Apple Inc’s share of China’s booming smartphone market slipped for a second straight quarter in October-December, as it lost ground to cheaper local brands and as some shoppers held off until after the iPhone 4S launch last month.
With the number of mobile subscribers set to top 1 billion in China this year, there is cut-throat competition among South Korea’s Samsung Electronics Co Ltd, Nokia, Apple and Chinese firms Huawei Technologies Co Ltd (華為) and ZTE Corp (中興).
While Apple regained its top spot as the world’s largest smartphone vendor in the fourth quarter and for last year as a whole, it slipped to fifth place in China, overtaken by ZTE. Apple’s China smartphone market share slid to 7.5 percent from 10.4 percent in July-September.
In the last quarter, Samsung knocked Nokia off the top slot, taking 24.3 percent of the market, more than three times Apple’s share, data from research firm Gartner showed. Nokia’s market share more than halved last year, from more than 40 percent in the first quarter to less than 20 percent by the fourth quarter.
“Chinese handset makers have been actively promoting their smartphones with China’s three telecoms operators, so we saw ZTE and Huawei gain significant market share,” Taipei-based Gartner analyst C.K. Lu said.
Gartner said this week it expected Apple’s iPhone market share to slip for a couple of quarters as the novelty of its latest 4S model wears off.
In the first quarter of last year, ZTE had a market share of just 3 percent, but ended last year ranked fourth, with more than 11 percent market share.
Chinese firms are gradually shifting toward the higher end of the market, unveiling more feature-packed smartphones.
“If you want to sell handsets to the mass market, a simple rule of thumb in China is that the handset price has to be close to 70 percent of the monthly salary,” Singapore-based Frost & Sullivan analyst Jayesh Easwaramony said. “Today, an iPhone is more than two months’ salary.”
This, Easwaramony said, gives the likes of Huawei and ZTE the opportunity to cater to a mass market that is captivated by the iPhone, but does not have the purchasing power for it.
However, given the sheer size of the Chinese market, just targeting the highest-end users should be enough for Apple, though it has not always been a smooth ride.
Analysts expect Apple to stem its slide in market share in China by signing up another carrier.
China Unicom (中國聯通), the country’s No. 2 telecoms operator, is currently the only carrier to officially carry the iPhone. It has not officially given its iPhone sales, but analysts estimate it has sold about 3 million iPhones since signing a contract with Apple in 2009.
China Telecom Corp Ltd (中國電信), the third and smallest operator, is expected to be next to clinch a similar deal with Apple later this year, and analysts predict it would sell about 1.4 million iPhones this year if it can reach a deal with Apple by May, rising to between 2 million and 4 million new iPhone users next year.