Low-Cost Devices Fuel China's Smartphone Market as iPhone Sales Dip

[pika2000]

What Huawei and Oppo (Vivo is part of Oppo) and Xiaomi are doing is killing Samsung.
Apple is not playing at the thin margin volume sellers. I mean seriously, even if you get single digit market share in China, that's a HUGE number. The fact that Apple can be in the top 5 itself, with only high priced phones and simplified lineup (instead of the dozens the competitors are doing) tells you something.

 

[Gudi]

On the cheaper end the issue is to convince the consumer that the cheap product is good enough. Until Apple shows up with something to again pull away from the pack the cheap phone "message" is making more sense. Apple dropping its price is not the answer. You cannot compete and make any profit on cheap. The answer is for Apple to announce products that provide sufficient differentiation to justify the cost.

To create sufficient differentiation does not entirely lie in Apples own hands. The cheaper end also needs to fail at being good enough. The I'm a Mac campaign worked, only because it could show how Windows was not good enough.

W7 was actually quite good, but then came W8. Trust me!​

 

[unclemax]

You can stop your BS all together.

2 year contract is not thing in China. Most people buy unlocked phone. Most people don't sign into 2 years contract.

You try to abolish carrier subsidy for iPhone. You will see iPhone sale down to the toilet. This is exactly what happen in Chinese and Indian market.

All the list of thing you listed aren't really applicable to Chinese market. China has its own thing, where people are not locked into Apple's ecosystem. Chinese people has its way to finding apps, music. Apple Stores in China are still not common place in China. People aren't use Apple's services. iOS still lacking some basic features that offered in mosy Chinesr phone makers.

You know nothing about Chinese market. All you know is that Apple is awesome in west, same logic must apply to China.


Huawei, Oppo, Meizu and Xiaomi are abousltly killing Apple.

It does not really matter Apple's market share is one digit or two digits. The fact is Apple's share in China is dropping and dropping realtive fast.

Well, I currently live in China and I don’t see it the way you describe. iPhone is hugely popular here, I see so many iPhones 6/6S/6 Plus/6S Plus, even taxi drivers use them. And two of my colleagues have recently bought 5S. My guess is that nowadays everyone wants to own a smartphone or two because it is so crucial in China, you can pay utility bills, pay for goods using with WeChat wallet or Alipay (in supermarkets or to street vendors alike), hail a car, etc. Hence the hike in sales of cheaper phones. They also get obsolete quicker. But iPhones are sought after because of their robustness.

One thing that I would be really concerned about though is how Apple Pay landed dead in the water in China. So much so that many places don’t sport Apple Pay logo even though they can accept contactless payment. The reason is that you still have to enter your PIN code on the terminal after you touch it with the phone and authenticate with finger. How is that supposed to compete with Alipay or WeChat Wallet where all you do is present a barcode for cashier to scan?

 

[LovingTeddy]

Well, I currently live in China and I don’t see it the way you describe. iPhone is hugely popular here, I see so many iPhones 6/6S/6 Plus/6S Plus, even taxi drivers use them. And two of my colleagues have recently bought 5S. My guess is that nowadays everyone wants to own a smartphone or two because it is so crucial in China, you can pay utility bills, pay for goods using with WeChat wallet or Alipay (in supermarkets or to street vendors alike), hail a car, etc. Hence the hike in sales of cheaper phones. They also get obsolete quicker. But iPhones are sought after because of their robustness.

One thing that I would be really concerned about though is how Apple Pay landed dead in the water in China. So much so that many places don’t sport Apple Pay logo even though they can accept contactless payment. The reason is that you still have to enter your PIN code on the terminal after you touch it with the phone and authenticate with finger. How is that supposed to compete with Alipay or WeChat Wallet where all you do is present a barcode for cashier to scan?

I also see Huawei, Xiaomi and lesser extend Meizu and Oppo everywhere when I was in China last year. What is your point.

Talking about obsolete. I have a Redmo Note 1 from Xiaomi and Meizu MX 4, still going strong. It is entirely up to the owner judging if their device is obselte.

 

[fermat-au]

Solution for which problem?

For the fact that Apple is still #1 in revenue and also #1 in profit and also #1 in software sales?

You bring up an important issue. Apple has a problem,a good kind of problem. Apple has a large loyal group of user who will update their iPhone every 24 months, if Apple where to drop the price they would would sell some more iPhones but would reduce their revenue from their loyal user. In fact Apple has gone the other way in recent years. The iPhone plus was +$100 and keeping the 16GB base model pushed more people to 64GB another +$100, both pushing up ASP. The Apple Watch, as it requires an iPhone, could be viewed as an accessory, again Apple is making more revenues from their loyal user base rather than expanding their user base

 

[kdarling]

What Huawei and Oppo (Vivo is part of Oppo) and Xiaomi are doing is killing Samsung.

In China, yep. Yet even Xiaomi is suffering now. Brand loyalty seems fluid, with Chinese consumers wanting whatever is currently seen as unique and with bang for the buck.

Apple is not playing at the thin margin volume sellers. I mean seriously, even if you get single digit market share in China, that's a HUGE number.

