Apple, Inc.'s China Prospects Brighten, but Faces Hurdles

With China being the world's largest smartphone market, Apple (NASDAQ: AAPL  ) has long been interested in tapping more sales in the country. But recently the company has been losing market share in China to small -- but growing -- companies like Xiaomi. As recent data from IDC shows, Apple saw a glimmer of hope in the fourth quarter of 2013 with the company seeing its shipment market share jump from 6% to 7% sequentially.

Good, not great
The latest market share numbers, originally reported by The Wall Street Journal, are good for Apple but they aren't great.

On the upside, the company is back in the top 5 vendor category because of the iPhone 5s release. Launching the new model in China and the U.S. at the same time likely helped drive sales in the country. Apple investors should also be pleased with the fact that the latest market share numbers don't include shipments on China Mobile (NYSE: CHL  ) . Apple launched its phones on China Mobile's network in January and can use the network to boost its market share even further.

So what's not to like about this?

Apple is close to the bottom of the barrel when it comes to its place in the Chinese smartphone market, and it could be pushed out once again. Here's how the current market share numbers break down just for reference:

Company

Smartphone Shipment Market Share

Samsung

19%

Lenovo

13%

Coolpad

11%

Huawei

10%

Apple

7%

Xiaomi

6%

Source: IDC, via WSJ.

While Apple has made some gains, it's nowhere near dominating the Chinese smartphone market, and Xiaomi is right on its heels. Apple is historically very public about not caring about market share, but that doesn't mean the numbers are completely irrelevant, either. Market share shipments can be a good indicator of consumer preference in a country and helps gauge how well devices are received. While Apple's high-end devices won't sell as many phones compared to all of the cheaper smartphones on the Chinese market, investors obviously should still look for market share increases rather than decreases.

Apple's hurdles going forward will be in battling further against a market that prefers Android devices and fighting off China's smartphone rising star, Xiaomi. As I mentioned earlier, Apple is likely to boost its position in the country through its China Mobile deal, and some analysts have estimated the company could sell anywhere between 10 million to 30 million iPhones on the network over the year. That's a really wide range, so investors should keep a close eye on any news of how the devices are faring on China Mobile's network. Though China is the world's largest smartphone market, smartphone growth in the country is slowing. That means other vendors other than Apple will have to find new ways to grow as well.

For now, Apple investors should be pleased with the company's work in China, but there's still lots work to be done.

Say goodbye to "Made in China"
For the first time since the early days of this country, we're in a position to dominate the global manufacturing landscape thanks to a single, revolutionary technology: 3-D printing. Although this sounds like something out of a science fiction novel, the success of 3-D printing is already a foregone conclusion to many manufacturers around the world. The trick now is to identify the companies -- and thereby the stocks -- that will prevail in the battle for market share. To see the three companies that are currently positioned to do so, simply download our invaluable free report on the topic by clicking here now.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2844933, ~/Articles/ArticleHandler.aspx, 7/30/2014 5:55:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement