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iPhone 5 Hits China as Apple Struggles for Market Share

Jessica Menton | Dec 15, 2012 3:00am EST | 2min:21sec

The iPhone 5 was officially released in China on Friday (December 14), as Apple struggled for market share with Samsung and other smartphone giants. The launch at Beijing's Wangfujing Apple store -- Asia's largest -- was subdued in comparison to previous product launches. This time, all customers were required to book their phone first online, meaning fans did not have to queue in the snow, or tussle for a chance to get their hands on one as with previous launches. Nonetheless, 23-year-old recent graduate Cao Yi was excited. "I have bought an Apple MP3 player, iPod Touch and Apple laptop. Overall, the image is more detailed and overall I like it much more than the Android system, plus I think the design is better suited to female users," she said. Programme designer Zhang Kun was disappointed with the launch, and felt the new iPhone model wasn't so different from its predecessors. On Friday, he was buying one for a friend, and holding out for the iPhone 5S for himself. "I think it should be as thin as the iPod Touch 5 and at least not much thicker than it. But this is just a little bit thinner than the iPhone 4S. Although the screen has become longer, I don't think it feels very different when it's in your hand," he said. At the flagship store in the commercial hub of Shanghai, the launch was also a quiet affair, with only dozens of customers turning out. As the world's biggest smartphone market, China is also Apple's second-largest market, but iPhone sales are in the middle of fierce competition with Samsung and Nokia as well as domestic handset makers, all of which have produced cheaper Android-based devices. "The price of an iPhone on the domestic market is still quite high. And personally, I don't have very high demands in terms of functions. In my daily life I can use a computer to complete the tasks," said Samsung user Shi Lipeng. Tech consultant Michael Clendenin said that if Apple wants a bigger market share, it would have to get cheaper. "Of course China matters to them and they've already captured a lot of the first wave of people likely to buy smartphones. So you've got to think those people they have captured will continue to upgrade with the iPhone 6 and 7 and 8 come out so they're pretty safe in that way. If they want to expand market share, probably the only way for them to do it here dramatically would be to put out a lower cost phone and it's really uncertain if they will decide to go that route. It's something they've really not considered before. But we'll just have to wait and see. Apple is a mystery in that regard," he said. California-based Apple has been in talks about a tie-up with China's biggest carrier China Mobile for four years. A deal is seen as crucial to improve Apple's distribution in a market of 290 million users which is forecast to double this year. China Mobile and Apple initially said they were separated only by a technical issue, as the Chinese carrier runs a different 3G network from most of the world, but that has evolved into a broader and more complex issue of revenue-sharing. China brings in around 15 percent of total revenue but failure to strike a deal with China Mobile means it is missing out on a large number of phone users. Meanwhile, smartphone rivals Samsung Electronics, Lenovo Group and little-known Chinese brand Coolpad held the smartphones market's top three slots in the third quarter, according to China's Industrial Development Corporation. All three have relationships with China Mobile and offer smartphone models at different price points. Apple competes exclusively at the high-end, and even there, rivals are rolling out models with China Mobile. The iPhone is currently sold through Apple's seven stores and resellers and through China Unicom and China Telecom, which together have fewer than half the mobile subscribers of bigger rival China Mobile.
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