Apple crushes Samsung in China as iPhone attracts twice the loyalty in upgrades over domes...

Posted:
in iPhone edited September 2017
Young smartphone buyers in China are preferring to buy low-priced domestic brands over phones from Samsung, but the loyalty rate in buying another Oppo or Vivo phone is half that of buyers getting another iPhone-- which remains the largest installed smartphone base in China.




According to a report by the Korea International Trade Association detailed by South Korea's Yonhap News, Apple's iPhone accounted for the largest installed base of smartphones in China, with 171 million units.

Huawei was second with an installed base within China of 132 million units, while Oppo has sold 124 million, Vivo 108 million, Xiaomi 68 million and Samsung 48 million phones in China. Apple's iPhone accounted for the largest installed base of smartphones in China, with 171 million units

While Chinese brands have recently mounted a surge of new sales outpacing the rate of new iPhone sales, sixth-place Samsung has clearly been hit hardest by the influx of low priced, middle and lower tier phones from domestic producers.

The report noted that 63 percent of phones sold in China during the second quarter were priced at less than 2,000 yuan (about $300 US). Phones priced above 4000 yuan (about $600 US) only accounted for 6.4 percent of total sales volumes in the quarter, but iPhones claimed an "absolute majority" of this highly profitable segment, which is concentrated in affluent large cities.

A previous report in April by Counterpoint noted that "Apple's share of this super-premium segment remains at 80 percent, with five out of the top ten model SKUs belonging to Apple."


Source: Counterpoint Model Sales Tracker - Q1 2017


Chinese brands were popular among younger buyers, with nearly half of all Oppo sales going to buyers between 16 and 25. However, the report noted that only a quarter of Oppo and Vivo buyers chose to repurchase the same brand again, while more than half (53.4 percent) of all iPhone buyers chose to get another iPhone. Conversely, just 7.2 percent of Samsung buyers opted to get another Samsung phone.

While much attention has been given to Apple's slipping overall "market share" in smartphones as the low end market for smartphones rapidly expands in China, it appears that the wave of cheap new smartphones is hitting Samsung hardest. Further, the bloom in lower-end shipments has not built either profits or strong loyalty among Chinese makers' brands.

That suggests that as young buyers in China become more financially independent, they are likely to opt for higher end phones built by Apple.

Globally, Samsung remained the top producer of smartphones with shipments of 89 million "smartphones and traditional handsets" in the second quarter, according to Strategy Analytics.

However, Samsung's profitable high-end Galaxy and Note sales were severely blunted at the launch of iPhone 6 and have never bounced back to the sales volumes or growth the company last experienced back in 2014, forcing the company to shift its focus toward memory, displays and semiconductors (serving Apple as a key customer) rather than finished mobile products (targeting Apple as a key rival).




Despite selling so many handsets, Samsung continues to earn less than a fifth of the profits Apple makes from sales of premium-class iPhones.

Comments

  • Reply 1 of 19
    How much money does Samsung make from IPhone sales?
  • Reply 2 of 19
    I lived in Beijing until recently, and when you're on the ground there, you get to understand some details about Chinese culture. The middle to upper class really appreciate luxury foreign goods. This can be Mercedes cars to LV bags. Apple products fall into the same category. The masses may buy cheap domestic phones, but the people that have money are willing to spend on quality (whether perceived or actual).
    jbdragonRacerhomieXwatto_cobraiscaroargonautjony0
  • Reply 3 of 19
    lkrupplkrupp Posts: 7,061member
    Okay, let's get something straight. The Chinese, Koreans, and Japanese don't like each other and it goes back centuries or even millennia. The Chinese and Japanese are said to consider Koreans to be the mutts of Asia. So reports of Chinese selecting phones other than Samsung should not surprise anyone. Racism is a player here.
    edited September 2017 cornchipargonaut
  • Reply 4 of 19
    lkrupp said:
    Okay, let's get something straight. The Chinese, Koreans, and Japanese don't like each other and it goes back centuries or even millennia. The Chinese and Japanese are said to consider Koreans to be the mutts of Asia. So reports of Chinese selecting phones other than Samsung should not surprise anyone. Racism is a player here.
    This is broadly true, but more accurately, it's Chinese and Koreans that share a dislike of the Japanese. For context, look into the history of WW2 and specifically the way that the Japanese treated Koreans and Chinese (and even more specifically, how they treated the women of those countries).

