Apple is providing free battery replacements for faulty iPhone 6s units. (Photo : Getty Images)
Apple's sales in China continue to stagnate as various Apple stores in China report dismal revenue because of the tough competition that the company continues to face in the country.
Analysts see that the low sales are prompting the company to boost research and development. Apple's attempt to make up for lost sales is to look for other markets, according to industry observers.
Motley Fool analysts and Apple shareholders Dylan Lewis and Evan Niu, CFA, expressed their observations on the company's latest performance ratings and their breakthroughs in R&D.
Niu said, "I think there are some questions about, why is R&D expenditure growth growing at this accelerated pace? Apple is really good at efficient spending on R&D. A few years ago, it used to always be 2 to 3 percent of revenue range, which is tiny. A lot of other tech companies are like 10 to 15 percent."
Financial analyst Neil Cybart agreed. The analyst wrote that Apple's spending on R&D has dramatically increased since 1996.
He stated, "This is a remarkable feat considering that Apple was spending a little over $3 billion per year on R&D just four years ago."
The often accurate analyst of Apple trends also predicted that "It'll no longer be the 'iPhone company.'"
According to Lewis, this move of the company is not creating confidence from investors. He believes that there is more risk involved especially with Apple sales declining in China.
He said, "Which is maddening as an investor. They're like, "Don't worry, we're spending it well, we're allocating resources great, just trust us."
Niu added that despite the decrease in sales, it is not the end for Apple in China.
He said, "Now they're basically $45 billion to $50 billion (worth of Apple companies). You can't argue with the long-term trajectory of it. And there's still a lot of room to grow; this is nowhere near the end game. China is still nowhere near saturated, there's still tons of first-time smartphone buyers. The middle class is still booming."
