Apple Drops to Sixth Place in China's Smartphone Market

[russell_314]

It can be a bit of both though, puts less friction in the way of walking the walk so that when one does want to walk the walk they aren't faced with a torturous money wasting scenario. But I think more common is that someone who is already gonna just buy something primarily coz it's cheaper can add some blowhard rhetoric on top.

I see what you’re saying. My point is if it was cheaper than they would just be doing it for it being cheaper and claim to be patriotic.

WeChat renders phone choice less important though because no matter what phone you have you are mainly using it to run WeChat. Gives iPhone less chance to entice people with any of the iOS apps, messaging features, file sharing features, phone call features, payment features, etc., since it is all just done on WeChat. Even when iPhone does have better features, many people remain unaware of them because they just default to using the WeChat equivalent.

I didn’t think of that because you’re right WeChat does so much in China. It’s pretty cool to be honest. You still have to deal with the phone to take pictures and other task. You’re not really doing iMessage as much so that is a big difference between the USA and China. Just like people in Europe use meta WhatsApp so they don’t really see the blue bubbles of iMessage.

I did, however, find one great messaging feature of iPhone in China, which is that iMessage is one of the only not blocked messaging services which isn't Chinese (and thus friends abroad are vastly more likely to have). But this is more a quasi hidden secret (in that most people don't seem to consider that) only useful to people with friends and family in other countries.

Correct me if I’m wrong, but if you’re messaging people outside the country couldn’t an iMessage failure cause the message to be sent by SMS or MMS and incur a hefty charge for overseas messaging? This is why I avoided iMessage for that purpose.

 

[russell_314]

I think this is the main reason. I looked at some of these brands and felt that the iPhone was still stuck in its earlier 2010s. Apple is not innovating or doing anything interesting anymore, they are re-packaging the same phone over and over again and expecting people to spend 1,000+ every year for it. And FYI, adding new phone colors is not an innovation.

It sounds like you’re talking about marketing rather than actual use. I get the folding concept because it makes it more compact in the pocket. I also get why Apple is not done this yet because they’re waiting for the technology to mature.

Other than folding, what feature has anyone innovated that is useful? I know android phones are more customizable, but that’s not innovation. What specific thing can you do on a, Samsung, Huawei, you pick the brand phone that I can’t do on an iPhone that has to do with some innovation?

 

[I7guy]

Apple stopped innovating in iPhones -- unless you call adding a button (wow!) innovation! They were behind with periscope lenses, they are behind with foldable phones. The only thing superior about iPhones is the software, but if everything is in WeChat, that hardly makes a difference.

Apple is behind with many functions added to smartphones. (As an aside many of those functions existed before smartphones. One example is oled). However something’s apple does causes a fundamental shift; eg Apple Pay.

And what politics? Mainly politics prevents superior Chinese phone from being sold in the US, so Apple is not pushed much to innovate.

Subjective is superior.

 

[Juggernaut510]

We handed them our tech for decades on s silver platter and the tech we didn’t hand them they sent people here to steal it and start their own companies sponsored by China. Don’t blame them, blame yourselves (USA) for being stupid.

Then Apple’s laziness and cockiness of being number one and holding out on tech that has been out for years, then launching it and calling it “revolutionary” is not helping, you’re becoming stale Apple and competitors are catching up.

 

[ksec]

I'm curious, could you explain which parts of Apple's SoC are lacking, exactly and two whom?

"Apart" from its SoC, other parts of hardware are lacking or has caught up, at least price wise compared to competition.

 

[huanbrother]

Several factors influence consumer choices, but one significant aspect is Apple's choice to exclude high refresh rate panels from their base model iPhones. In contrast, China's market offers entry-level smartphones from brands like Redmi (Xiaomi), RealMe (Oppo), and iQOO (Vivo), which feature 90Hz/120Hz panels and at least 25W fast charging, all for approximately 150 USD. While some may contend that Apple's products are of higher quality, consumers often prioritize explicit specifications.

