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In China, new iOS product launches drive older device sales, expand Apple's customer base

post #1 of 19
Thread Starter 
In most countries, when Apple releases a new iPhone model the handset quickly becomes a hot-seller as older models fall by the wayside. The opposite is true in China, according to fresh data from research firm Mixpanel.

Mixpanel China
Source: Mixpanel


Taking a micro-level look at the Chinese wireless market, specifically as it pertains to iOS devices, Mixpanel discovered that the buzz around an Apple product release is more important than the product itself.

The firm points to Apple's recent iPhone 5s and 5c debut as an example. In major markets outside of China, especially the U.S. and Europe, customers flocked to stores to pick up the latest and greatest handset (with sales largely skewed toward the 5s). In December, some three months after the iPhone 5s hit store shelves, one report found Apple's premium offering was the best-selling smartphone on the "big-four" U.S. carriers through November.

Compare that to the current list of top iOS devices used in China, which shows the last-generation iPhone 5 sitting on top with a 19-percent share of all iOS traffic Mixpanel monitored in the country. Despite a marketing blitz by China Mobile for the newest iPhone 5s and 5c, the spike in usage went to models like the iPhone 4S and first-gen iPad mini.

Specifically, when Apple released the latest iPhone lineup in September there was a definite uptick in Chinese iOS data, though the jump was attributed to the iPhone 5, not the 5s or 5c. Similarly, China Mobile's iPhone launch in January drove growth, but again consumers went mostly for older models.

The simple explanation is price, Mixpanel says. When Apple debuts a new product, last-generation devices get an instant price drop, making them more attractive to first-time buyers or those in the market for a mid-tier handset.

Mixpanel China


Diving deeper into the data, Mixpanel segmented iOS activity by city and region, as seen above. For the most part, the findings are not surprising, with most activity logged from more affluent cities along China's eastern coast.

The concentration of data in major metropolitan cities is most likely a direct correlation to income, but Mixpanel proposes China Mobile's 4G network rollout could also play a factor in the iOS adoption. The carrier's TD-LTE technology is somewhat rare, though the latest iPhone 5s and 5c models offer support for the network's bands.

Breaking down the data by region, Guangdong shows one of the highest concentrations of iOS device users in China. Likely a factor in the area's iOS adoption are Guangzhou and Shenzhen, both cities made prosperous from manufacturing industry operations.

Mixpanel China


Notably, Apple manufacturing partner Foxconn has a strong presence in the region with factories in Shenzhen which boast some 500,000 workers, many of whom live on site. Mixpanel was unable to parse IP data to find whether the uptick in iOS usage originated from within Foxconn's plants, but says, "It seems safe to assume that Foxconn's presence can only serve to raise awareness of Apple and its latest offerings within Shenzhen as a whole."

Mixpanel's findings shine a light on the health of Apple's iOS ecosystem in China, a region representing the most important near-term growth potential for the company. While the country lags other markets in new device adoption, the fact that Apple's product launches drive sales is an obvious positive; the company's customer base in China is growing.

As China Mobile grows its 4G network beyond large cities, consumers may start turning to the sales model seen in already saturated smartphone markets like the U.S. At this point, any prediction as to what the Chinese holds for Apple is speculation, though the next iPhone launch should at least offer a clearer picture as to where the country is headed.
post #2 of 19

comparing sales (US) to usage (china).   The data, while interesting, doesn't support the premise that that 5s/5c launch 'drove' iPhone 5 sales.   If they simply showed the delta in usage patterns pre 5s to post 5s release in January, the data would have been much more compelling, as it is, there may be several reasons why the 5s is lagging in usage (like, people who bought it for bling, and not to really do anything with it).

 

also the first mixpanel piechart is proportionally misleading.   It certainly looks like 18.9% is smaller than 16.8, and that 22% is the same as 16.8.  (also look at the 8.4/9.0 wedges).

post #3 of 19
Quote:
Originally Posted by TheOtherGeoff View Post

comparing sales (US) to usage (china).   The data, while interesting, doesn't support the premise that that 5s/5c launch 'drove' iPhone 5 sales.   If they simply showed the delta in usage patterns pre 5s to post 5s release in January, the data would have been much more compelling, as it is, there may be several reasons why the 5s is lagging in usage (like, people who bought it for bling, and not to really do anything with it).

also the first mixpanel piechart is proportionally misleading.   It certainly looks like 18.9% is smaller than 16.8, and that 22% is the same as 16.8.  (also look at the 8.4/9.0 wedges).

I hate when people do that. Everything should be to scale on the same chart.

Still is this good/bad news? I think it's good as it's bringing more folks into the iOS fold.
post #4 of 19
If that's the case, Apple should continue selling older models.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply
post #5 of 19
It is a good thing! What also might be happening is called "Churn". Maybe the rich folks in Chjna did run out and bought iPhone 5s, like in Western Hemisphere. Their older model found buyers. Basically, what it points to is that Chinese buyers themselves like Apple as a brand. So overall it is all good for Apple - do not try to read any negative news into this.
post #6 of 19
Quote:
Originally Posted by AppleInsider View Post

In most countries, when Apple releases a new iPhone model the handset quickly becomes a hot-seller as older models fall by the wayside. The opposite is true in China, according to fresh data from research firm Mixpanel.
 

