Apple’s shipment struggles as market share sinks in China

iphoneLast Friday I reported how China’s smartphone market had hit its first major slowdown in 27 months, as the growth engine of Asia slowly matures.

Well, I’ve been back to the analyst house where those stats came from to ask specifically who the biggest handset winners and losers are in China at the moment.

Unsurprisingly Samsung remains number one with a market share of 19 per cent, followed by local players Lenovo (13 per cent), Coolpad (11 per cent) and Huawei (10 per cent).

Apple rounded out the top five with a 7 per cent share – which various reports have shown was a one per cent improvement on the previous quarter and signs that things are picking up in China for the US giant.

Well, I’m not quite so sure. IDC senior research manager Melissa Chau told me that the biggest year-on-year movers were actually Lenovo (+57%), Coolpad (+36 per cent) and Huawei (+26 per cent). Samsung posted not unimpressive 20 per cent growth, but Apple’s year-on-year share actually dropped 2 per cent.

By comparison, its nearest rival, home-grown star Xiaomi, notched impressive 91 per cent growth to take sixth place with 6 per cent of the market.

So will Apple be worried? Well yes and no, according to Chau.

On the one hand the Cupertino giant has always been a high margin business, making way more money on handsets than Xiaomi and most of its Chinese rivals. To that extent it doesn’t need to shift smartphones in volumes quite so great.

However, the counter argument is that Apple needs to be seen as an attractive, popular platform, for the sake of its ecosystem.

“It is relevant to look at shipments because they affect Apple’s market power; it’s ability to attract developers,” Chau explained.

“Apple must walk a fine line making sure it doesn’t drop so far down that Android is the only ecosystem in China. It won’t be a risk it’s taking this or next year but it needs to watch [this trend]. That’s why it makes sense to launch a lower cost model there.”

You can’t argue with this logic. With Xiaomi’s low margin, high volume strategy potentially lifting it above Apple the last thing Cupertino wants is to be left floating outside of the leading pack, even if it is still hovering up revenue in one of its biggest markets.

Much has been written about the potential sales lift Apple’s recently announced deal with China Mobile – the world’s largest operator by subscriber numbers – will give it. However, as Chau told me, this might have been overplayed by some commentators – after all, we’re not talking about a new iPhone model here.

“Given the model has been out for some time I’m not sure the bump will be as significant as people are making out,” she argued. “The bump will come with the next iteration of the iPhone.”

All at Apple will be hoping that creates more buzz than its last major launch here. Or it could seriously be time to go back to the drawing board.

Advertisements

No news is bad news for Apple in China

chinaSo there it is. Apple’s much publicised Beijing iPhone launch event ended. With no news.

It appears that the fruit-themed company, while claiming that China will be its biggest market soon, does not believe it’s THAT important. At least yet. All the poor hacks were offered was a video of last night’s US launch. Ouch.

More importantly for Cupertino, the prices it has stuck on its new 5C and 5S devices will mean only the most hardy fanboys and girls will want to buy them. The iPhone 5C is definitely not budget, so it will fail to appeal to the mass low-end market currently consuming smartphones in China and India like there’s no tomorrow.

A 5C will retail for between 4,488 and 5,288 yuan ($733-864, £466-549). Compare this with the price for the high-end 5S in the US ($649-849) and you can see why some commentators reckon it will fail in the PRC.

It’s certainly not enough to beat Xiaomi’s impressively spec’d Mi-3 at 1,999 yuan ($326).

Forrester analyst Bryan Wang told me that it needs to come down to 2,999-3,499 yuan in order to “eat up the market share” of the likes of Huawei, Lenovo and Meizu, but that at present prices, the local Android players will be “really relieved”.

However, Apple is likely to have left itself some breathing room. It’s plan? Test the market out with these inflated prices and then “lower the price after a couple of months”.

Apple’s other hope of gaining much needed market share in China come from a possible tie up with the world’s largest operator, China Mobile, which has over 700 million subscribers.

No announcement was made at the Beijing press “conference” today but Wang believes it will come, when the carrier has a 4G network to announce. The reason? The 5C and 5S both support TD-LTE, a standard China Mobile helped to build.


Sweaty palms as Myanmar stalls telco license decision

burma templeOver on The Register I’ve been following quite closely the carve up of Myamar (Burma) by international technology giants.

This deceptively massive country bordering China, Thailand, India and Laos, has of course only recently opened its doors to the global community after decades of self-imposed exile thanks to rule by a military junta.

So Myanmar not only offers tech firms a market of 60 million+ users to tap, but also offers rich business opportunities for infrastructure providers and could even serve as an outsourcing destination in the years to come.

An IDC report from last year, Myanmar ICT Market 2012–2016 Forecast and Analysis, predicts 15 per cent year-on-year growth in IT spending in 2012, with the market to reach $268.45m (£172.9m) by 2016.

One of the biggest opportunities lies in the telecoms space where global operators have been eyeing up the two licenses set to be awarded this month. However, the decision – due to take place today – was postponed at the last minute until lawmakers pass a new telecommunications law, still be being drafted.

It emerged that an emergency statement was submitted by a telecoms committee urging lawmakers to favour local joint ventures over global bids.

Whether this ends up scuppering the ambitions of France Telecom, Qatar Telecom, Singtel, Telenor and others remains to be seen, but it must be said that some operators are walking a fine line in getting stuck into the country before human rights concerns have been fully allayed.

Human Rights Watch, for example, has been lobbying telcos to boycott the country until legislation is passed which does better to outlaw things like mass surveillance and hardline censorship.

In fact, Vodafone and China Mobile withdrew their joint bid last month, in what some think was a decision influenced by Myanmar’s current failure to protect online freedoms.

John Morrison executive director of the Institute for Human Rights and Business (IHRB), told me that if nothing else, the recent NSA debacle has shown that even in western democracies, telcos are vulnerable to mass surveillance requests from governments.

“Given Myanmar’s human rights record it is all the more important that the companies that secure the license to operate in the country do so in a way that respects privacy and free expression,” he added.

“As Myanmar continues political and economic reforms, it should work towards making telecommunications technology a tool for advancing human rights, including guarding against hate speech that incites violence.”

Time will tell whether Myanmar can make a stable transition from repressive hermit state to 21st century Asian tiger, but if it does, technology will be a major driving force.