For many consumers in China, a smartphone represents a significant annual investment, and the absence of features that are standard in entry-level Android phones can be a source of frustration. Consequently, they may opt for mid-tier or flagship Android devices, even when Apple discounts its non-Pro models through third-party channels. After all, no one wants to spend at least 800 USD on a device with a standard refresh rate panel and face ridicule at work.

 

[chmania]

For many consumers in China, a smartphone represents a significant annual investment, and the absence of features that are standard in entry-level Android phones can be a source of frustration. Consequently, they may opt for mid-tier or flagship Android devices, even when Apple discounts its non-Pro models through third-party channels. After all, no one wants to spend at least 800 USD on a device with a standard refresh rate panel and face ridicule at work.

Not only for consumers in China, but all over the world. There's a world outside the US, after all...

And, there are many phone brands in countries other than the US, some of them.

 

[idkwhat]

Correct me if I’m wrong, but if you’re messaging people outside the country couldn’t an iMessage failure cause the message to be sent by SMS or MMS and incur a hefty charge for overseas messaging? This is why I avoided iMessage for that purpose.

You can avoid that by turning off the Send as SMS setting in Messages settings. Though to be honest I never feel 100% confident it won’t happen at least when messaging someone for the first time but it has never happened.

 

[idkwhat]

After all, no one wants to spend at least 800 USD on a device with a standard refresh rate panel and face ridicule at work.

I can’t tell if this is a joke or not.. If not I can only shudder to think what my coworkers may have said about me for using an iPhone 8 until 2023 rather than spending thousands of yuan on something I don’t need, iPhone or not iPhone. 😀

 

[idkwhat]

Then Apple’s laziness and cockiness of being number one and holding out on tech that has been out for years, then launching it and calling it “revolutionary” is not helping, you’re becoming stale Apple and competitors are catching up.

This reminds me of one thing that hasn’t been said yet, perhaps simply because it’s not so relevant to the China market sales question.
This is one reason among many I like iPhones. I don’t want the latest mind blowing tech, I want a durable and well designed phone that I enjoy using, and maybe integrates some of that tech later when there is a strong reason for it. If anything I wish Apple was “staler” and could do things like hold off even longer on jumping on AI marketing bandwagon.
It feels absurd to me that someone would complain an iPhone 15 Pro isn’t “revolutionary enough” or “innovative enough” and if that’s how they feel then it makes sense to buy some more gimmicky phone like a Huawei fold that costs more than a MacBook or whatever, or also to sacrifice build quality and design and privacy functionality for a phone at the same price point but with some fancier eye catching functions. I’m sure Apple doesn’t feel the same way though and wouldn’t mind being #1 everywhere. But it might also do well to remember this news article is a bit alarmist and the numbers could very well be completely different in the next quarter since the period right before the new iPhone is released is often the lowest sales quarter if I’m not mistaken.
I also wonder if people use iPhones longer than they use other phones because in my very limited experience the situation is that iPhones are much more durable and thus don’t require you to buy one as often as the average other phone. I’d hope that Huawei could at least get close to that level of durability given they are as expensive or more expensive than iPhones though.
My point though is that if this is true then a full time iPhone user has less need to upgrade their phone as often which would influence sales.

 

[Kevin2055]

The real reason is Apple is behind in most aspects in Smartphone market.

1. Poor displays (Dull colours and glare issues) People don't care about XDR and fancy terms.
2. Poor Battery life
3. Slow charging speed
4. No easy way to transfer downloaded random files from iPhone to PC/Mac
5. Basic cheap non-Pro models artificially limited to 60hz while $250 androids are pushing 120hz
6. Brand fatigue
7. Patriotism and feeling amongst Chinese that USA = Bad

0. Apple is much more expensive and has less features.

 

[mech986]

What is the ASP for the brands that are in 1 - 5? I'm betting it is no where near the $900+ Apple has achieved for ASP.

As always, if one was to check each vendor’s revenue numbers from sales, I suspect Apple’s revenue still out paces each Chinese vendor although the gap may be closing somewhat in this particular quarter which is usually Apple’s slowest. For example, if each China Vendor ASP was the same (some probably lower but give them all the benefit of the doubt) from Xiaomi the China revenue could work out this way.

