Apple Facing Struggle to Convince Chinese Smartphone Users to Switch Allegiance [Updated]

[MacRumors]

Apple is facing an uphill struggle in its attempts to wean Chinese smartphone users off cheaper rival devices in a saturated mobile market, according to a new Bloomberg report.

With Apple gearing up to sell its most ambitious but most expensive iPhone yet, local competitors like Huawei, Oppo, and Xiaomi are already poised to compete by launching their own less expensive feature-packed devices around Apple's September 12 "iPhone 8" launch date.

Unofficial "iPhone 8" poster spotted in Chinese store (via Slashleaks)​

While it sticks to a global template that's served it well, local vendors have become adept at technology design while tailoring phones to local tastes, such as with dual SIM capability. In a show of confidence, Huawei Technologies Co., Xiaomi Corp. and likely Vivo -- far from front-running or avoiding the iPhone the way movie studios juggle summer tentpoles -- are tackling the U.S. company head-on by timing new products around the publicity avalanche sure to engulf Apple's Sept. 12 launch.

"The challenge comes from Vivo, Oppo and Huawei, they can replace Apple in high-end markets priced around $500, even as Apple remains dominant in the ultra high-end $600 plus segment," said Kiranjeet Kaur, an analyst with industry consultancy IDC. "We don't expect big growth as China's market is now very saturated. The biggest demand for the new iPhone will come from the replacement market."

Part of the problem is that many of the features Apple will debut in its so-called "iPhone 8", such as a full-screen display and wireless charging, are already available in some form to consumers in China, albeit at a much lower price point. Adding to the difficulty is that local vendors have become more skilled at efficient smartphone design and are particularly adept at tailoring smartphones to local preferences.

On the software side, the ubiquitous WeChat app has been described as the iPhone's "toughest rival" in the country. The app offers users an entire ecosystem where they can pay for services, text, call cabs, watch videos, play mobile games, and access cloud-based "mini programs", or apps that don't need to be downloaded to a device to be used. WeChat is said to have captured nearly 35 percent of each user's monthly smartphone usage time, averaging about 1 billion monthly active users in total.

Combined, these market factors make it increasingly difficult for Apple to prise away users from rival devices and platforms, which doesn't bode well in a market which the company has historically struggled to penetrate.

To counter these obstacles, Apple has previewed new features coming in iOS 11 that specifically cater to Chinese customers, such as QR code scanning with the native camera app, a keyboard that makes Chinese characters easier to input, and a new mapping app that shows traffic camera locations.

But with supply of new iPhones expected to be tight in the upcoming months, Apple's Chinese rivals may be seeing their best chance yet to lure buyers away with features aimed at local users, such as dual SIM devices that support multiple phone numbers, high capacity memory and storage, and advanced selfie cameras.

Apple and the iPhone have taken fourth place in China, behind Oppo, Vivo, and Huawei, according to market research firm Warren Captial, while in April Kantar Worldpanel's data noted that iOS dropped to its lowest share of the China smartphone market since 2014.

Canalys estimates Apple's Chinese smartphone shipments will grow by just 1.4 percent to 22.5 million units in the second half of 2017. Meanwhile, the upcoming OLED iPhone's rumored $1,000-plus price tag may end up pushing iOS fans toward local alternatives, "because even well-heeled buyers are price-sensitive", said Jia Mo, an analyst from Canalys.

Update: In a lengthy post last week, Neil Cybart at Above Avalon came to a different conclusion, arguing that consolidation in the Chinese smartphone market has seen top vendors increase their shares more at the expense of smaller Android vendors than Apple.

Cybart believes Apple's pricing premium in China means the company operates largely in a separate market from other manufacturers, and following the combination of expansion to China Mobile and the launch of the larger-screen iPhone 6 in 2014, it has been "much harder for Apple to find pockets of premium users in China ready to buy their first iPhone."

Article Link: Apple Facing Struggle to Convince Chinese Smartphone Users to Switch Allegiance [Updated]

 

[576316]

'Tenth anniversary, eagerly hope.'

