Chinese Produce iPhones, But Aren't as Interested in Buying Them
August 24, 2012 1:24 PM
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Apple market share in the world's biggest smartphone marketis halved in Q2
While Apple, Inc. (
) 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. (
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. (
), 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. (
) -- makers of the Intel Corp. (
-- rose to second, seizing 11 percent of the market. Lenovo is currently in second place in PC sales as well, globally. ZTE Corp. (
) 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."
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. (
) side of the fence, Qualcomm, Inc. (
) 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. (
) EVO 4G LTE and
Samsung's Galaxy S III LTE
sold in the U.S.
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.
This article is over a month old, voting and posting comments is disabled
8/25/2012 12:05:51 AM
If apple provided american workers with jobs I would be somewhat supportive but they turned their backs to the american worker so F-them.
8/25/2012 6:49:23 AM
Apple's A5 chips are made by Samsung in the U.S. In fact they are expanding the Austin Samsung facility to make more products for Apple, so if anything Apple is one of the few tech companies that are expanding U.S. jobs.
8/26/2012 6:12:01 AM
Dude, you have to realise that Americans don't work for $250 a month. They want $2000. A high school level educated Chinese factory worker will put in 16hr days, 6 days a week for $250. That's why apple makes phones in china and not America. They'd have to charge $2000 a phone just to break even. Fortunately, with American wages plummeting, because the economy is a shambles, in a decade or so there will be plenty of companies returning to the US to build there wares, providing millions of $250 a month jobs. Of course none of those workers will be able to afford the things they make, but at least you can feel happy that it's made in the US.
8/27/2012 2:26:48 PM
Another reason and Steve Jobs did say this to Obama is that they needed 30,000 engineers to get it going and those engineers weren't available in the U.S. We need to reduce worker Visa restrictions so tech companies can get all the engineers they need into the U.S.
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