They may be new and cutting-edge, but the latest iPhones are failing to attract as many consumers as Apple expected.
On Wednesday, Apple CEO Tim Cook issued a rare letter to investors, warning them that company sales during this past fourth quarter won't hit the original $85 billion to $93 billion in revenue the tech giant had originally projected.
Apple now estimates that the quarterly sales will only come in at $84 billion — or about about $4 billion less than what the company raked in a year ago.
So why the slowdown? According to Cook, fewer people are buying the new iPhones in one of the company's biggest markets: China. But he isn't blaming the downturn on the product's high price in the country, which can start at $1,265 for an iPhone XS.
Instead, Cook is pointing to the US's ongoing trade war with the country for worsening the economic conditions in China. "The effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed," Apple's CEO wrote in his letter.
"Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance," he added.
Another factor in the slowdown: Apple's decision a year ago to offer $29 battery replacements for older iPhones, which can help prolong the devices' performance. This led some consumers, particularly in developed markets, to stick with their existing iPhones rather than upgrade to the new, but more expensive models.
On top of all this, some consumers held off on buying a new iPhone because of fewer carrier-backed subsidies, which can help lower the total cost of a new device, Cook said. "We have sort of a collection of items going on," he told CNBC. "Some macro-economic and some that are Apple specific."
The revised guidance from Apple comes as total sales in the smartphone market have been struggling to grow, at a time when product prices are reaching beyond $1000. One study recently found that US consumers will on average wait 2.83 years before upgrading to a new handset.
To help encourage sales, Cook said his company has been offering trade-in deals, where a consumer exchanges their old iPhone to help go toward paying for a new model.
The good news for Apple is that demand for non-iPhone products remained high during the fourth quarter. "Wearables grew by almost 50 percent year-over-year, as Apple Watch and AirPods were wildly popular among holiday shoppers," Cook wrote in his letter. Mac products and the iPad are also on track for year-over-year revenue growth.
The company is slated to report the full fourth quarter earnings later this month on Jan. 29.