Smartphone growth slowing in China as Apple expands iPhone presence

Posted:
in iPhone edited January 2014
Though the Chinese market remains a major focus for Apple, particularly with the upcoming launch of the iPhone on China Mobile, new data suggests that overall smartphone sales growth has been slowing from its previous red-hot pace.

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Average 3G user growth was at a booming rate of around 18 million new users per month in the third quarter of calendar 2013, according to data from investment firm Wedge Partners. But 3G user growth fell to around 13 million new users per month in the fourth quarter of the year, analyst Jun Zhang said.

Zhang believes that sales of Apple's iPhone in China were affected by slowing smartphone sell-through in the market. Both the iPhone 5s and iPhone 5c, Apple's two latest smartphone models, launched there in September on carriers China Unicom and China Telecom.

In addition, data from Wedge Partners suggests that the popularity of Apple's latest iPhones has been slipping in China in favor of handsets from local manufacturers. Specifically, the iPhone 5s was previously the country's No. 2 selling handset, but slipped to No. 3 in October after it was replaced by Xiaomi.

Apple's mid-range handset, the iPhone 5c, didn't even crack the top 20 smartphones tracked by Wedge Partners in October. The data is the latest in a number of reports that have suggested sales of the iPhone 5c may be weaker than some had anticipated they would be in China.

Word of potentially slowing growth in the Chinese smartphone market comes as Apple announced a much anticipated deal with China Mobile, the world's largest wireless provider. Both the iPhone 5s and iPhone 5c will become officially available to its 760 million subscribers in January.

Market watchers have high hopes for Apple's agreement with China Mobile, seeing it adding as much as 5 percent to the company's revenue in calendar 2014. Analysts generally expect that China Mobile will move 17 million iPhones, or 10 percent of the carrier's current 170 million 3G subscribers, over the next year.
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Comments

  • Reply 1 of 35

    OMG! this means, Apple is doomed! again! Heeeeelp! save all your children, pack your things!

    move out to the closest assigned security area!...

  • Reply 2 of 35
    There it is... The expected analyst pissing on the fire. The truth is that Apple is eating up Android market in the US right now. Android is the appetizer.
  • Reply 3 of 35
    jkichline wrote: »
    There it is... The expected analyst pissing on the fire.

    Wait 'til they realize that masses of Chinese are hoarding their money to buy the iPhone when it's finally available
  • Reply 4 of 35
    rogifanrogifan Posts: 10,669member
    But which market is slowing? Is it the premium segment or the cheap segment? Lots of companies including Chinese brands have been flooding the market with cheap phones. I have a hard time believing that the premium segment in China is fully saturated.
  • Reply 5 of 35
    lkrupplkrupp Posts: 7,449member

    I’m surprised it took this long for an analyst to put a negative spin on the deal. AAPL down $2.44 today.

  • Reply 6 of 35
    lkrupp wrote: »
    I’m surprised it took this long for an analyst to put a negative spin on the deal. AAPL down $2.44 today.

    It was the hard work of a team of dedicated stock manipulation specialists.
  • Reply 7 of 35
    Quote:

    Originally Posted by lkrupp View Post

     

    I’m surprised it took this long for an analyst to put a negative spin on the deal. AAPL down $2.44 today.


     

    Oh, bs.

     

    A small amount of money is being taken off the table over the holidays. By the 3rd of January AAPL will be over $600.

  • Reply 8 of 35
    Quote:

    Originally Posted by lkrupp View Post

     

    I’m surprised it took this long for an analyst to put a negative spin on the deal. AAPL down $2.44 today.


    buying opportunity 

  • Reply 9 of 35
    512ke512ke Posts: 782member
    This is either disingenuous or idiotic, take your pick.

    The Chinese market for iPhones all all kinds is growing, growing, growing.

    Period. Bookmark and come back to tell me how wildly right I am lol.
  • Reply 10 of 35
    Mr. Zhang happens to be the same analyst who said just a few days ago that apple won't reach agreement with china mobile until late 2014.
  • Reply 11 of 35
    The article does not state if the market saturation is of the high or low end, yet I suspect it is the cheaper smartphone market that is super-saturated. I believe that as China increases in personal disposal income, there will be a corresponding increase in disposable income to higher-end luxury products and this means Apple products are poised for a breakout in China.