    The Chinese have had good relations with the Koreans until recently. In the past year, the Chinese have become generally more nationalistic, and they do not like the military support that South Korea has given to the USA. The Koreans allowed us to install a missile defense system that the Chinese government strongly opposes. This has led to mass boycotts of Korean made products and businesses that were previously quite popular. 

    (FYI I lived in Beijing and Seoul until recently)
    revenantcornchippropodargonautairmanchairman
  • Reply 5 of 19
    PS: Welcome back DED!
    RacerhomieXwatto_cobrabrakkenairmanchairmanjony0
  • Reply 6 of 19
    saltyzip said:
    How much money does Samsung make from IPhone sales?
    Samsung most likely does not make money from iPhone sales. What it does make money off of is an initial contract from Apple to supply certain components in a certain quantity at a certain price. The fact that those iPhones are sold later (or not sold) should not change the outcome for Samsung, since they have already gotten their moneyZ.
    edited September 2017 kevin keeairmanchairman
  • Reply 7 of 19
    avon b7avon b7 Posts: 3,768member
    You specifically mention a Counterpoint report on Q1 2017:

    "A previous report in April by Counterpoint noted that "Apple's share of this super-premium segment remains at 80 percent, with five out of the top ten model SKUs belonging to Apple."

    That said, worldwide, and according to Counterpoint, the premium segment actually contracted 4% while the 'affordable premium' segment ballooned. 

    https://www.counterpointresearch.com/affordable-premium-smartphones-grew-49-annually-in-q1-2017/

    At the time, I mentioned here that that was the area to keep an eye on because premium (in spite of some country specific data) had slipped.

    I haven't seen any more numbers from Counterpoint graphing the situation since then until this appeared recently:

    https://www.counterpointresearch.com/huawei-surpasses-apple/

    So while Apple is pinching Samsung in China, in the bigger picture, it seems to be that others are having a nice prod too.

    AFAIK, this is the first time that Apple has been out of the top two since 2010.

    Apple has reacted in affordable premium by giving a major, but under the radar, push to the iPhone 6. It seems to have played off.

    Samsung has pushed hard too with many special promotions and getting aggressive on price.

    Christmas should be fun!

    edited September 2017
  • Reply 8 of 19
    tylerd said:
    I lived in Beijing until recently, and when you're on the ground there, you get to understand some details about Chinese culture. The middle to upper class really appreciate luxury foreign goods. This can be Mercedes cars to LV bags. Apple products fall into the same category. The masses may buy cheap domestic phones, but the people that have money are willing to spend on quality (whether perceived or actual).
    There are Audi, Mercedes-Benz and other high-end vehicles everywhere on the roads there.
  • Reply 9 of 19
    Welcome back DED! Always like the historical perspective. 
    watto_cobrabrakkenjony0
  • Reply 10 of 19
    jbdragonjbdragon Posts: 2,111member
    tylerd said:
    lkrupp said:
    Okay, let's get something straight. The Chinese, Koreans, and Japanese don't like each other and it goes back centuries or even millennia. The Chinese and Japanese are said to consider Koreans to be the mutts of Asia. So reports of Chinese selecting phones other than Samsung should not surprise anyone. Racism is a player here.
    This is broadly true, but more accurately, it's Chinese and Koreans that share a dislike of the Japanese. For context, look into the history of WW2 and specifically the way that the Japanese treated Koreans and Chinese (and even more specifically, how they treated the women of those countries).

    The Chinese have had good relations with the Koreans until recently. In the past year, the Chinese have become generally more nationalistic, and they do not like the military support that South Korea has given to the USA. The Koreans allowed us to install a missile defense system that the Chinese government strongly opposes. This has led to mass boycotts of Korean made products and businesses that were previously quite popular. 

