Apple appears to have lost its charm in China, the world's biggest smartphone market, as sales in the country drop and regulation hurdles get tough.
The Cupertino, California-based tech giant saw iPhone sales fall for the first time since its launch in 2007. Fiscal second-quarter sales declined 16 percent, while net income dropped to $10.15 billion.
But things just got worse in China, which was once deemed as the company's major growth engine.
Apple recorded a 26-percent sales drop in the country, Hong Kong and Taiwan.
"China is particularly worrisome for Apple because it has risen quite quickly to become Apple's second-most important region," said Gartner analyst Brian Blau in a report by Bloomberg.
"That makes us wonder what the issue is, whether it's a temporary issue or whether it's going to be something longer-term," Blau added.
China's unpredictable consumers and the presence of local competitors such as Huawei and Xiaomi are partly to blame for Apple's sales decline, said The New York Times.
"Apple's second-quarter earnings report Tuesday showed how hard it can be to keep the attention of China's fickle and increasingly hard-to-impress consumers," the Times said.
"China's young, middle-class consumers are increasingly willing, analysts say, to try phones from the many competitors--including Huawei, Meizu and Xiaomi--that seek to compete with Apple on technical specifications and aesthetics but offer their models at a few hundred dollars cheaper," the Times added.
Additionally, Apple has failed to bring significant changes to its recent models that could convince users to ditch their old phones in replacement for a new one.
The iPhone 6s, for example, "lacks exciting new features," resulting in dismal sales figures, the Mirror Online said quoting research firm TrendForce.
Meanwhile, Apple's legal battles in China are only making its headache worse.
The company's iBooks Store and iTunes Movies services have been blocked by Chinese regulators.
"The rare about-face by China suggests that Apple could face further pressure as the Chinese government increases its scrutiny of U.S. companies' operations within its borders," the Times said.