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Apple Faces Dilemma Over Strategy in China
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Apple is in a quandary about what straegy to pursue in the large China market. Apple's pricing depends on its image of bringing in exciting new products. With growth slowing in iPhone sales and lack of new products like the iPhone Apple can go after the market of lower end smartphones to maintain growth. In that segment Apple faces strong competition from manufacturers who make products in-house and have the scale to compete effectively such as Samsung. Other manufacturers such as Lenovo are also surging in this part of the market. Sales figures for the smartphone market give some idea of the problem Apple faces. Smartphone sales for the industry slowed to growth estimated at 41% for 2013, compared to 136% in 2012. In 2014 IDC forecasts growth slowing even further to 17% and by 2015 the smartphone segment looks even less promising with only 12% growth. And much of this growth is likely to go to regional smartphone companies such as Lenovo Group of China, and other brands which are better at competing in the lower priced smartphone segment of below $100, say analysts. Apple sales were 7.9% of the smartphone market in China, Samsung had 15.4%, and Lenovo 13.1%, in the 4th quarter of 2012, according to IDC.
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Apple's pricing strategy for the iPad at $499 helps it maintain a grip on this rapidly growing market, making it difficult for competitors. Either competitors such as Amazon price lower to gain market share and have low margins or barely profitable product as with the Kindle at $199, or price relatively higher and gain only modest market share.
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Apple China.
07/08/2010
Apple is going after the Chinese market in earnest in 2010 after a slow start.
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Bill Amelio of Lenovo and managing a business in China for markets worldwide
11/17/2006
Amelio brings a unique approach that is better suited to the culture in emerging market countries. At the same time blending in the strengths of the American approach.
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Lenovo in the smartphone market
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Lenovo is doing manufacturing in-house compared to its competitors H-P and Dell who have outsourced manufacturing.
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China's mobile phone market.
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China's mobile phone market includes Nokia, Samsung, and also local Chinese companies like Tianyu which satisfy demand for lower prices and locally desired features. It can price the K-Touch touchscreen, at athird of the price of a similiar Taiwanese phone.
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Samsung Electronics Third-Quarter Profit Plunges
Wall Street Journal 10/07/2014
Samsung Electronics Third-Quarter Profit Falls Sharply
Wall Street Journal 10/30/2014
Samsung's mobile business.
06/28/2010
Grouped Articles
Apple Faces Dilemma Over Strategy in China
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Samsung Could Soon Surpass Apple in Handset Profit
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Samsung Pursues Developers, Seeking Orbit of Apps
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Investors Stay Sour on Samsung, Slicing $8 Billion From Market Capitalization
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Wall Street Journal 01/08/2014
Economist 01/14/2014
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