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For Apple’s iPhone 7, China Is a Challenge
Keywords: Iphone 7, Apple China, Apple Performance,
Apple faces large hurdles in China with models made locally by Huawei and other Chinese companies that offer similar features at a price about one third less. Chinese buyers are also looking for products that are made locally by Chinese companies. As a result Apple's market share in China has declined from 9% in 2015 to 7% in 2016. The future for Apple does not look bright apart from a core group of Apple fans that look for new product launches every year. Social media comments cited here show the comments about the iPhone 7 that say buyers should not pay $159 for Air Pods, the cordless earbuds. With the economic situation changing buyers are careful to pay so much for the iPhone 7, when it looks so much like the iPhone 6. In India Apple iPhone price are much higher and remain a significant hurdle for price conscious buyers.
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Xiaomi has in the four years since its start in 2011 gained 13.7% market share in China, only 1 percentage point below Apple and passing Samsung at 9.7% (for 1st quarter 2015, source: IDC). It does not incur marketing costs by selling online and generating user interest through its fan clubs. Contract manufacturers provide phones of high quality, often using the same parts used in iPhones. Xiaomi focusses on design and software. A 64 gigabyte Mi Note Pro from Xiaomi costs 2999 yuan or $489 in China, compared to Apple 64 gigabyte Apple iPhone 6 at over twice the price at 6088 yuan, and the Samsung Galay S6 at 5288 yuan 76% above the Mi Note Pro. By offering similar quality features at these prices Xiaomi has particularly hurt Samsung sales in China.
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Xiaomi, China’s New Phone Giant, Takes Aim at World
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Wall Street Journal 07/30/2015
Hugo Barra Outlines Xiaomi’s Ambitious Plans
Wall Street Journal 08/05/2015
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New York Times 08/24/2015
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iPhone 7 First Look: Practical, but Not Jaw-Dropping
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Apple’s iPhone 7 vs. iPhone 6s: What’s Different?
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For Apple’s iPhone 7, China Is a Challenge
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03/25/2014
With the need to strengthen manufacturing Apple is diversifying away from Taiwan's Foxconn. Samsung does its own manufacturing giving it more flexibility and cost advantage. Apple is moving work on the mini iPads and lowcost iPhones to Pegatron. Pegatron operates at margins of about 0.8% compared to 1.7% for Foxconn. It is also gearing up to manage the greater complexity of the iPhone 5 and successor models.
Grouped Articles
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Apple's iPhone 5 is targeted at a lower price segment of the market. It will cost $99 in the U.S. In China where Apple has about 5% market share compared to 18% for Samsung, Apple still focusses on the high end of the market because the iPhone 5C will cost about 4500 yuan or about $733. Customers in smaller cities in China are looking for phones in the 1000 to 2000 yuan range. China's Lenovo, HTC and Huawei are increasing market share with lower priced smartphones. In China subsidies for the phone kick in later with lower phone bills unlike what happens in the U.S., where the phone costs less when purchased.
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Wall Street Journal 09/12/2013
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New York Times 01/27/2015
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Apple China strategies
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Xiaomi Makes a Profit on Its Cheap Smartphones
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Apple Petitions to Sell Refurbished iPhones in India
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Apple iPhone in China
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Grouped Articles
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Wall Street Journal 04/28/2013
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Wall Street Journal 09/12/2013
Even With a Big Store in China, Apple Remains an Underdog There
New York Times 07/08/2010
China Deal Gives Apple Big Market to Court
New York Times 12/22/2013
The Fair Labor Association and the audits of Apple supplier Foxconn's factories in China
01/05/2008
Grouped Articles
China Factories Try Karaoke, Speed Dating to Keep Workers
Wall Street Journal 05/03/2013
Hon Hai to Add Robotics in China
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The Demanding Off-Hour Escapes of Chinaâs High-Tech Workers
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The Rise of a Chinese Worker's Movement
BusinessWeek 06/10/2010
Why Apple and Others Are Nervous About Foxconn
BusinessWeek 06/03/2010
Experts Say Audit of Apple Supplier Foxconn Was Thorough
New York Times 03/30/2012
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