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Apple gaining ground in China, now fifth largest player

But will the China Mobile deal make much of a dent if iPhone prices remain high?

Technology trends and news by Faith Merino
February 19, 2014 | Comments
Short URL: http://vator.tv/n/3524

Apple’s deal with China Mobile has barely gotten underway and already, it looks like the iPhone is making strong gains in the Chinese smartphone market. Data from IDC reveals that Apple’s market share in China rose by one percentage point to 7% in the fourth quarter, making it the fifth largest smartphone maker in China, according to the Wall Street Journal. As of 2012, Apple had slipped to sixth place.

The growth in iPhone sales was no doubt driven largely by the emphasis Apple placed on China in the last year. Notably, the launch of the iPhone 5S and 5C in China last September took place on the same day they launched in the U.S. In the past, the iPhone didn’t go on sale in China until months after the U.S. launch. Apple even held a parallel launch event in Beijing at the same time as the U.S. launch event.

Looks like all that attention on China is paying off, as the numbers from IDC refer specifically to the fourth quarter, while Apple didn’t start selling iPhones through China Mobile until January. The largest carrier in China, China Mobile has 760 million subscribers. IDC estimates China’s smartphone shipments will exceed 450 million in 2014, and China Mobile in particular will ship 32 million TD-LTE smartphones this year. That will no doubt boost Apple's numbers. 

BTIG estimates Apple will sell 38 million iPhones in China in the second quarter. Apple claimed that it saw more iPhone activations in China in the first week after signing the China Mobile deal than any other week previously.

Samsung still retains the number one spot in China with 19% of the smartphone market in the fourth quarter, followed by Lenovo Group, Coolpad and Huawei. Globally, one in three smartphones sold are Samsung phones. Apple’s global market share slipped to 15% in 2013 from 19% in 2012.

But will the China Mobile deal end up doing that much for Apple’s position in the Chinese market? The company gave fairly low guidance for the next quarter, which seems to indicate it’s anticipating low smartphone sales—which, of course, doesn’t jibe with its claims that iPhone activations are booming in the wake of the China Mobile deal.

The iPhone 5C didn’t do well last quarter, with Tim Cook admitting as much in the company’s earnings call last month. Many investors fear that it’s because the unsubsidized iPhone 5C is still too expensive for many Chinese consumers. Apple was expected to release an 8 GB iPhone 4 in India for an estimated $245 (R. 15,000), but Apple ended up setting the price at $370 (R. 22,900).

“Lower pricing on legacy products can drive incremental demand but we think it would take a cut to below $300 to address the unsubsidized emerging markets,” wrote BTIG analyst Walter Piecyk, in a blog post last month. 

 


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