Xiaomi’s ASP determined by their Q1 smartphone revenues divided by reported units sold from their Q1 2024 earnings report, ASP was $158, showing their sales as well as most of the Chinese OEM sales are dominated by low price (<$150) and mid priced (<$300) smartphones, despite offering a few “premium” models (>$600).

Using the Canalys report numbers:
China OEM – ASP x Units = revenues

Vivo 13.1M X $158 = $2.07B

OPPO 11.3M X $158 = $1.8B

HONOR (low price brand so ~10% lower ASP) 10.7M X $142 = $1.5B

Huawei (some premium sales Inc. ASP X 15%) 10.6M X $182 = $1.93B

Xiaomi 10.0M X $158 = $1.58B

(For comparison, Samsung’s overall annual 2023 ASP was around $340, Android’s overall ASP from all non-iPhone makers was $220. In CY2023, the entire smartphone market sales was ~$415B on 1.17B sold. Of that, iPhones sold 230M making $200.5B, ASP = $870. All the rest was Android, selling 940M and making $214.5B, ASP = $228, again illustrating Android sells the vast bulk of its smartphones on low priced cheap products under $250,
Much more than half to offset the maybe 55-60M premium Androids sold each year. Meanwhile, Apple’s ASP of over $870 illustrates the bulk of its sales are high end premium (>$600) products with a major part over $1000 offset by sales of discounted past flagships (14, 13, 12, 11) and some iphone SE’s)

So we’ll assign Apple China sales it’s worldwide ASP since >90% of Apple’s iPhone sales in China are new iPhones

Estimated Q2 2024 9.7M X $870 = $8.44B

That $8.44B revenue is 4 TIMES MORE revenue than any of the best Chinese OEM’s revenue! In fact, Apple’s estimated China iPhone revenues of $8.44B is ALMOST as much as ALL 5 leading Chinese OEM’s COMBINED!

For a YOY compare:

Apple’s Q2 2023 10.4M X $870 = estimated $9.05B iPhone revenue, that was 57% of $15.76 total China revenue which is ~consistent with iPhone’s share of overall Apple revenues.

We’ll have to see how other Apple products fared in Q2 2024 for overall total China revenues reported and then we’ll see what happens in Q3 2024 if Apple China iPhones and revenue growth finally turn positive again.

Do people understand now why Apple’s business model is better? Apple doesn’t have to lead in “overall sales”, it just has to lead in sales of the best category, the high end premium sales, which it does in most if not all parts of the world. That premium market segment is the most profitable, the most resilient in terms of user economic resilience, and is where ALL smartphone makers are making a push but not getting much in the way of results.

 

[chmania]

As always, if one was to check each vendor’s revenue numbers from sales, I suspect Apple’s revenue still out paces each Chinese vendor although the gap may be closing somewhat in this particular quarter which is usually Apple’s slowest. For example, if each China Vendor ASP was the same (some probably lower but give them all the benefit of the doubt) from Xiaomi the China revenue could work out this way.

Xiaomi’s ASP determined by their Q1 smartphone revenues divided by reported units sold from their Q1 2024 earnings report, ASP was $158, showing their sales as well as most of the Chinese OEM sales are dominated by low price (<$150) and mid priced (<$300) smartphones, despite offering a few “premium” models (>$600).

Using the Canalys report numbers: ...

So, we need China to build the iPhones and buy them to keep the revenue? After all, China has 4 times more buying people than the US...

 

[chmania]

As always, if one was to check each vendor’s revenue numbers from sales, I suspect Apple’s revenue still out paces each Chinese vendor although the gap may be closing somewhat in this particular quarter which is usually Apple’s slowest. For example, if each China Vendor ASP was the same (some probably lower but give them all the benefit of the doubt) from Xiaomi the China revenue could work out this way.