    I also contend that the Apple-China naysayers are not 'analysts' at all, but merely dilettante uniformed 'critics'. The amazing thing is that so many supposed 'intelligent' people listen to this muck, they should know better.
  • Reply 12 of 35
    lantznlantzn Posts: 240member
    Wait 'til they realize that masses of Chinese are hoarding their money to buy the iPhone when it's finally available

    That was my thinking. The same thing happens in the US a couple of months prior to the release of new iPhone models. How many months and numerous rumor articles have there been written about Apple signing a deal with this large China carrier? They have been waiting to pounce.
  • Reply 13 of 35
    cnocbuicnocbui Posts: 3,613member

    An iPhone 5s costs an American about 1.15% of the average per-capita GDP to purchase.  It costs about 9% in China.

     

    I think the demand in the US for the iPhone 5s would be rather muted if it cost $6,740 to buy one.

     

    The Average income in China in 2012 was $2,100 while in a prosperous city such as Shanghai it was $4,700.

     

    I know there are a lot of people in China but the iPhone will be affordable to only a tiny fraction of the population.  Some people seem to be expecting runaway sales.  Maybe that will happen.  It will certainly be interesting to to see what transpires.

  • Reply 14 of 35
    solipsismxsolipsismx Posts: 19,566member
    cnocbui wrote: »
    An iPhone 5s costs an American about 1.15% of the average per-capita GDP to purchase.  It costs about 9% in China.

    I think the demand in the US for the iPhone 5s would be rather muted if it cost $6,740 to buy one.

    The Average income in China in 2012 was $2,100 while in a prosperous city such as Shanghai it was $4,700.

    I know there are a lot of people in China but the iPhone will be affordable to only a tiny fraction of the population.  Some people seem to be expecting runaway sales.  Maybe that will happen.  It will certainly be interesting to to see what transpires.

    1) Everything everywhere is only available to a fraction of the people, even if that fraction is 99/100.

    2) There are how many millions of iPhones on China Mobile's network using only GSM for voice and EDGE for data? 10 million was it? Now it's officially offered and at prices lower than the grey market for new iPhones.

    3) Let's remember China is a country with over 1 billion people, with over 3/4 of a billion subscribers on China Mobile alone, a growing market, and shitload of wealthy customers that makes this deal important to Apple and their shareholders. China doesn't (yet) have as many millionaires as the US but you don't need to be a millionaire to own an iPhone.
  • Reply 15 of 35
    cnocbui wrote: »
    An iPhone 5s costs an American about 1.15% of the average per-capita GDP to purchase.  It costs about 9% in China.

    I think the demand in the US for the iPhone 5s would be rather muted if it cost $6,740 to buy one.

    The Average income in China in 2012 was $2,100 while in a prosperous city such as Shanghai it was $4,700.

    I know there are a lot of people in China but the iPhone will be affordable to only a tiny fraction of the population.  Some people seem to be expecting runaway sales.  Maybe that will happen.  It will certainly be interesting to to see what transpires.

    China is still a hugely attractive market for Apple.

    And guess what... if a person doesn't make a lot of money now... they might next year. Or the year after that. (or they'll just save longer)

    It's not like Apple will be selling iPhones in China for one year and then vanish. No... Apple will be selling iPhones in China from now on.

    Apple being on more carriers in more countries is a good thing... especially in countries with over a billion people.


    EDIT for my huge math fail...
  • Reply 16 of 35
    normmnormm Posts: 575member

    Apple is exactly keeping up with the smartphone market in terms of the constant of its exponential growth (see recent articles at asymco.com about penetration ratio).  The only difference is that Apple's exponential growth started a little after the market as a whole.  That's not a cause for alarm, it's just a fact.

  • Reply 17 of 35
    Quote:

    Originally Posted by Michael Scrip View Post





    1% of China's population is 135 million. That's still a hugely attractive market even if that's all Apple could ever get (don't worry... Apple will get MUCH more than that)

     

     

    Seriously? China has a population of 13.5 billion people?  And here I was thinking we hadn't quite reached 7 billion on earth.

  • Reply 18 of 35
    Seriously? China has a population of 13.5 billion people?  And here I was thinking we hadn't quite reached 7 billion on earth.

    Damn decimal...

    Thanks!

    (the point still stands though... Apple will gain new customers in China)
  • Reply 19 of 35
    george li wrote: »
    Mr. Zhang happens to be the same analyst who said just a few days ago that apple won't reach agreement with china mobile until late 2014.

    So he's 0 for 2.
  • Reply 20 of 35
    Of course demand is down. They were waiting for the iPhone to be available. That happens in the USA every time a new iPhone is about to be announced!
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