Mmmkay

 

[Red Oak]

Remember when Xiaomi was anointed the "Apple Chinese killer"? Me neither

The Chinese vendors make almost ~ $0 profit. At some point, that will catch up to them. It might take 5-10 years, but it will happen

 

[5105973]

WeChat sounds like something that could even take off in the US if Apple had someone adept at managing services like that. It will be interesting to see Apple continue to tweak the communication and nascent commerce features on iMessage and see what it turns into. iMessage already is a really important part of the Apple Ecosystem and keeps people connected in the USA.

I don't think that will help them in China, but it's not like the rest of us are chopped liver and our money is worthless, so Apple better not take the rest of us for granted. And if they stop being so greedy and trying to take a cut of things in ways that come across as really petty to people in the Chinese culture, they could become a stronger partner in WeChat commerce, too.

Apple fell asleep at the wheel for the past few years. They let their desktop line atrophy. They let so many of their products coast. And still most of their products are very strong against the competition despite the extra bells and whistles of the competition. It would be amazing to see what they can/will do when they wake the hell up. Get in the giant metal donut and get cracking!

 

[rizzo41999]

China is a lost cause for Apple. They generally are the most nationalist consumers

 

[4jasontv]

Part of the problem is that many of the features Apple will debut in its so-called "iPhone 8", such as a full-screen display and wireless charging, are already available in some form to consumers in China, albeit at a much lower price point.

How is that different than the US, Europe, and well, everywhere else?

 

[PG(Austin)]

Why would they buy a REAL iPhone when they can get a knock-off Chinese CHEAP. The Chinese are all about perception. As long as they have the right image that others see, they don't care how good or bad it works.

 

[Cole Slaw]

I think the iPhone is simply too expensive for that market.

 

[iapplelove]

Apple will never turn the heads of price conscious shoppers. If the Chinese smartphone market is flooded with low budget phones that do everything an iPhone can do( minus iTunes) well it may just be a lost cause.

 

[Fzang]

The Chinese vendors make almost ~ $0 profit.

Source?

It's a widely known fact that Apple keeps extremely high luxury-goods-like profit margins. It's still possible to make money from a "realistically priced" (i.e. sub $1000) smartphone.

 

[69Mustang]

How is that different than the US, Europe, and well, everywhere else?

In the US and Europe iOS and Android mean something. A lot of people prefer one or the other. In China the OS is less important than the app, specifically WeChat. If I am Chinese and spend the majority of my time in WeChat, what does it matter what OS my phone runs? Choosing an iPhone 8 or Galaxy Note 8 doesn't enhance my experience in any way.

 

[rjtyork]

If Apple really wanted to surprise and disrupt the industry, they would make this phone at least $100 cheaper than the newest samesong phones that just came out. unfortunately they just aren't going to have the supply to meet the kind of demand that would create. There's still way too many people that think those phones are so much cheaper than iPhones

 

[5105973]

China is a lost cause for Apple. They generally are the most nationalist consumers

You have a point. A great many of Chinese customers in interviews and surveys do seem nationalistic. But there's another side to this.

A forum member who is either Chinese or living there said that Apple services were very bad, almost non functional in China. He said he struggled with mail and with getting some kind of decent response to his requests for help with his mail problems.

So it's probably not fair to judge what the Chinese customers would or wouldn't do when given a choice, until their choices are more equally in good working order.

I hope our fellow forum members who are Chinese or who are living and working there can chime in and give us a more accurate picture of what's going on there.

 

[thisisnotmyname]

Combined, these market factors make it increasingly difficult for Apple to prise away users from rival devices and platforms

Why not just use the word "pry?" Did someone get a new word of the day calendar?

 

[69Mustang]

If Apple really wanted to surprise and disrupt the industry, they would make this phone at least $100 cheaper than the newest samesong phones that just came out. unfortunately they just aren't going to have the supply to meet the kind of demand that would create. There's still way too many people that think those phones are so much cheaper than iPhones

Who are these people? No one thinks Samsung's flagships are cheaper than iPhones. As for Apple dropping their price to $100 lower than Samsung? Sweet Jeebus that's funny. Apple isn't chasing market share, they're chasing what they've always chased: profit margin. Besides, trying to compete with Samsung on price sends the wrong message from a company stand point. Might be nice from a customer perspective, but Apple has a different customer perspective: Buy it or don't; somebody else will. It's worked for them so far.

