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China now has more active Android, iOS devices than US, growing rapidly
Market analysis firm IDC has released its latest figures on smartphone share in China, and reports that Apple has achieved a nine percent share of the estimated 78 million smartphones sold in China during the first three months of 2013, a rise of 117 percent year-over year. While all of the top vendors did well, Apple -- led by its entry-level iPhone 4 -- grew at an annual rate of 211 percent. Another survey firm, Canalys, gave Apple an eight percent share but also ranked it in fifth place among manufacturers, about double the prevailing view on the company's marketshare in China.
The tripling of iPhone 4 sales is credited to more aggressive marketing by Apple including financing through instalment plans and generous trade-in offers through resellers, who then recycle the trade-ins to bolster their margins. In both the IDC and Canalys surveys, Samsung is the market leader with a share roughly double that of Apple -- but the core of its business is in sub-$200 phones rather than premium smartphones.
Also of note in a recent analysis by Flurry Analytics was that the Chinese market for smartphones is now larger than the US market, with China having reached parity in January and is now approaching the 250 million mark in the total number of active iOS and Android devices. The US market is also growing, but at a slower pace and is estimated to have reached the 230 million mark in February.
Samsung's hold on the low-end phone market in China grew by 47 percent, which mirrors recent map analysis based on Twitter tweets that show that poorer areas of major US cities tend to be dominated by Android phones, while upscale areas tend to be solidly iPhone-centric. IDC says that Samsung has changed its marketing focus to simply maintaining its high-end base and focusing on the low-end segment for growth. China now has 79 percent of its mobile handset market made up of various levels of smartphone as it makes the transition away from "feature phones."
Because of the lower price of the iPhone 4 coupled with Apple's incentives, it has found that it can compete effectively in the "middle range" between the low-end devices (many of which barely qualify as smartphones) and the premium devices such as the iPhone 5. Apple's sales surge would indicate that consumers are willing to reach a little beyond the cheapest segment when they can get most of the features found in the most expensive premium smartphones, the so-called "value segment" of the market.
The report says that the dominance of the market by foreign-owned companies has hindered China-based local manufacturers (apart from international brand Huawei) from gaining more of a foothold, mostly due to patent limitations or the fact that foreign manufacturers have eaten up most of the capacity with parts suppliers. IDC believes that the larger domestic brands in China will need to expand through mergers and acquisitions of parts suppliers in order to fight the challenge of foreign brands.
China is also starting to see a rise in large-screen mobile phones, with units that feature screens larger than five inches now accounting for 7.5 percent of the market -- a 74 percent year-over-year rise that IDC believes this will grow to 20 percent share by year's end. As such devices tend to be priced as higher "premium" smartphones, however, the prediction may be seen by some as optimistic. The analysis firm also called for 4G to overtake 3G as a majority of smartphone models sometime in 2017, and said that trends going forward will depend heavily on the "stickiness" of the mobile services eco-system vendors build around the products -- a factor that could favor more growth for Apple, which is widely seen as having the best and most resilient after-sale phone accessories and app market.
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