Yes, you read that headline correctly. Nokia's (NYSE: NOK ) Symbian is still alive -- but not doing well -- in China. That's not surprising considering the company abandoned Symbian a few years back and has since moved on to the Windows Phone platform. According to a recent report by Kantar Worldpanel ComTech, Symbian accounts for 23% of installed base mobile OS', while iOS has 19.9%.
But that's all about to change.
Apple's (NASDAQ: AAPL ) iOS is expected to overtake Symbian over the next two quarters to become the No. 2 installed base smartphone platform in China. Even with Nokia's switch to the Windows Phone OS, Chinese smartphone users aren't staying with company.
That's because Chinese consumers are rapidly switching to Android. At the end of Q1 2013, Android accounted for more than 50% of the smartphone installed base market share in China. Android's growth is partly due to the plethora of inexpensive phones running the mobile OS. This has come about with help from Chinese brands like Lenovo, Huawei, Coolpad and Xiaomi, which make up one in five active smartphones in the country -- and their market share is growing fast.
The big smartphone player in China, though, is (surprise!) Samsung. The company is the fastest-growing brand in the country and has over 15% of the smartphone installed base. Samsung recently debuted the new Galaxy S4 Mini, which is expected to compete directly with Apple's iPhone 4S and a possible iPhone Mini (if the lower-cost iPhone ever becomes a reality). There's no set launch date for the S4 Mini in China (or anywhere yet), but the phone could pose a serious problem for Apple. Strategy Analytics expects the S4 Mini to be priced 5% lower than the iPhone 4S -- leaving Apple to sell an older, smaller phone for a higher price.
This could all change in an instant
In just a few weeks Apple is expected to debut a new iOS -- maybe even a new iPhone, though that's less likely. But without cheaper phone for emerging markets, Apple should be concerned about the S4 Mini. If Apple doesn't deviate from its current strategy, it's likely the company will continue to lose ground to Samsung and Android in China.
Apple CEO Tim Cook said at the end of April that the company will double the amount of Apple Stores in China over the next two years, and make the iPhone 4 "more attractive" to Chinese consumers. But I think selling an old phone as a mid-priced smartphone is a problematic strategy. Investors and consumers need something new from Apple that isn't in a price point beyond most Chinese consumers' reach. Apple can keep its high-end reputation intact and still release a mid-priced phone with great features; the two are not mutually exclusive.
Although Apple isn't exactly winning in China, the company is nowhere near being out of the Chinese smartphone game. But Apple hasn't done itself any favors by sticking to seemingly old principles of selling high-end phones with big margins while ignoring other price points. This refusal to adjust strategy hasn't built investor confidence as the company's stock price has plummeted over the past several months. Some question whether Apple remains a buy. To help answer that question, The Motley Fool has put together a list of reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.