Assuming you define under nine million as HUGE. (Apple's China sales last quarter estimated between 7.3 and 8.6 million.)

, if Apple where to drop the price they would would sell some more iPhones but would reduce their revenue from their loyal user. In fact Apple has gone the other way in recent years. The iPhone plus was +$100 and keeping the 16GB base model pushed more people to 64GB another +$100, both pushing up ASP.

Apple did add a lower priced phone, and it did reduce revenue.

The success of the SE pushed iPhone ASP back down again, dropping it by 10% ($660 down to $595).

 

[pika2000]

Assuming you define under nine million as HUGE. (Apple's China sales last quarter estimated between 7.3 and 8.6 million.)

Depends on what your metric is. I mean ~8-9 million is already more than the population of some countries. Sure, percentage wise, it's tiny for China. But then again, Apple is not playing the volume seller game.
I am curious about the China sales number, considering many Chinese are buying their iPhones from Hong Kong and Japan (and other countries as well).

 

[Shirasaki]

I am curious about the China sales number, considering many Chinese are buying their iPhones from Hong Kong and Japan (and other countries as well).

Should these be counted as sales in other countries but not China?

 

[pika2000]

Should these be counted as sales in other countries but not China?

Yeah. What I meant is that the sales number from China may not reflect the actual usage market share in China.

 

[Shirasaki]

Yeah. What I meant is that the sales number from China may not reflect the actual usage market share in China.

And you know, this, theoretically, applies to every single country where iPhone is sold. Maybe other countries data is closer to a real deal I don't know.

 

[kdarling]

Depends on what your metric is. I mean ~8-9 million is already more than the population of some countries. Sure, percentage wise, it's tiny for China. But then again, Apple is not playing the volume seller game.

Apple has been putting their toes in the cheaper waters to see how investors react. Witness the SE model.

As more and more people realize that a good smartphone doesn't have to cost a lot, I think Apple has two choices: stay in the dwindling higher price market with phones and expand their core business into more fields to make up the revenue, or continue to come out with less expensive models for much of the world.

I am curious about the China sales number, considering many Chinese are buying their iPhones from Hong Kong and Japan (and other countries as well).

Good question. According to the NYT, such markets have dropped through the floor as well.

"For years, smugglers have done a brisk business taking iPhones to mainland China from Hong Kong, where they cost less. But even the illegal sellers are feeling the pressure. In interviews, four smugglers who did well a year ago said they had now quit the trade."

- NY Times: Apple iPhone, Once a Status Symbol in China, Loses Its Luster

 

[pika2000]

And you know, this, theoretically, applies to every single country where iPhone is sold. Maybe other countries data is closer to a real deal I don't know.

Yeah. After personally seeing how Chinese tourists bought iPhones in Japan like hotcakes, I have to wonder.

 

[hotspring21]

To the hell with units sales!

Most of those smartphones are under $150 and $100.

Who cares about unit sales?

Apple has their own stores, so 3rd party retailers can stop stocking iPhones, that's no problem for Apple. But they won't, because retail margin on iPhones are quite considerable.

Developers know that iPhone users are the most engaged users in the market, more likely to hail a ride, or buy digital goods, the AppStore is #1 world wide, so software is not going anywhere.

So what's really the point of unit sales and this stupid "Apple vs World, and World decides the rules" war?

Apple might be losing sales because lots of people upgraded from 2 year and 1 year iPhones to the 6 promptly and now don't see a reason to upgrade and the second hand market was flooded with 5's and 5s's. The rethoric that Apple is losing sales because of smartphone quality vs the competition is ridiculous. In 2015 there were the same quality phones for low prices and in 2014 the same was also true.

Also, those numbers are false, Kantar reports 17.9% for iOS in China. So one is lying. I would say Digitimes source is lying. Either the data is trustworthy or it's not. And it's not.

Look closer - Kantar only report for URBAN CHINA (~50% of China market), while Digitimes report smart phone market for ALL of China. So yea, the figure makes perfect sense. For ENTIRE China, iphone market share is indeed in single digits.

 

[Zirel]

Look closer - Kantar only report for URBAN CHINA (~50% of China market), while Digitimes report smart phone market for ALL of China. So yea, the figure makes perfect sense. For ENTIRE China, iphone market share is indeed in single digits.

Who cares?

Also, it's completely impossible for them to study a country so vast as China, with 4 times the population of the US, and a complete mess of organization.
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W7 was actually quite good

The "quite good" was just because it wasn't as bad as Vista. W7 was just Vista repackaged, but with the initial driver problems fixed, and with computers becoming faster, it wasn't as slow as Vista was at it's time.
[doublepost=1471480725][/doublepost]

Assuming you define under nine million as HUGE. (Apple's China sales last quarter estimated between 7.3 and 8.6 million.)

$8.8 billion.

Official.

that's what matters.

 

[Gudi]

The "quite good" was just because it wasn't as bad as Vista. W7 was just Vista repackaged, but with the initial driver problems fixed, and with computers becoming faster, it wasn't as slow as Vista was at it's time.

Vista was never slow. 7 was a badly needed UI overhaul and simplification.