Is the iPhone failing to keep up in China?

Despite launching on a second carrier, Apple's iPhone exclusivity is holding back sales in China. However, claims that it cannot compete with Samsung may be premature.
Written by Hana Stewart-Smith, Contributor

Last week, the Apple iPhone 4S began sales with its second Chinese partner, China Telecom. But experts are already questioning Apple's ability to catch up to its major rival, Samsung.

Apple currently holds a 7.5 percent share of China's mobile market, compared to Samsung's 24.3 percent. At the moment Apple is the fifth largest seller in the country, and according to Gartner analyst Sandy Shen, doesn't stand much chance of taking over first place.

"I don't expect Apple to replace Samsung any time soon," Shen said.

The main reason that Apple's shares are lagging behind is that the iPhone is only available on two of China's carriers.

"China Telecom is the nations smallest carrier, so the extent to which they can help Apple is quite limited."

Apple's major setback is that it has not yet partnered with China's biggest mobile network, China Mobile, which has over 655 million subscribers. China Mobile is currently the world's largest carrier.

Without China Mobile, Apple simply doesn't have the access to a majority of China's mobile market. The two mobile carriers Apple is partnered with have a much smaller pool of subscribers, meaning it only reaches 34 percent of that market.

China Unicom, which sold the iPhone 4S exclusively until last week, has only a third of China Mobile's users with around 195 million.

Many have suggested that Apple's exclusivity is what is holding it back, as well as the networks it has chosen to partner with.

Despite making the iPhone more available by partnering with a second network, China Telecom only has 62 million subscribers, so it can only provide so many new customers.

However, the suggestion that Apple stands no chance of really competing with Samsung might be premature.

China Mobile has previously stated that it has been unable to partner with Apple because the iPhone does not currently support its 3G (TD-SCDMA) network. It also revealed that Apple had promised an LTE-compatible iPhone. China Mobile is testing its LTE network, and hopes to have it completed by June.

Were Apple to follow through with their promise and produce an LTE capable iPhone, a partnership with China Mobile would definitely be a priority.

Considering that Apple's recently revealed third generation iPad is 4G and LTE compatible, is a newly compatible iPhone too far behind?

This situation is very similar to the iPhone's issues in Japan. By making the phone exclusive with smaller networks like Softbank and KDDI they were disadvantaged against the country's biggest carrier NTT Docomo.

Also similar to the situation Japan is the fact that, despite this drawback, the iPhone is still a popular brand. China Mobile has over 15 million iPhone's activated unofficially using its 2G network. The company is not discouraging this, even giving advice and instructions for using the phone on the network.

Even before the iPhone was officially available in China many were already importing it, and the crowds at the smartphones initial release were so big that they were forced to shut down the stores for fear of losing control of them.

Interestingly, a recent report from Chinese search engine Baidu suggests that the iPhone has the most active web users in China. Despite being a comparatively small number of users, Baidu's findings reveal that iPhone users are four times more active online then any other device.

What this means for the iPhone's future in China remains to be seen, but it definitely has a following. If Apple were to successfully partner with China Mobile, it could become be a serious competitor for Samsung.

Image source: Elizabeth Phung/Flickr.


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