Apoorva Bhardwaj is a source.
In North America, Apple andSamsung are the top two phone sellers. The South Korean giant has less than 1% market share in China, with its Chinese competitors hogging the spotlight. Apple's market share increased by 42% in the third quarter of the year.
Apple was the fifth-largest phone brand in China in the third quarter, but the introduction of the iPhone 13 made it the largest phone brand in the country. Apple went from a 13% share to 22% in a month, according to Counterpoint sales figures.
The launch of the iPhone 13 was the catalyst for the change. I talked to Ivan Lam, a senior research analyst at Counterpoint Research, to understand what's happening. A retail strategy that's finally taking off, a decline in the price of the phone, and aggressive pricing are all factors that have led to an increase in sales of the phone.
While OPPO andXiaomi are starting to focus on the high-end segment, they haven't made much headway, as evidenced by the fact thatHuawei is continuing to lose ground in the high-end market. In the third quarter of 2020, the leader in China's phone segment was Huawei with a 30% market share, but that figure is now 8%. The U.S. trade ban has made it impossible for the brand to access the latest technology in its home market.
According to an Associate Research Director at the International Data Corporation, Apple was ideally positioned to fill the void left by the departure of the Chinese company, as it has a better brand image in the premium segment than its rivals. There is less competition for the 13 series this year.
The pricing strategy for the iPhone 13 will be a benefit to the company, as it will include a lower price point than the iPhone 12. The move was made last year when Apple began allowing online stores to sell the iPhone, giving them the ability to heavily subsidize the device for the holiday season. The ideal situation for Apple in China was created because of the discounts and aggressive pricing for the iPhone 13 and 12.
Apoorva Bhardwaj is a source.
The maturing market with an increasing average selling price is a benefit to Apple. The average selling price in Q3 2020 was $314, but it has gone up to $383 in Q1 2021. The mid-range and high-end segments of the OS are more suited to the changing demand, but they still don't have the cachet of Apple. That allows the iPhone maker to be ahead of its competitors.
The global chip shortage contributed to lower-than-normal sales for the likes of Vivo, OPPO, andXiaomi, as well as for the other manufacturers of the high-end and mid-tier segments. Apple's scale has helped it weather the shortages better, as evidenced by the sales increase in October.
Apple's retail presence and brand recognition are advantages, according to Kaur, who is bullish on the company's short-term strategy. Apple's advantage in the premium market will continue in the short term, as other brands have yet to establish their own premium brand image. Apple has a wide online and retail presence in the market that has allowed it to reach large and small towns in China.
Can Apple continue to grow? With the launch of the new flagships from OPPO, Vivo, andXiaomi in the coming months, that dynamic will change, as they should sell well for the next two quarters. They're looking to make up for their lack of brand awareness with flagships that will be cheaper than the iPhone 13 and better hardware.
The offline distribution network of OPPO and Vivo can be used to go on the offensive. The two brands control over 70% of the offline market, and they can use that to their advantage, like what they do in other markets. The offline segment is gaining ground, but it isn't quite on the same level as its rivals. Honor will struggle to differentiate itself in the future, as it is too similar to what is already available in the market, according to Lam.
Apoorva Bhardwaj is a source.
Apple is cutting estimates because it sees a decrease in demand for the holiday season. The Chinese phone market has a bigger problem than that. The 75 million sales figure in the second quarter of 2021 was the lowest in a decade. The entire market is getting old, with 5G too costly and the 4G market saturated. The upgrade cycles for Chinese customers are now two years.
The Chinese market is thought to have contracted by 0.6% this year, with the PC and tablets category seeing more demand. The Pandemic drove more demand for PCs and tablets than for phones.
It will be difficult for brands to differentiate their products with the market getting saturated. Apple did a great job taking market share from Huawei, but with Chinese manufacturers ramping up their efforts in the high-end segment, they should regain some steam in the coming quarters.
