Wait iPhone 6S? Apple Is Losing Its ‘Magic’ in China’s Smartphone Market.

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iPhone 6S (or iPhone 7) will be released in this fall. A lot of iPhone owners want to know -what’s new will be in new iPhone? Undoubtedly, the future of Apple’s business is in China. However, while the company has had early success in the populous country all is not what it’s cracked up to be and now Apple may be losing the “cool factor”. iPhone is a luxury brand in China and that bad news could lie ahead if Apple doesn’t lower its price and differentiate itself from the increasing competition. Data from industry research firm IDC showed that Apple’s share of China’s smartphone market almost halved to 10 percent in the second quarter as Chinese consumer waited for the next iPhone model which expected later this year, or switched brands …

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Smartphone shipments in China overtook feature phones for the first time in April-June, with domestic vendor Lenovo knocking Apple from second place in the world’s largest mobile market. Lenovo, the world’s No.2 vendor of personal computers which makes the LePhone series which only sold in mainland China, took 11 percent market share in China in the second quarter, up from a single-digit percentage in the first quarter when it was ranked 7th. Samsung retained its lead in the Chinese smartphone market with a share of around 16 percent, little changed from the first quarter. Apple ranked 4th.

Apple brand might not be as popular as it was 6-12 months ago. One main factor that might contribute to the iPhone’s cooling in China is the perception that the Samsung smartphones have “trumped the iPhone in features.” Heavy competition from less expensive phones that are considered “good enough” only makes matters worse. The best example is Xiaomi phone. Their new generation model with quad-core CPU, HD screen and 2GB RAM is selling for US$312 only, while a contract free iPhone 4s is selling at US$780 in China. The cheapest iPhone, the 3Gs is selling at US$451, which is also considered expensive for average consumer. To compensate for the extra expenditure, upper middle-to-high income urban households in China would need to use about 30-45 percent of annual savings to afford an Apple’s iPhone.

Another factor holding the iPhone back is Apple’s lack of a carrier agreement with China Mobile, the nation’s largest wireless carrier which has more than 600 million customers. Although the iPhone 5 is expected to support TD-SCDMA, the country’s standard of 3G mobile telecommunication, there are not much hints for China Mobile and Apple to form a strategic alliance anytime soon. The upcoming iPhone 5 is certainly to get a fever in China, but will it be different or better enough to justify spending more than 30 percent of one’s annual income to own it ? Nowadays, smart Chinese buyers will opt for significantly less expensive smartphones that are “good enough”, indeed, the fickleness of Chinese consumers as witnessed in past cell phone cycles means Apple has to earn its premium brand reputation every product cycle.

Will Apple’s premium brand reputation make the upcoming new iPhone become magical again in China ?

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