IPhone struggles to gain ground in China(money.cnn.com)
money.cnn.com
IPhone struggles to gain ground in China
http://money.cnn.com/2012/08/28/technology/iphone-china/index.html?hpt=hp_t3
7 comments
Anecdotally, if you visit Shanghai or Beijing you will see iPhones everywhere - owning an Apple product in China will give you more 'street cred' than pretty much any other consumer purchase. The amount of money people are willing to spend on their phones (in China) relative to their annual income is actually way, way higher than any rational economist might think (as do the authors of this article). The constraining factor in Apple's growth in China is supply (in manufacturing and distribution) rather than demand.
The interesting thing comes at the bottom; "In such a huge market, even 7.5% market share, he noted, is worth billions."
So. 7.5% market share is worth billions in revenue to Apple, they make healthy profit on the iPhone. They know it's desirable. The simple question is, why would Apple try and price point compete and sacrifice the one thing that makes them stand out from the whole host of other, cheaper devices?
There was an interesting report from a while back about consumer purchasing in relation to knock off products in China, and it's an aspirational aspect of consumer purchasing. There's a whole host of people who get the closest thing to the 'the' item they want, be it a fake or a very similar item, and then they'll bank until the can afford it. This is why whilst there's a huge amount of goods counterfeiting it in China they also have one of the largest amounts of luxury goods growth for any economy. Apple is in a safe position by doing what they're doing, it's not like Ferrari or Louis Vuitton have suddenly panicked and tried dropping their prices for an increase in market share.
Note, there's a massive divide between the poor, the reasonable and the wealthy and I'm not an economist so I'm not even going to get into that quagmire.
So. 7.5% market share is worth billions in revenue to Apple, they make healthy profit on the iPhone. They know it's desirable. The simple question is, why would Apple try and price point compete and sacrifice the one thing that makes them stand out from the whole host of other, cheaper devices?
There was an interesting report from a while back about consumer purchasing in relation to knock off products in China, and it's an aspirational aspect of consumer purchasing. There's a whole host of people who get the closest thing to the 'the' item they want, be it a fake or a very similar item, and then they'll bank until the can afford it. This is why whilst there's a huge amount of goods counterfeiting it in China they also have one of the largest amounts of luxury goods growth for any economy. Apple is in a safe position by doing what they're doing, it's not like Ferrari or Louis Vuitton have suddenly panicked and tried dropping their prices for an increase in market share.
Note, there's a massive divide between the poor, the reasonable and the wealthy and I'm not an economist so I'm not even going to get into that quagmire.
Sensational headline. Apple's marketshare is about 7%, the biggest competitor (Samsung) reaches 21% (by the article, that doesn't state what kind of (cheap?) phones Samsung sells).
As always Apple's market-share could be bigger "if they were only to produce a cheaper, less feature-rich iPhone". This statement is made what? Once a week for the past 7 years? I'd take profit versus market-share every time.
As always Apple's market-share could be bigger "if they were only to produce a cheaper, less feature-rich iPhone". This statement is made what? Once a week for the past 7 years? I'd take profit versus market-share every time.
I don't know that it is that sensational, it seems to be more in the vein of stating something obvious that may not be so obvious stateside.
Apple's strategy is like Tiffany's or BMW's or some companies which sell some sort of couture to the mass market. These are not trying to capture the mainstream of the developing world, but the top 1%. These are premium, luxury brands, and their sales actually benefit from the higher price because of the reasons that people choose their product.
If Armani starts moving a lot of $3 boxers, or BMW starts selling $8k capsule cars, it won't help them. This isn't purely about profit, of course there is lots of money to make on volume. Rather - without the prestige these companies lose a ton of competitive advantage that they have carved out for themselves.
Apple's strategy is like Tiffany's or BMW's or some companies which sell some sort of couture to the mass market. These are not trying to capture the mainstream of the developing world, but the top 1%. These are premium, luxury brands, and their sales actually benefit from the higher price because of the reasons that people choose their product.
