Is Apple’s Popularity Waning in China?

Reuters reported Friday that Apple’s share of China’s smartphone market almost halved in the second quarter:

For the first time, smartphone shipments in China overtook feature phones in the second quarter, with local brands Group Ltd and Corp pushing to fourth place from second, the IDC data showed.

Total April-June smartphone shipments rose to 44 million, accounting for 51 percent of China’s total mobile shipments of 87 million, IDC said.

“There are two things in play,” said IDC analyst TZ Wong, referring to Apple’s drop in ranking and market share. “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.”

For The Financial Times’ beyondbrics blog, Zhao Tianqi and Kathrin Hille ask why Apple isn’t as cool as it used to be in China:

One reason Apple is falling behind is Chinese telecoms operators’ reluctance to subsidise the iPhone enough to make it competitive. While this affects all makers, Apple is especially exposed because its smartphone is the most expensive.

Another headache has been Apple’s reluctance to customize the device for TD-SCDMA, the Chinese homegrown 3G standard used by China Mobile, and thus making itself unattractive to subscribers of the world’s largest mobile operator.

That problem could go away when the iPhone 5 is launched later this year. The device is expected to come with a Qualcomm chip that is TD-compatible.

But there are other disadvantages. With a screen expected to measure 4 inches, the iPhone 5 is no longer cutting edge. “That would still be smaller than many of its Chinese competitors, which have 4.3-inch or 4.7-inch screens,” says Wang.

See also recent CDT coverage of Apple’s slowing growth in China.

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