Apple's iPhone Loses China Market Share

Apple Inc's share of China's booming smartphone market slipped for a second straight quarter in October-December, as it lost ground to cheaper local brands and as some shoppers held off until after the iPhone 4S launch last month.

China, the world's largest mobile phone market, has not been easy for Apple, which is grappling with a lawsuit from a local firm over the iPad name and issues at its suppliers' factories over wages and working conditions.

With the number of mobile subscribers set to top 1 billion in China this year, there is cut-throat competition among South Korea's Samsung Electronics Co Ltd, Nokia, Apple and local firms Huawei Technologies Co Ltd and ZTE Corp.

While Apple regained its top spot as the world's largest smartphone vendor in the fourth quarter and for last year as a whole, it slipped to 5th place in China, overtaken by ZTE. Apple's China smartphone market share slid to 7.5 percent from 10.4 percent in July-September.

In the last quarter, Samsung knocked Nokia off the top slot, taking 24.3 percent of the market, more than three times Apple's share, data from research firm Gartner showed. Nokia's market share more than halved last year, from above 40 percent in the first quarter to below one fifth by the fourth quarter.

"Chinese handset makers have been actively promoting their smartphones with China's three telecoms operators, so we saw ZTE and Huawei gain significant market share," said Taipei-based Gartner analyst CK Lu.

Gartner said this week it expected Apple's iPhone market share to slip for a couple of quarters as the novelty of its latest 4S model wears off.

In the first quarter of last year, ZTE had a market share of just 3 percent, but ended 2011 ranked 4th with more than 11 percent market share.

Chinese firms are gradually shifting up towards the higher end of the market, unveiling more feature-packed smartphones.

"If you want to sell handsets to the mass market, a simple rule of thumb in China is that the handset price has to be close to 70 percent of the monthly salary," said Jayesh Easwaramony, an analyst with Frost & Sullivan in Singapore.

"Today, an iPhone is more than two months salary."

This, said Easwaramony, gives the likes of Huawei and ZTE the opportunity to cater to a mass market that is captivated by the iPhone, but doesn't have the purchasing power for it.

(Reuters)