If Armani starts moving a lot of $3 boxers, or BMW starts selling $8k capsule cars, it won't help them. This isn't purely about profit, of course there is lots of money to make on volume. Rather - without the prestige these companies lose a ton of competitive advantage that they have carved out for themselves.
"Among all the international smartphone brands competing in China, Apple is the only one not offering a product that complies with [China Mobile's] air standard," said Kevin Wang, the IHS report's author, in a press release. "For Apple, this is a huge disadvantage."
The iPhone hardware supports only GSM and CDMA, not the Chinese TD-SCDMA standard [1]. According to this [2] article it would be far from simple for Apple to create a Chinese variant, although to me the commercial case seems very strong.
Does anyone with knowledge of this kind of hardware integration have informed opinions about this?
[1] http://en.wikipedia.org/wiki/TD-SCDMA [2] http://gigaom.com/apple/apples-iphone-dilemma-should-it-make...
The iPhone hardware supports only GSM and CDMA, not the Chinese TD-SCDMA standard [1]. According to this [2] article it would be far from simple for Apple to create a Chinese variant, although to me the commercial case seems very strong.
Does anyone with knowledge of this kind of hardware integration have informed opinions about this?
[1] http://en.wikipedia.org/wiki/TD-SCDMA [2] http://gigaom.com/apple/apples-iphone-dilemma-should-it-make...
the reason is cost and availability. The iphone is way too expensive in china as you must by the phone outright with no contract as most people use pre paid plans. There are some ways to get the phone discounted but still require you to leave deposit with phone company for the full value of the phone which is over $600.
The other reason is this does not account for age groups. There are so many cheap android phones on the chinese market used by older people who barely even know how to check their email with it, they just buy it because it is similarly priced to non smart phones. For the 18-30 crowd i think iphones must be over 50% market share for all phones not just smart phones
The other reason is this does not account for age groups. There are so many cheap android phones on the chinese market used by older people who barely even know how to check their email with it, they just buy it because it is similarly priced to non smart phones. For the 18-30 crowd i think iphones must be over 50% market share for all phones not just smart phones
Remember, Apple is the smartest of smartphone makers. Look at this stat for example -
"Though it shipped only about 6 percent of the industry’s smartphones and tablets in the second quarter, Apple captured about 43 percent of the industry’s revenue, according to Raymond James analyst Tavis McCourt. And it generated an astonishing 77 percent of the industry’s operating profits"
Apple's customers "think different" and pay more.
"Though it shipped only about 6 percent of the industry’s smartphones and tablets in the second quarter, Apple captured about 43 percent of the industry’s revenue, according to Raymond James analyst Tavis McCourt. And it generated an astonishing 77 percent of the industry’s operating profits"
Apple's customers "think different" and pay more.
You might be new here? Welcome.
Your quotes look strange, you need to give a reference.
"Ships 6%" and "gets 43% of revenue" implies that the price point of Apple products are 7+ times larger than the competition's products.
That look unlikely, since the claim was about smart phones (not "phones" in general!) and tablets.
Your quotes look strange, you need to give a reference.
"Ships 6%" and "gets 43% of revenue" implies that the price point of Apple products are 7+ times larger than the competition's products.
That look unlikely, since the claim was about smart phones (not "phones" in general!) and tablets.
Please note that this should be a high quality web site.
Don't "argue" by finding a random web page that claims something.
I Googled market share smart phones 2012 quarter and got 16.9% for Apple in multiple sources, including Washington Post. In literally a minute.
(Apple's market share in pads is much larger than this, so it would only increase the statistic.)
http://www.bgr.com/2012/08/08/q2-2012-smartphone-market-shar...
http://www.boston.com/business/technology/2012/08/29/worldwi...
http://www.washingtonpost.com/business/technology/worldwide-...
Edit: I did learn something -- about AllThingsD. Which was the original source for your claim.
Don't "argue" by finding a random web page that claims something.
