Apple crushes Samsung in China as iPhone attracts twice the loyalty in upgrades over domes...
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.
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.
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
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)
"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!
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.
The longer I'm with the Apple ecosystem then the less likely I am to leave.
Yay Dilger!