 

 

"Research Firm"?  Is that a fancy word for "Analyst"?

 

Don't believe a word they say.

post #7 of 19

All these positive, encouraging articles on AI, then the quarterly results “disappoint” once again and the naysayers have another field day. Lather, rinse, repeat and the stock continues to trade in a narrow range with analysts lamenting that Apple is no longer growing. It gets old.

post #8 of 19

For chrissakes, Wall Street is already certain that iPhone sales on China Mobile will be abysmal.  They're certain that Chinese consumers absolutely can't afford iPhones.  It's almost guaranteed Apple will miss iPhone sales expectations this quarter by a wide margin and it will drive the share price below $500.  Articles like these only give Apple shareholders false hopes that never materialize.  Apple has been trading down and sideways for almost six months as Tim Cook constantly talks about some mythical awesome product pipeline while Samsung comes out with new products every week.  If Tim Cook really wanted to do something useful for Apple shareholders, he would take about $50 billion dollars and buy some new revenue streams.  A search engine, credit card company or a mobile payment company.

 

It's nearly impossible for Apple to sell more iPhones with Android smartphones totally saturating the entire smartphone market.  How many smartphones does Samsung alone sell every quarter?  About 90 million.  Apple can't even manage half that amount.  That just means huge amounts of market share loss every quarter.  With loss of market share comes loss of shareholder value.  That's why Google is worth $1200 a share and Apple is worth $530 a share.  Google will be headed higher and Apple will be headed lower.  Talk is cheap and Apple is getting cheaper by the day.  With $160 billion in the bank and the share price dropping, Tim Cook should be ashamed of himself.

post #9 of 19
Quote:
Originally Posted by radster360 View Post

- do not try to read any negative news into this.

Uhh... how's it reported by NYT and WSJ?

Apple's new iPhone 5s only captures 6% of all smart phones sold in China's Major population areas.

Apple's new iPhone 5c and iPad Air don't even move the needle in Chinese sales.

Apple lowers memory in the iPhone 5c to attract Chinese buyers to its lower cost while unsold inventory backs up in Chinese warehouses.

Analysts see short-team price plunge of AAPL stock while Apple's management mulls options.
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
Reply
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
Reply
post #10 of 19

LOL, Digitimes should be releasing something that refutes all of this in about a day or so.

post #11 of 19
Quote:
Originally Posted by Constable Odo View Post

How many smartphones does Samsung alone sell every quarter?  About 90 million.  Apple can't even manage half that amount.  That just means huge amounts of market share loss every quarter.  With loss of market share comes loss of shareholder value.  

In other news... Burger King will never sell as many hamburgers as McDonald's.

And Honda will never sell as many cars as Toyota.

Perhaps it's time for everyone to sell their Apple stock and put it into Samsung, McDonald's and Toyota.

Those companies sell more "things"... and apparently that's good for the stock price.

Right?
post #12 of 19
Quote:
Originally Posted by Constable Odo View Post

Bla, bla, bla...That just means huge amounts of market share loss every quarter.  With loss of market share comes bla, bla, bla...

And since when has Apple cared about market share... especially the low end???
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
Reply
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
Reply
post #13 of 19
Quote:
Originally Posted by Constable Odo View Post

With $160 billion in the bank and the share price dropping, Tim Cook should be ashamed of himself.
Apple is about the _customer_ experience, not the shareholder experience. If you're not OK with that, maybe you shouldn't be in this stock.
post #14 of 19
Quote:
Originally Posted by TokyoJimu View Post


Apple is about the _customer_ experience, not the shareholder experience. If you're not OK with that, maybe you shouldn't be in this stock.

 

or endlessly bitch about it here-

post #15 of 19
Quote:
Originally Posted by Michael Scrip View Post

Perhaps it's time for everyone to sell their Apple stock and put it into Samsung, McDonald's and Toyota.

Those companies sell more "things"... and apparently that's good for the stock price.

Right?

Yes to the Right!

Oh you forgot BIG GM as a vehicle seller, who are in the news a lot.

Yes they install crappy ignition locks, but they say their latest cars are the best ever.

How often have I heard that from the car company which mainly thinks volume!   :no:

post #16 of 19
Quote:
Originally Posted by Constable Odo View Post
 

It's nearly impossible for Apple to sell more iPhones with Android smartphones totally saturating the entire smartphone market.  How many smartphones does Samsung alone sell every quarter?  About 90 million.  Apple can't even manage half that amount.  That just means huge amounts of market share loss every quarter.  With loss of market share comes loss of shareholder value.  That's why Google is worth $1200 a share and Apple is worth $530 a share.  Google will be headed higher and Apple will be headed lower.  Talk is cheap and Apple is getting cheaper by the day.  With $160 billion in the bank and the share price dropping, Tim Cook should be ashamed of himself.