I Googled market share smart phones 2012 quarter and got 16.9% for Apple in multiple sources, including Washington Post. In literally a minute.
(Apple's market share in pads is much larger than this, so it would only increase the statistic.)
http://www.bgr.com/2012/08/08/q2-2012-smartphone-market-shar...
http://www.boston.com/business/technology/2012/08/29/worldwi...
http://www.washingtonpost.com/business/technology/worldwide-...
Edit: I did learn something -- about AllThingsD. Which was the original source for your claim.
Save the lectures imho, the source of the quote was a analyst cited by All Things D, hardly a random webpage.
Also 43% of "industry revenue" not smartphone/tablet revenue. Try not to confuse people with tangents and red herrings.
Also 43% of "industry revenue" not smartphone/tablet revenue. Try not to confuse people with tangents and red herrings.
>>43% of "industry revenue" not smartphone/tablet revenue.
You're not touching the "6%" number, which was what I showed wrong? In what you comments on...
Edit: Removed discussion of the revenue percentage, which wasn't so obviously wrong (I only questioned it in relation to the market share.)
You're not touching the "6%" number, which was what I showed wrong? In what you comments on...
Edit: Removed discussion of the revenue percentage, which wasn't so obviously wrong (I only questioned it in relation to the market share.)
Well you cited a different number, not the same as showing it was wrong.
For the record I think your number is closer to right and I'm inclined to believe what's really meant was 6% of all phones but it could be a different definition on what constitutes a smartphone and/or the lower end of a broad range.
For the record I think your number is closer to right and I'm inclined to believe what's really meant was 6% of all phones but it could be a different definition on what constitutes a smartphone and/or the lower end of a broad range.
>>you cited a different number
Sigh, it is not my number -- it is Washington Post's number (and the remaining top hits on Google).
And if you're not familiar with the US news market and Washington Post [Edit: Removed wikipedia link since ZeroGravitas wrote a better one in a parallel comment.]
Now, go troll someone else. Preferably not on HN.
Sigh, it is not my number -- it is Washington Post's number (and the remaining top hits on Google).
And if you're not familiar with the US news market and Washington Post [Edit: Removed wikipedia link since ZeroGravitas wrote a better one in a parallel comment.]
Now, go troll someone else. Preferably not on HN.
The severity of your tone (go troll someone else, etc.) seems disproportionate... whether it is accurate or inaccurate, you seem to be actually offended by the 6% figure, yet looking over the thread I don't see anyone getting particularly personal with you, just discussing a topic.
I pointed out unreasonsble claims that disagree both with Wikipedia and with media that have serious fact checking -- he keeps arguing. (I stopped checking after the three top results on Google)
All that without any real point. Now you claim there is a point?
All that without any real point. Now you claim there is a point?
I'm familiar with the Washington Post. I'm also familiar with the Wall Street Journal which runs AllThingsD. I can see that each post cites a different analyst. And I already said I thought your number was right and the 6% was likely a misquoting.
Why you've decided to brand me a troll eludes me but based on your general tone to npguy and now myself I've formed a hypothesis.
Why you've decided to brand me a troll eludes me but based on your general tone to npguy and now myself I've formed a hypothesis.
Sure, Thanks for the links.
How do these websites define market share? it must be market share by revenue, right? my original comment was based on units -> then revenue -> then profits.
How do these websites define market share? it must be market share by revenue, right? my original comment was based on units -> then revenue -> then profits.
No, they use units. Your 6% figure is clearly wrong (or 4 years out of date). For some reason Apple blogs regularly switch between smartphone and mobile phone numbers and get themselves and their readership mixed up. I don't know why, Apple's success in the smartphone market alone is impressive enough, but they seem to like to convince themselves that Samsung isn't making any money from Android smartphones.
http://en.wikipedia.org/wiki/File:World_Wide_Smartphone_Sale...
http://en.wikipedia.org/wiki/File:World_Wide_Smartphone_Sale...
