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Report: Apple owns high-end smartphone market in China already

updated 02:05 am EDT, Fri March 14, 2014

Segment constitutes more than a quarter of entire smartphone base

A study in China by app and mobile advertising analytics firm Umeng shows that Apple's consistent smartphone strategy of leaving the low end of markets to others (what CEO Tim Cook calls "junk devices") and targeting affluent users as influencers has again resulted in high profitability and potentially surprising share in the face of a flood of competitors. Despite having only recently emerged to a full national presence on all the top carriers in China, Apple is said to already account for 80 percent of the $500-or-more segment of the Chinese smartphone market.



The company's report indicates that there are currently 700 million smartphone users in China, with high-end users making up 27 percent of that market (some 190 million users who paid more than $500US for their smartphone). Of that group, 80 percent -- nearly 150 million users -- are carrying iPhones. To put this into a North American perspective, the number of iPhone users in China is about the same as the total number of smartphone users in the US.

As Cook predicted, growth in the smartphone market in China has been explosive: in addition to growing from 175 million 3G users in 2012 to over 300 million as of last July, sharing on social networks tripled in just the last six months of 2013. The balance between the 190 million "high-end" smartphone users and 300 million 3G subscribers is likely occupied by mid-range smartphone buyers, which may include some iPhone 4 buyers.

Apple has had a steady relationship with the country's second- and third-largest carriers, China Unicom and China Telecom, and has been selling the iPhone 5s and 5c since their introduction (along with the 4s and leftover iPhone 5 and even the iPhone 4, the latter two for several years), but only recently debuted officially on the country's largest carrier, China Mobile, which by itself had 760 million subscribers as of last July.

Umeng's numbers are taken from real-world usage rather than shipments, and thus are considered more accurate representations of active smartphone users. If 3G/LTE subscriptions have grown as indicated, Apple may have done as well as to nearly double their presence in the country in the last nine months, as it was thought to have around 80 million 3G iOS users last June.



The report also notes other positive trends in China, including a rise in the percentage of top apps that licensed third-party intellectual property (20 percent, up from 13 percent last June) and a drop in the number of jailbroken iPhones (13, down from 30 percent last summer). Umeng says that users are "becoming aware of the security risks of using a jailbroken phone." The rise in high-end smartphone users has also been a boon to developers: Umeng says such users buy and use very diverse apps, such as news and finance, shopping and entertainment.

By contrast, low-end smartphones (defined as costing less than $150US) are far more populous, but make very little money after the initial sale of the phone. One of the most popular category of apps for low-end smartphones in China is "wallpaper," along with casual games, and Android gets 57 percent of its collective sales from such devices.




By Electronista Staff
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Comments

  1. Jeff75

    Forum Regular

    Joined: 09-15-00

    Apple's strategy is winning.

  1. iphonerulez

    Dedicated MacNNer

    Joined: 11-28-08

    Apple's share price continues to fall so I wouldn't exactly say that Apple is winning anything. Tim Cook gets no respect whatsoever and Apple is still said to be a doomed company. I'd hate to see where Apple would be if it had a losing strategy. There are many claims that the recent China Mobile iPhone deal will be an utter disaster for Apple and no monetary gains will be forthcoming.

  1. sibeale1

    Fresh-Faced Recruit

    Joined: 02-23-06

    iphonerulez must be shorting Apple stock. Good luck! Basing your opinion of Apple on stock price alone is truly foolish. There have been "many claims" of "utter disaster" for Apple in the past. The company seems to be doing rather well.

  1. James Katt

    Junior Member

    Joined: 03-02-08

    If this report is true, then Apple is an EPIC SUCCESS story in China. Apple has 150 MILLION CHINESE IPHONE USERS. That BOGGLES the mind! This is 80% of the market for phones costing over $500. This is the same as the TOTAL number of US Smartphone users. This means Apple has DOUBLE the number of iPhone users in China as it has the number of US iPhone users. EPIC. AMAZING. MIND-BOGGLING, EYE-POPPING numbers!

  1. Jeff75

    Forum Regular

    Joined: 09-15-00

    Looks like Apple's strategy is winning.

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    Originally Posted by iphonerulezView Post

    Apple's share price continues to fall so I wouldn't exactly say that Apple is winning anything. Tim Cook gets no respect whatsoever and Apple is still said to be a doomed company. I'd hate to see where Apple would be if it had a losing strategy. There are many claims that the recent China Mobile iPhone deal will be an utter disaster for Apple and no monetary gains will be forthcoming.


    Are you a Wall Street shill, or a Samsung shill? I can't figure out which.

    Apple doesn't give a shit about share price, beyond what they're legally required to consider.

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