Apple has a very big volume of their latest iPhone, plus reasonable volume of the previous generation.

Apple's latest lovely iOS7 is easily installable on all iPhones back to my over 3 yr old iPhone4, which runs very well with it.

 

Google doesn't make money on all the android phones, they give away their OS and they make lots of $s on the spying it does for them. I can just imagine the HUGE data base of info Google has on all the android users they extract personal info from.

I will admit android users upgrade their phone more often, that's the only way for them to keep  their android OS and apps current . Their down payment is slightly less than for an iPhone, because android phones sell for a discount after just a few months on the market. That attracts bottom end phone buyers.

post #17 of 19
Quote:
Originally Posted by Constable Odo View Post
 

For chrissakes, Wall Street is already certain that iPhone sales on China Mobile will be abysmal.  They're certain that Chinese consumers absolutely can't afford iPhones.  

Dear Odo - I guess both you and Wall Street missed the announcement yesterday that China Telecom sold about a million iPhones last month.

 

"We added 1.34 million new 4G users in February and most of them are iPhone users"

Quote:
Originally Posted by Constable Odo View Post
It's nearly impossible for Apple to sell more iPhones with Android smartphones totally saturating the entire smartphone market.  How many smartphones does Samsung alone sell every quarter?  About 90 million.  Apple can't even manage half that amount.  That just means huge amounts of market share loss every quarter.  With loss of market share comes loss of shareholder value.  

If you look at actual data (I looked at Dediu at Asymco--   http://www.asymco.com/2014/03/18/invaluable/ ) you'll see that in the last quarter, Apple shipped about 10% of the smartphones, had a bit more than 40% of the revenue and about 75% of the profits. Samsung shipped a lot more and had the rest of the profits. All other smartphone companies lost money.

 

Please explain how 75% of industry profits causes loss of shareholder value. 

post #18 of 19
Quote:
Originally Posted by plovell View Post

Dear Odo - I guess both you and Wall Street missed the announcement yesterday that China Telecom sold about a million iPhones last month.

"We added 1.34 million new 4G users in February and most of them are iPhone users"
If you look at actual data (I looked at Dediu at Asymco--   http://www.asymco.com/2014/03/18/invaluable/ ) you'll see that in the last quarter, Apple shipped about 10% of the smartphones, had a bit more than 40% of the revenue and about 75% of the profits. Samsung shipped a lot more and had the rest of the profits. All other smartphone companies lost money. 

Thanks for the good data that was unavailable at the time of the story. I think it's worth noting that some (possibly many) of the Samsung "smart phones" are hardly smart and should not fall into the same classification as the iPhone. It always warms my cockles to see numbers that verify Apple's strategy of focusing on building a prestige brand instead of thinking "market share" only. Samsung has a firm grasp of the low end of the market and (try as they might) cannot convince the buyer that they have a prestige product too.
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
Reply
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
Reply
post #19 of 19
Quote:
Originally Posted by Macky the Macky View Post

Thanks for the good data that was unavailable at the time of the story. I think it's worth noting that some (possibly many) of the Samsung "smart phones" are hardly smart and should not fall into the same classification as the iPhone. It always warms my cockles to see numbers that verify Apple's strategy of focusing on building a prestige brand instead of thinking "market share" only. Samsung has a firm grasp of the low end of the market and (try as they might) cannot convince the buyer that they have a prestige product too.

Exactly.

I find it odd that any Android phone... whether it's a $79 budget Android phone sold in a developing country or a $600 flagship Android phone... they ALL carry the same weight when compared to the iPhone.

In the automobile market... they have different classifications: Ultracompact, Compact, Mid-size, Full-size, Luxury, Sports car, Pickup, SUV, etc. And sales are compared within those classifications.

But in the smartphone market... there are no classifications. If 3 cheap garbage Android phones get sold for every 1 iPhone... people think that's an automatic fail for Apple.

That doesn't make a lot of sense... considering Apple doesn't even sell a phone lower than $449.

But it's worth noting that MOST of Apple's iPhone sales are actually the $649+ models.

If we're gonna compare Samsung to Apple... or any company to Apple... it would be nice to at least know the price ranges of the phone we're talking about to try to get some common ground.

Samsung reportedly sold 82 million smartphones last quarter... but they weren't all Galaxy S4 or Galaxy Note 3. I'd be surprised if even 1/4 of Samsung's smartphone sales were high-end phones.

All everyone talks about is the number of units... no matter what those units happen to be.

So when we're talking about market share... which is ALL the smartphones (low-end to high-end) sold over the last 3 months... of course Apple and their $649+ phones won't rank too high.

But they would rank very high in the high-end smartphone market... if such a classification could be made.

Yes... Samsung sells more smartphones than Apple. But they also sell more low-end smartphones than Apple... because Apple sells ZERO low-end phones.

Sadly... no one ever mentions that.
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