APPLE may be ecstatic about the landmark US$1 billion patent war it won against Samsung, but a recent report shows that Apple is a lightweight contender in a much more crucial battleground.
Apple’s share of the Chinese smartphone market was just a measly 7,5% during the first half of 2012, according to IHS iSuppli. That put the company in seventh place, behind Samsung (No. 1), Nokia (NOK) (No. 5) and a host of native brands, including Lenovo, Coolpad, Huawei and ZTE.
That’s not a position Apple (AAPL, Fortune 500) is accustomed to — in nearly every other region of the world where it sells iPhones, Apple is in either first or second place.
Seventh is certainly not where the company wants to be in the critical Chinese market. China is set to become the largest smartphone market in the world later this year, after more than doubling the number of devices sold in 2011, IHS iSuppli says.
If Apple wants to grab a larger slice of that rapidly growing pie, it may have to make some concessions to Chinese consumers.
Price is a big issue — the iPhone is a big-ticket item by Chinese standards. Phones aren’t commonly subsidised by wireless carriers in China like they are in the United States, putting a top-tier device like the iPhone outside the price range of many Chinese consumers.
For those customers who would have to save up months of paychecks to purchase an iPhone, many instead opt for an array of pre-owned devices and knock-offs, which are widely popular in China.
But Apple CEO, Tim Cook, has said that the company has no plans to offer a less feature-rich device to compete with lower-cost smartphone manufacturers in the country.
“I firmly believe that people in the emerging markets want great products like they do in developed markets,” Cook said. “And so we’re going to stick to our knitting and make the best products. And we think that if we do that, we’ve got a very, very good business ahead of us.”