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Apple market share in the world's biggest smartphone marketis halved in Q2

While Apple, Inc. (AAPL) is based in Cupertino, Calif., China is the company's home away from home; the place where all of its i-gadgets are assembled.  But in the birthplace of sparkling new iPhones, the world's most populous nation and largest smartphone market, Apple is struggling.

I. Apple Falls to Fourth

In Q2 Apple fell to fourth place in this massive market, with the IDC Group reporting market share plunging from 20 percent to 10 percent.  Gartner, Inc. (ITreported a smaller drop from 17 to 12 percent.  Regardless of which numbers are correct, the consensus is Apple struggled in China; at least for a quarter.

Samsung Electronics Comp., Ltd. (KSC:005930), Apple's bitter perennial rival also fell slightly from 21 percent to 19 percent, but clung to the top sales spot.  Meanwhile, a local firm, Lenovo Group, Ltd. (HKG:0992) -- makers of the Intel Corp. (INTC) x86 Android "LePhone" -- rose to second, seizing 11 percent of the market.  Lenovo is currently in second place in PC sales as well, globally.  ZTE Corp. (SHE:000063) also did well, moving past Apple and into third place.

So why are the Chinese turning there back on the iPhone, long considered a coveted status symbol among Chinese youth?  IDC analyst TZ Wong suggests, "There are two things in play.  One is seasonal; people know the new phone is coming. And the second is that the alternatives are becoming much more attractive than a year ago. The iPhone didn't change much over the year."

China iPhone 4S
The iPhone 4S has not been selling great in China from April to June.
[Image Source: Reuters/Jason Lee]

II.  The Chinese Hardware Market Gets Competitive

One thing that has begin to impact Apple's sales is a faster pace of hardware turnover on the Chinese market.  Traditionally, China received hardware that was dated by U.S. standards.  Today it's getting bleeding edge hardware that American buyers don't have access to.

For example Lenovo -- or any manufacturer for that matter -- has yet to release an Android smartphone in the U.S. powered by Intel's chips.  And on the ARM Holdings plc. (LON:ARM) side of the fence, Qualcomm, Inc. (QCOM) is shipping Snapdragon 4 chips to Chinese Android smartphone makers.

Huawei's G330D and Xiaomi Technology's MI2 both have Snapdragon 4 chips, just like the HTC Corp. (TPE:2498) EVO 4G LTE and Samsung's Galaxy S III LTE sold in the U.S.

Xiaomi MI2
Domestic phonemakers have stepped up their game with handsets like the Snapdragon 4-powered MI2 from Xiaomi Technology. [Image Source: Xiaomi]

In short, Chinese buyers are turning away from iPhone and towards domestic brands not solely out of a sense of national pride, but largely because the domestic players are putting out handsets with hardware that surpasses that found in the current generation iPhone.

Apple is far from out of the Chinese market, with its next generation smartphone incoming in only a few weeks, but it has its work cut out for it in these competitive times.

Source: Reuters

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By Uncle on 8/24/2012 2:52:06 PM , Rating: 5
The key word here is "COMPETITIVE". Its a foreign word in the North America market. The only way to keep or gain market share is to SUE, in N America. Monopolize and Sue are the word most Corporations in N America understand. Now those words arn't foreign to apple. If apple wasn't an American Company, I don't think it could get away with the crap their foisting on to the Consumers, I'm not talking product, I'm talking attitude, and mentality. What was that news item about apple being involved with 60% of all patent lawsuits. One of the reasons the iphone looks so good in N America is that the better and innovative phones are kept out of the N American market. apple can only pretend, using the boys club media, to be the best in town.
Examples HDTV kept out of N America approximately 10 yrs so USA could control the DRM standards and license to foreign companies instead of the other way around. Cell phone technology standards one generation ahead in Europe and Asia before USA adopts. USA has shown that to compete, one must buyout or Sue them out of business. Mean while the N American companies play their silly little games in court, the consumer loses big time. The USA talks the talk when it preaches FreeTrade, but doesn't walk the walk when true competition comes. Then the import barriers and the court system all come into play. The consumer knows, look at the crap with Regional DVD's, one region pays more or less then another. They wonder why theirs piracy. When USA companies sell software, movies,etc, cheaper in china then in their own country. No wonder consumers are pissed off in USA when they hear and read that. Their paying a higher price to subsidize the people in other nations such as China because they can't compete. Just my perspective at whats happening.

RE: competitive
By spamreader1 on 8/24/2012 3:00:32 PM , Rating: 4
Don't lump Canadians in with the US with N America. Hate to admit it being a US citizen, but those guys in the great white north have some good things over us when it comes to business laws and patent system.

RE: competitive
By ritualm on 8/24/2012 9:48:14 PM , Rating: 3
The worst part about Canada is a total lack of competition in certain industry sectors, and surprisingly it's a lot worse than USA at times. Look at the wireless telcos for just one example, another being home internet services.

You think being locked to two-year smartphone plan contracts is bad? Try three years.

Also, the Canadian version of RIAA is just as dumb as the real thing south of the 49th Parallel.

“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls

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