 

[thisisnotmyname]

I was wondering why the focus on QR codes, it seems to be a nearly dead tech (from a consumer perspective) here.

 

[5105973]

Why not just use the word "pry?" Did someone get a new word of the day calendar?

I used the word "nascent" in a post. I had to look it up to make sure I was spelling it correctly and that it meant what I thought it meant. So give me a cookie. I haven't had my morning coffee yet, as it was a crazy morning getting everyone out the door getting the pets taken care of and I'm just catching my breath.

I think "prise" was the better word choice here because it is more closely associated with imagery of pulling something loose from another's hand than "pry", which is more closely associated with loosening one object from another. At least it seems that way from how I've come across the usage of those words in my reading.

 

[Pilgrim1099]

This is why Apple is pricing itself out of the market due to competition that offers a cheaper alternative that has existing technology or features. They need to get off their high horse and drop the premium BS. iPhone SE is more reasonably priced, IMO, based on my needs.

 

[rjtyork]

Who are these people? No one thinks Samsung's flagships are cheaper than iPhones. As for Apple dropping their price to $100 lower than Samsung? Sweet Jeebus that's funny. Apple isn't chasing market share, they're chasing what they've always chased: profit margin. Besides, trying to compete with Samsung on price sends the wrong message from a company stand point. Might be nice from a customer perspective, but Apple has a different customer perspective: Buy it or don't; somebody else will. It's worked for them so far.

My mom, stepdad, all 4 of my grandparents, 2 of my uncles, 4 of my aunts, my brother and sister in law, and all their dogs bought the newest Samesong and then laughed at me for spending so much on my iPhone and called me a liar when I told them it's actually almost the same price. They even accused me of messing with the Apple website to show lower prices and then pointed to how low their monthly payments are on the phones with their T-Mobile plan they have. They all just don't like Apple for one reason or another, even though none of them have ever even owned anything from Apple. Oh well. Some people just like having their data mined and sold to the highest bidder.

 

[rikscha]

China is a lost cause for Apple. They generally are the most nationalist consumers

Very true. And easy to sell to based on non-sense features.

 

[HJM.NL]

Remember when Xiaomi was anointed the "Apple Chinese killer"? Me neither

The Chinese vendors make almost ~ $0 profit. At some point, that will catch up to them. It might take 5-10 years, but it will happen

I think in 5-10 years Apple is out of phone business. It's a wonder they're still this popular today because you can get the same or better for half the price.

 

[rikscha]

You have a point. A great many of Chinese customers in interviews and surveys do seem nationalistic. But there's another side to this.

A forum member who is either Chinese or living there said that Apple services were very bad, almost non functional in China. He said he struggled with mail and with getting some kind of decent response to his requests for help with his mail problems.

So it's probably not fair to judge what the Chinese customers would or wouldn't do when given a choice, until their choices are more equally in good working order.

I hope our fellow forum members who are Chinese or who are living and working there can chime in and give us a more accurate picture of what's going on there.

This has partially to do as well with how easier it is for local vendors to offer their products compared to foreign companies. The western world should have never sold anything over there, they have stolen so much IP that the day is near where only Chinese companies will be allowed to offer goods and services.

 

[5105973]

This has partially to do as well with how easier it is for local vendors to offer their products compared to foreign companies. The western world should have never sold anything over there, they have stolen so much IP that the day is near where only Chinese companies will be allowed to offer goods and services.

The theft of our technological IP should be a huge concern yet the discussion consistently gets swept under the rug.

 

[HJM.NL]

This is why Apple is pricing itself out of the market due to competition that offers a cheaper alternative that has existing technology or features. They need to get off their high horse and drop the premium BS. iPhone SE is more reasonably priced, IMO, based on my needs.

Yes the iPhone SE is reasonable priced and competitive if it had the features of the 7 and 7 plus today. Apple is pricing itself out of the market. Maybe not in the USA but definitely in Europe and other countries where we get flooded with good build Chinese alternatives.

 

[weckart]

Why not just use the word "pry?" Did someone get a new word of the day calendar?

Because prise (pull away) is correct and pry (snoop) is incorrect? Maybe that's why.