Somebody Is Finally Beating Apple at Its Own Game

Apple has always been the engagement leader, but now that's being challenged in China.

Jul 9, 2014 at 11:45AM

Apple (NASDAQ:AAPL) has been relinquishing market share to Google's (NASDAQ:GOOG) Android in mobile for a couple of years now, but Apple has historically had the more desirable user base. Engagement for iPhone and iPad users is intense. They spend more time on their apps than typical Android owners. This is important for developers, and naturally it will make sure that they keep backing iOS as a platform despite the gradual decline in global market share.

Apple gadgetry owners also spend more money and are more appetizing marketer targets, but let's get back to engagement. Web traffic analytics specialist Flurry just posted an interesting study of app usage among smartphone owners in China. Instead of simply pitting Apple's iOS against Google's open-source Android, Flurry measured the engagement levels by smartphone brand. 

It's not a surprise to see Apple crushing it against the Android darlings. Flurry's random sample of 23,000 smartphones in China earlier this year finds that the average Samsung owner spent 14% less time on apps than an iPhone user. That may be bad for Samsung, but it's even worse for HTC which saw its consumers spending 27% less time on apps than iPhone owners. However, then we get to China's Xiaomi, rapidly emerging as a popular smartphone for China's young professionals. The average Xiaomi owner spent 7% more time in apps than the average iPhone user.

Apple obviously doesn't need to panic. The sample size of 23,000 devices is pretty small, and Xiaomi isn't a household name outside of select Asian markets at the moment. It just announced plans to enter India. However, this is the first time that Flurry has seen a non-iPhone device lead the study in terms of app engagement. 

Xiaomi is being referred to by some as "the Apple of China" and it's starting to gain some cult-like appeal. Sales are on fire. It sold 26.1 million devices during the first half of the year, soaring 271% over the past year. It is targeting 60 million phones for all of 2014. When Xiaomi introduced its popular Mi 3 in Malaysia two months ago, it sold out of its initial online supply in just 17 minutes.  

Xiaomi

Source: Xiaomi.

Flurry took a closer look at the actual app engagement of Xiaomi users. They surprisingly spend less time on social, messaging, and gaming apps than the typical smartphone user. That may seem odd for a device that's hot with Chinese professionals under the age of 35. However, their app engagement is far greater than the typical smartphone user when it comes to productivity apps as well as consuming media and entertainment. That naturally isn't too much of a surprise, but it's also why Apple investors will want to keep a close eye on a company that's being marketed successfully to China's college-educated youth that see the value in Xiaomi's cheaper yet powerful Android-fueled handsets. 

Xiaomi isn't the first company to sacrifice margins for the sake of market share early in its life cycle to take on Apple. However, it appears to be the first company that is possibly winning the war in terms of app engagement. Keep an eye on Xiaomi.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google (C shares). The Motley Fool owns shares of Apple and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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