By Tom Bannister
Despite the latest edition of its iPhone selling well, Apple is beginning to lag behind its competitors in China. Bloomberg reports that the American multinational is now being outsold by three other smartphone companies: South Korean giant Samsung, and homegrown companies Lenovo and Coolpad.
Whilst the Apple-Samsung rivalry would be expected, the superior sales figures of Lenovo and Coolpad are more of a surprise. Lenovo, which firmly established itself selling computers, has only really been involved with smartphones since 2010. Coolpad, owned by a Shenzhen telecoms company, is a small company that is virtually unknown outside of China. Over recent years it has staked out a place in the market selling lower priced handsets.
Indeed, another Bloomberg report on Apple’s problems in China, identifies the high cost of the iPhone as being a major problem for the American company. Apple is said to be developing a lower cost smartphone, but this won’t be available until at least the end of the year.
A second problem that the report lists has to do with iTunes, the application that Apple users are supposed to purchase media through. Currently Apple does not sell music through its Chinese iTunes service, only apps. The ease of obtaining pirated media in China makes the iTunes model unattractive to Chinese users. This makes Apple systems (slightly) less attractive to Chinese consumers and the market less profitable for the American company.
The potential for growth in China, the world’s largest mobile-phone/cellphone market, obviously remains as more and more people switch to smartphones. Earlier this month Apple CEO Tim Cook predicted that China would grow to become the telecom giants biggest market. This still could be the case, but it seems that Apple will need to alter its business model to better suit the Chinese market.