Xiaomi’s ASP determined by their Q1 smartphone revenues divided by reported units sold from their Q1 2024 earnings report, ASP was $158, showing their sales as well as most of the Chinese OEM sales are dominated by low price (<$150) and mid priced (<$300) smartphones, despite offering a few “premium” models (>$600).

Using the Canalys report numbers:

So, we need China to build the iPhones and buy them to keep the revenue? After all, China has 4 times more buying people than the US...

 

[mech986]

So, we need China to build the iPhones and buy them to keep the revenue? After all, China has 4 times more buying people than the US...

My numbers are only the revenue from the reported sales numbers. While it is true that there’s 1.4B people in China, the number of smartphones actually sold is not 4 times higher than the US.

IDC reported in Jan 2024 that Total 2023 China smartphone sales were 271.3M units, down 5.0% from 2022’s 284.9B. Of that, Apple took 1st overall in 2023 China sales with 17.3% or roughly 46.1M sold out of their 230M sold worldwide, about 20%.

Apple Captures the Top Spot in the China Smartphone Market in 2023 for the First Time Ever, Despite the Overall Market Dropping 5.0%, According to IDC Tracker

IDC examines consumer markets by devices, applications, networks, and services to provide complete solutions for succeeding in these expanding markets.

www.idc.com

IDC in Mar 2024 reported 2023 US smartphone sales were “only” 130.6M units (mature market), but Apple had 51.9% of those sales or 67.8M iPhones sold, about 47% more than sold in China. Chinese OEM’s sell more in China (home market) than in the US.

Now yes, China unit sales are 271.3M / 130.6M = 2.08X more numerous, but like many countries, the total spent on those sales is less than more wealthier countries even though they sold LESS, because the unit sales ARE NOT EQUAL. The ASP’s in China are
much lower than the ASP’s of smartphones sold in the US (or Europe) due to vastly different economics, annual salary, savings, spending, even credit usage.

Now, if China unit sales were actually 4 times higher than the US, but ASPs were 4 times lower, the revenues could / would be roughly the same, but we are long past that point even in China. China’s bulk of sales are low and mid priced tiers because that’s what most can afford or want to pay for. India is much the same since wages there are also low, that’s why sales are dominated by cheaper inexpensive brands. But even there, Apple’s total value sold (or revenue) almost leads All vendors except Samsung even though they have only 6-8% of the market unit sales wise.

Again, not all sales are equal. Given Apple’s ASP of $870 being almost 4x higher than the worldwide average Android sale of $228, from a revenue standpoint, it takes almost 4 Android sales to equal 1 iPhone sale. Same applies to China sales.

And yes, Apple needs Chinese sales to generate revenue they get to keep and assign to the China geo business region they report. Same with every other region Apple sells in.

 

[mech986]

I think 7 is a bigger part of it than the other 6 items you mentioned but Apple has been too conservative with the iPhone line and not aggressive enough in the low end to middle of the market.

Apple has clearly chosen not to play or be aggressive in the low (<$200) or middle (<$350-400) ends of the market (save for the aborted iPhone 5C and the iterations of the $399 iPhone SE’s) simply because it barely razor thin profitable, it undercuts Apple’s premium image, and frankly, they don’t have that much demand or sell particularly well. Yes, they sell in some price sensitive markets, but only because they don’t have much of a refurbished iPhone market. Here in the US, you can buy older used or refurbished iPhone flagships like XS, 11, 12’s for under $400, sometimes a lot under, and those serve the purpose of expanding the install base although Apple itself doesn’t get much of that revenue (sold mostly by third parties) but Apple gets a new user, and maybe a little on Apps and services.

Short term. Personally, and thinking in the long term, I think Apple could see a nice sales bump from Vietnam/southeast Asia.

That’s true, but the revenue for those countries is not assigned to China geosegment but Rest of Asia. Oddly, India sales are still assigned by Apple to the Europe region segment.

Americans would likely walk the walk if the situation was like it is in China, where domestic actually is cheaper.

