Apple’s stunner

[Bloomberg] [Fully Charged]( From [Bloomberg](   [FOLLOW US [Facebook Share]]( [Twitter Share]( [SUBSCRIBE [Subscribe]](  Happy 2019, everyone. This is [Shira](mailto:sovide@bloomberg.net), kicking off the new year for the Bloomberg Technology newsletter by digesting Apple Inc.'s downgrade to its expected revenue, and the company's attempts to counteract the forces behind it. Late on Wednesday for the first time in almost two decades, Apple said revenue for its fiscal quarter ended in December would fall[ far below]( what the company had expected just two months ago. The biggest culprits, Apple said, were slowing economic growth in China and unease among shoppers in that country because of the ongoing U.S.-China trade war. Apple's news was a shocker. More businesses that have come to rely on sales growth from China's consumers may be in for a rude awakening. It's also a reminder that geopolitical tensions matter to companies' bottom lines. Apple hadn't given any hints it saw red flags in the region that includes China, Taiwan and Hong Kong—which collectively generate about one-fifth of Apple's revenue. As recently as November, executives said Apple's business was going strong in China, even amid signs then that slower economic growth was hurting Chinese sales of some consumer items such as [cars](. Cook also had expressed confidence that the U.S. and China would resolve their trade disputes amicably. Recent weeks, of course, have been filled with grim news for Apple about what looked like [weaker-than-expected interest]( in its new iPhone models. Indeed on Wednesday, Apple acknowledged that even outside of China, existing iPhone owners weren't buying the freshest models at the rate the company thought they would. The company ignored patently obvious changes in smartphone buying trends, until it [couldn't deny reality any more](. In a [letter to stockholders](, Apple Chief Executive Officer Tim Cook said his company can't change global economic conditions, but it would do more to control what it can. One initiative he mentioned was making it simpler to trade in an older model iPhone at Apple's stores, finance the purchase over time and get help moving the apps and other data from an old iPhone to a new one. The problem with this initiative is that Apple already offers such a [program]( in the U.S. to spread out the costs of new iPhone purchases, and so do many mobile phone companies. That's critical because in the U.S., the vast majority of smartphones are sold by mobile phone companies rather than by Apple or other makers. Existing initiatives haven't altered the smartphone market reality. People in the U.S. and many other established markets are holding onto their gadgets for longer than they used to—more than three years on average in the U.S., up from about two years in 2014, according to mobile industry consultant Chetan Sharma. At Verizon Communications Inc., for example, about 5 percent of its contracted mobile customers opted to get a new smartphone in the third quarter. The figure three years earlier was 7 percent. (See Verizon's investor [presentation]( here.) Even small changes in habits have a big effect on companies such as Apple. The company sells the vast majority of new iPhones to people who already own one of the devices. Every person who keeps a three-year-old iPhone for one more year is one fewer new iPhone sold. Unlike China's economic conditions that might have changed significantly in the last couple of months, Apple should have seen and started reacting to those smartphone buying trends years ago. It's a pity that in trying to justify Apple's dramatic change in financial performance, Cook didn't offer stunned investors any better solutions than the tactics the company and its partners have already tried.—[Shira Ovide](  And here’s what you need to know in global technology news: Netflix Inc. hired a new chief financial officer, and stirred some drama. The new finance chief, Spencer Neumann, was fired by his former employer, Activision Blizzard Inc. He had a clause in his Activision contract that [limited his ability]( to seek another job. The streaming video company also [pulled an episode]( of a comedic talk show from Saudi Arabia after the government there said a segment critical of the country's de facto leader violated a local cybercrime law. And a recently released Netflix horror movie, "Bird Box," drew large [viewership numbers]( and inspired many [good]( [memes](—which of course people took dangerously [too far](.  Boundless optimism about autonomous driving has been [tempered]( by technology challenges, safety concerns and big questions about business models.  A stock analyst suggested Amazon.com Inc. should [open its own gas stations](.  China's intensifying crackdown on its shadow banking industry may [result]( in 70 percent of the country's peer-to-peer lenders closing, according to one estimate.    You received this message because you are subscribed to the Bloomberg Technology newsletter Fully Charged. 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