While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be.
Sounds to me that it isn't just China. The new phones are even more expensive then the previous ones. It's kind of hard to imagine that those high prices have no impact on sales and I would have at least expected there to be a mention about pricing in the letter.