tech

Apple fights for bigger slice of China smartphone pie

7 Comments

The world's biggest mobile network is ready to offer Apple's iPhone, but while the U.S. technology giant has declared China its biggest future market, it faces an uphill battle to unseat Samsung and homegrown competitors.

China Mobile has more than 760 million customers but for years it has declined to provide the iPhone as the two companies argued over commercial terms.

The country's other big mobile telecommunications firms, China Unicom and China Telecom, already stock the product, and China Mobile will join them on Friday.

Analysts expect the move to boost the number of subscribers for China Mobile and lift Apple's iPhone sales in China by millions -- but in all likelihood it is far too late for it to take the lead.

Although the iPhone commands fanatical devotion from its Chinese fans, South Korea's Samsung rules the smartphone market with more than 18 percent share, according to consultancy Analysys International.

Apple sits in a lowly eighth place with a 3.5% share as of the third quarter last year, with six Chinese companies ahead of it, many offering cheaper phones using the Android operating system.

"The domestic high-end smartphone market is much more diversified and competitive now, leaving users more choices," said Wang Jun, an analyst for Beijing-based Analysys.

"It's likely Apple will move up one or two places in the market-share rankings, but it's impossible for it to make it into the top three or four," he said.

China's Lenovo, renowned for buying IBM's personal computer business, is in second position, while two companies best known for telecom equipment and controversy over network security -- Huawei and ZTE -- are also in the top five, according to Analysys.

The iPhone launch just two weeks before the Chinese New Year, a traditional time for gift-giving, should benefit both China Mobile and Apple, analysts said.

But Kevin Wang, director of China research for consultancy IHS iSuppli, agrees that Apple has a tough job on its hands.

"Although cooperation with China Mobile will help boost Apple's sales and market share in China, it's unlikely that its share will rise to among the top three, given the intense competition in China's smartphone market," he said.

"Smartphones that cost around 1,000 yuan ($164) are the most popular," he added.

In the United States, an iPhone 5s with 16GB of storage retails for $649 while that same phone is $726 in Hong Kong -- the special administrative region that borders China -- and $867 in the mainland itself through the Apple Store, due to taxes and other charges.

The higher prices in China have given rise to a flourishing market for smuggled iPhones, eroding official sales in the country.

As a result, many China Mobile subscribers have already procured iPhones and use them on its network, though some functions suffer.

Apple's revenue in Greater China -- which includes Hong Kong and Taiwan -- still reached $5.7 billion for its fiscal quarter ended in September 2013, up 24% from the previous quarter, according to the company.

The firm does not reveal iPhone sales in China.

Apple chief executive Tim Cook said in January last year that he expected the country to become its largest market, though he gave no time frame.

Unlike many network providers in the United States and other Western countries, Chinese telecommunications firms require hefty up-front payments for iPhone and other packages.

But analysts said China Mobile will have to make its pricing attractive to potential subscribers to promote sales of the iPhone, which could eat into its profits.

China Mobile had yet to announce prices Tuesday, despite the imminent launch, but with investors also worried about profitability, its Hong Kong-listed shares had fallen 3.72% since the agreement with Apple was announced in late December.

China Mobile is majority state-owned and authorities in December awarded it a licence for 4G (fourth generation) services.

It plans the world's largest 4G network, promising faster speeds and a better quality service, a natural fit for the iPhone.

But some Chinese consumers are unimpressed by the combination. One microblog user posted: "Those who like the iPhone wouldn't wait for China Mobile to sell it. Those who dislike the iPhone will not like it after China Mobile launches it."

© (c) 2014 AFP

©2021 GPlusMedia Inc.

7 Comments
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Aww, poor Apple can't get a slice of the pie that they kept sending their parts to get assembled cheaply and then can't understand why they've already lost to "homegrown" competition after practically handing the blueprints for all their best equipment to the manufacturing capital of the world.

0 ( +2 / -2 )

Apple will have to sell there Iphones at much cheaper prices if they plan on getting some more market, but I somehow doubt they can do that. id be p@@sed if I bought an iPHONE and could get the exact same model in China for less than half the price.

-2 ( +1 / -3 )

Dude, you do not understand Apple nor China, nor the young Chinese Apple lovers! My Chinese students explain to me about their country and for many young Chinese, owning an IPhone is a HUGE status symbol! So if you do not use your $$ for food and other silly things like that, no problem! As long as you can be seen by everyone using an IPHONE, go ahead and sell your kidneys etc..and this is NO JOKE in China. So Apple knowing this about China, will they lower their prices?? Hell no!

1 ( +2 / -1 )

Every new market, every new product, the "experts" and pundits come out with all sorts of explanations why Apple cannot succeed or how they must change, etc., and every time they are wrong. This has been going on for 30 years so there's no reason to expect that the outcome will be any different this time. Ka-ching! Big success for Apple!

Wtfjapan, price discrepancies between different countries is natural, normal and unremarkable. Not everything in a retail price derives from the item itself. Included are things like overhead and labor costs in the retail channel. Storefront rent and clerk wages, for example, as well as the salaries of the truck drivers and warehouse workers. These all contribute to the point-of-sale prices. If those costs are higher in Japan than China, then the retail prices in Japan will be higher.

-1 ( +1 / -2 )

in a country where the average person doesnt have the money to spend on smartphones as much as say in Japan/US, yes Apple will have to drop there prices if they want to get more market share in China. whether they want to do that at the cost of lower margins is up to them. with Iphone global share dropping below 14%, only 3.5% in China. im guessing they will drop prices to get more customers

-1 ( +0 / -1 )

Getting real tired of your crap Apple

-2 ( +0 / -2 )

China Mobile has more than 760 million customers

What is missing from that statistic is the vast majority of China Mobile customers don't have any kind of smart phone. They have cheap feature phones and cheap phone plans.

Apple may equalize the price a bit, but they aren't going to make it cheap in China.

What to cheap smart phone? Buy an android phone. Want a phone that keeps getting OS upgrades? Then buy a Nexus or Motorola phone.

0 ( +0 / -0 )

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