Tim Cook’s talks with China Mobile have just taken on some more urgency. Bloomberg reports that research firm Canalys has just found that the iPhone’s market share fell to just 5% in China in the second quarter of 2013, down from 9% in Q2 2012. Nicole Peng, Canalys’s China research director, tells Bloomberg that Apple is getting walloped by low-cost Android phones being pushed by vendors such as Lenovo, ZTE and Xiaomi, which have all been peddling dirt-cheap smartphones with surprisingly strong specifications.
“Apple is only focused on the high-end segment, and China’s smartphone market growth right now is coming from the mid- to low-end,” Peng said. “Apple doesn’t have any products in the mid- to low-end and that’s where Xiaomi has been building their brand awareness.”
One big reason that Apple is losing out badly in the world’s largest smartphone market has been its continued unwillingness to accept lower subsidies from China Mobile, which has nearly 750 million subscribers and is the world’s largest wireless carrier. Another reason is that many Chinese consumers no longer see the iPhone as a must-have premium brand and are perfectly happy with low-cost Android phones.
“Apple is no longer the prestige handset that everybody is aspiring to,” Shaun Rein, the managing director of the Shanghai-based China Market Research Group, tells Bloomberg. “The smartphone has become more of a commodity and Xiaomi is selling good hardware at a cheap price.”