    (FYI I lived in Beijing and Seoul until recently)
    If China actually DID something and stop all sales to North Korea whch allowed them to build nukes and rockets, we wouldn't be in the huge mess in the first place. We wouldn't be in South Korea installing DEFENSE missiles. That's mostly on China for allowing things to get to where they are now. China and Russia, blocking bans for years. Look, you have North Korea workers in Russia, working like slaves and giving part of their money to the Government. Thousands of them. This is one of the ways they can get money to make their nukes and missile systems. China has been a long time trade partner. Now they're made because South Korea ho has NO NUKES, just like Japan has No NUKES. Didn't want them. Is now thinking once again about getting NUKES. We're supplying only DEFENSE Missiles. They are not offence Missiles. They's also not NUKES. Can I give China the big middle FINGER? Thanks China. Not forget past presidents like Clinton who made a deal and of course North Korea didn't give a crap. Didn't keep their word.I know, SHOCKING.
    cornchipSpamSandwichdanh
  • Reply 11 of 19
    I remember when Apple started crushing the Japanese market way back when. The naysayers said the Japanese were beholden to their type of  phones b/c they could play TV. Haha. :)
    SpamSandwichwatto_cobra
  • Reply 12 of 19
    radarthekatradarthekat Posts: 3,040moderator
    There's a difference between market share of new sales and installed base.  

    While Apple continues to take a minority market share in new sales, it seems they have been able to grow the largest installed base.  This is, I'd guess, due to the much longer useful lifespan of an iPhone versus most other phones.  They stick around and the installed base grows.  The other brands sell a lot more phones than Apple but they mostly can't be updated to newer major versions of their operating system and suffer from crapping out after a couple years, so a lot of those new sales go to replace existing phones that are shitcanned.

    while the pundits bemoan Apple's minority market share, the executives in Cupertino are playing a different game, stealthily taking over where it matters most in the long run; share of installed base and customer satisfaction and loyalty. 
    edited September 2017 cornchipwatto_cobrabrakkenjony0
  • Reply 13 of 19
    Rayz2016Rayz2016 Posts: 4,591member
    There's a difference between market share of new sales and installed base.  

    While Apple continues to take a minority market share in new sales, it seems they have been able to grow the largest installed base.  This is, I'd guess, due to the much longer useful lifespan of an iPhone versus most other phones.  They stick around and the installed base grows.  The other brands sell a lot more phones than Apple but they mostly can't be updated to newer major versions of their operating system and suffer from crapping out after a couple years, so a lot of those new sales go to replace existing phones that are shitcanned.

    while the pundits bemoan Apple's minority market share, the executives in Cupertino are playing a different game, stealthily taking over where it matters most in the long run; share of installed base and customer satisfaction and loyalty. 
    Yup.  

    The longer I'm with the Apple ecosystem then the less likely I am to leave. 
    watto_cobraradarthekat
  • Reply 14 of 19
    RacerhomieXRacerhomieX Posts: 95unconfirmed, member
    tylerd said:
    PS: Welcome back DED!
    I have been waiting for a longform DED article,for quite some time
    watto_cobrabrakkenradarthekat
  • Reply 15 of 19
    DilirX said:
    tylerd said:
    PS: Welcome back DED!
    I have been waiting for a longform DED article,for quite some time
    Mike W certainly does not cut it. There are only so many times I can re-read RoughlyDrafted, and AppleInsider's search function seems to have been written in 1992.
    Yay Dilger!
    jony0
  • Reply 16 of 19
    avon b7avon b7 Posts: 3,768member
    brakken said:
    DilirX said:
    tylerd said:
    PS: Welcome back DED!
    I have been waiting for a longform DED article,for quite some time
    Mike W certainly does not cut it. There are only so many times I can re-read RoughlyDrafted, and AppleInsider's search function seems to have been written in 1992.
    Yay Dilger!
    I think Mike does a great job and actively follows up on all questions that get posted. His pieces are well balanced and normally sufficiently detailed for most users. Difficult to ask for more. And as a moderator the same.
    radarthekatgatorguyMacsplosion
  • Reply 17 of 19
    I like Mike W! He's got an easy style and his speaking voice on podcasts is friendly and informative. That being said, it was DED's articles that got me interested in following Apple. Great job; Guys. 
  • Reply 18 of 19
    Great article!   LOL  
    edited September 2017
  • Reply 19 of 19
    Love DED, Mike W and N Hughs.  I especially love that DED and Mike W step into the comments section to mess with the trolls.
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