And that’s just not likely to happen because the costs of labor, materials, energy, transport, packaging, taxes, etc. is simply and always higher in the US compared to larger population and poorer countries. If Americans won’t take jobs working on farms picking crops, or flipping burgers, or waiting tables, or cleaning hotel rooms for minimum wage (even at $15/hr), they won’t accept iPhone assembly wages either. Only immigrant workers would take those jobs, not taking them away from other Americans IMO.

And if they demanded iPhone Assembly wages needed to be a lot higher, like $25/hr, well, the cost of the production and product just hit higher still, forcing either margin loss or price hikes, or both.

 

[chmania]

My numbers are only the revenue from the reported sales numbers. While it is true that there’s 1.4B people in China, the number of smartphones actually sold is not 4 times higher than the US.

IDC reported in Jan 2024 that Total 2023 China smartphone sales were 271.3M units, down 5.0% from 2022’s 284.9B. Of that, Apple took 1st overall in 2023 China sales with 17.3% or roughly 46.1M sold out of their 230M sold worldwide, about 20%.

Apple Captures the Top Spot in the China Smartphone Market in 2023 for the First Time Ever, Despite the Overall Market Dropping 5.0%, According to IDC Tracker

IDC examines consumer markets by devices, applications, networks, and services to provide complete solutions for succeeding in these expanding markets.

www.idc.com

IDC in Mar 2024 reported 2023 US smartphone sales were “only” 130.6M units (mature market), but Apple had 51.9% of those sales or 67.8M iPhones sold, about 47% more than sold in China. Chinese OEM’s sell more in China (home market) than in the US.

Now yes, China unit sales are 271.3M / 130.6M = 2.08X more numerous, but like many countries, the total spent on those sales is less than more wealthier countries even though they sold LESS, because the unit sales ARE NOT EQUAL. The ASP’s in China are
much lower than the ASP’s of smartphones sold in the US (or Europe) due to vastly different economics, annual salary, savings, spending, even credit usage.

Now, if China unit sales were actually 4 times higher than the US, but ASPs were 4 times lower, the revenues could / would be roughly the same, but we are long past that point even in China. China’s bulk of sales are low and mid priced tiers because that’s what most can afford or want to pay for. India is much the same since wages there are also low, that’s why sales are dominated by cheaper inexpensive brands. But even there, Apple’s total value sold (or revenue) almost leads All vendors except Samsung even though they have only 6-8% of the market unit sales wise.

Again, not all sales are equal. Given Apple’s ASP of $870 being almost 4x higher than the worldwide average Android sale of $228, from a revenue standpoint, it takes almost 4 Android sales to equal 1 iPhone sale. Same applies to China sales.

And yes, Apple needs Chinese sales to generate revenue they get to keep and assign to the China geo business region they report. Same with every other region Apple sells in.

We have a wrong idea about China and the Chinese. We have that "cheap labour", "not so wealthy" idea about China created by our media. China and the Chinese had gone a long way, much further than the so-called West. If you'd go to a Chinese shop with phones, you'd notice that the iPhone just sits in a small area with few phones, 3-4 models while the others cover a lot of area. That goes in any such shop in the EU too, and in any country of Asia. iPhone is just one mobile phone in a sea of phones.

So, if the iPhone still holds the 6th place in sales in China, it tells something, but that place won't be there that long. And, most probably iPhones are much cheaper in China than in the US.

 

[avz]

We handed them our tech for decades on s silver platter and the tech we didn’t hand them they sent people here to steal it and start their own companies sponsored by China. Don’t blame them, blame yourselves (USA) for being stupid.

You are oversimplifying. This is just one of the downsides of having US dollar as a world reserve currency. There is a reason why China is not necessary looking forward to the Yuan becoming a world reserve currency as they understand that they will end up in the same predicament USA is now.

 

[idkwhat]

And, most probably iPhones are much cheaper in China than in the US.

I was under the impression that Apple products were more expensive in China , but now that you mention it I never checked the conversion etc for iPhones. I merely sadly noted that despite waiting months for the MacBook pros m3 to hit the refurbished store to get one, the price I ended up paying currency converted to the price of a new , non refurbished store one in America and Canada.

