone owners. 

Will there be an upside surprise in today’s keynote or this week’s event?

Tune in a couple of hours and find out.