 

[John_Blackthorne]

Better everything for half the price.

Sort of lacking in specifics, no?

 

[rgwebb]

Apple has clearly chosen not to play or be aggressive in the low (<$200) or middle (<$350-400) ends of the market (save for the aborted iPhone 5C and the iterations of the $399 iPhone SE’s) simply because it barely razor thin profitable, it undercuts Apple’s premium image, and frankly, they don’t have that much demand or sell particularly well. Yes, they sell in some price sensitive markets, but only because they don’t have much of a refurbished iPhone market. Here in the US, you can buy older used or refurbished iPhone flagships like XS, 11, 12’s for under $400, sometimes a lot under, and those serve the purpose of expanding the install base although Apple itself doesn’t get much of that revenue (sold mostly by third parties) but Apple gets a new user, and maybe a little on Apps and services.

I understand the reason why Apple is not more aggressive on pricing in the middle and bottom of the market. The problem with that reasoning in China is that their consumers clearly do not see Apple's premium image. If Apple is serious about competing in one of the most important consumer markets in the world, they're going to have to compete on different terms than they do in the US and Europe.

Competing in China is going to involve being more aggressive on price and not as conservative on pushing new technologies down their lineup. They've got to recognize and deal with the different consumer perceptions on what is a premium product. Additionally, patriotism/jingoism rising as the USA and PRC relationship degrades is a significant headwind.

They probably should start by trying to reframe the iPhone as a true Chinese product instead of leaning of the Designed in California, Made in China concept. Mostly just a corporate propaganda campaign in China. Additionally, they've got to figure out a better balance of margins v. consumer desirability in the Chinese market.

 

[chmania]

They probably should start by trying to reframe the iPhone as a true Chinese product instead of leaning of the Designed in California, Made in China concept.

If the iPhone, or any other Apple product can only be made in China, then one should really ask, what is this Designed in California talk? Most probably most of it is actually designed in China, and by the Chinese themselves.

 

[Mousse]

Sort of lacking in specifics, no?

More storage thanks to a microSD slot, dual-SIM pretty much standard outside the US, headphone jack for superior audio to bluetooth, higher refresh rate display in the lower end, foldable (gimmicky or must have, no in between), higher capacity battery, and so on and so forth.

Apple lowering the price of the iPhone in China and it's not selling well is pretty telling. Price ain't as big a factor anymore. People want value. Unlike in the US where the blue/green bubble is the deal breaker. The iPhone is a feature sparse for the asking price.

Given a choice between a Tacoma (can handle any kind of pavement, a workhorse, reliably as the sunrise) and $150K pocket money or a Ferrari (really fast on smooth pavement, looks good, status symbol), practical folks will choose the Tacoma. Most of the Chinese I know are pragmatic folks.

 

[John_Blackthorne]

MicroSD and headphone jacks aren't innovative. They've both been around forever (and removed because the majority of people don't need or want them, and if you disagree, you can't read the market, which doesn't consist of people reading tech sites).

The iPhone does have high refresh rates--just not the cheap ones.

Outside of folding phones (and arguably dual SIM) nothing you mentioned is "innovative."

 

[Mousse]

MicroSD and headphone jacks aren't innovative. They've both been around forever (and removed because the majority of people don't need or want them, and if you disagree, you can't read the market, which doesn't consist of people reading tech sites).

The iPhone does have high refresh rates--just not the cheap ones.

Outside of folding phones (and arguably dual SIM) nothing you mentioned is "innovative."

Who said anything about innovations? Folding phones are a meh in my book. I only saying that android phones are features rich.

Mid range android phones, $300 range, are chock-full of features--including high refresh rate--and is a far better value than any iPhone and even high end android phones.

We all know the real reason Apple won't add microSD slots to the iPhone: greed. Pixel and Galaxy S follow suit because copycats and greed.

Chinese phone makers are competing against each other. They're pushing one another to produce better and more feature rich phones. It's iron sharpening iron. Apple rested on its laurels too long. The competition has caught up and surpassed them.