Somebody Is Finally Beating Apple at Its Own Game

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.  

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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Read/Post Comments (5) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On July 09, 2014, at 12:49 PM, stanleyliu2003 wrote:

    Yep, Xiaomi is definitely a company to watch. However, other Android manufacturers have more to fear than Apple. This is why Apple succeed in the smartphone space. They have differentiation (iOS) and innovative features (TouchID, Sapphire Glass Screen, Siri, etc). We see Samsung's China market share suffering because of Xiaomi. If I can choose between a Xiaomi and a set of Beats Headphones or a Samsung S5, of course I'll choose the Xiaomi. It's a no brainer since they are both Android based and works pretty much the same way. Xiaomi and Beats vs iPhone 5S, I'll still pick the 5S.

  • Report this Comment On July 09, 2014, at 12:58 PM, systemBuilder wrote:

    We spent June 15-30 of 2014 in China. We were amazed at the number of iPhones we saw in Beijing and Shanghai, and other cities too (Sujou, Xian, etc.)!! I think we saw 2 Samsung phones, and at least 20 apple devices. We literally saw NO other devices! It seemed like Apple owns China! As a google employee, this is not something I am happy to admit ...

  • Report this Comment On July 09, 2014, at 1:07 PM, zippero wrote:

    Now that Samsung is crashing and burning, I guess the media wants to build up Xiaomi as the next Apple-killer. If you fail once, try, try again, as they say. But whoever the Android leader du jour is at any given moment, always remember that Android phones are cheap, commodity products that are profitless (including Xiaomi) regardless of however much market share they ever get. Zero margins take their toll on quality in the end, whether it's so-called high-end phones, luxury cars, or any other product category on earth. In hardware, which requires a good deal of capex, you can't really innovate and stay on the cutting edge year after year like Apple does if your bank account is empty because you're a cheap, no-margin commodity player like Xiaomi, Lenovo, Huawei, etc.

  • Report this Comment On July 09, 2014, at 1:10 PM, FF2point0 wrote:

    may interest Fools that Qualcomm is involved

  • Report this Comment On July 09, 2014, at 1:20 PM, zippero wrote:

    By taking the expedient route of adopting Android OS instead of developing their own unique OS's, Chinese Android players are following the same road to commoditization that Samsung took to capitalist purgatory. Android guarantees the commoditization of the entire Chinese Android industry in one fell swoop because these Chinese players have nothing to differentiate themselves from each other than price. Neverending price wars, like the one that's raging in China now at the low-to-mid tiers and which Samsung recently joined, are the future for Xiaomi, Lenovo, Huawei, etc. till Kingdom come, and they're going to have a difficult time fighting Apple at the high end with commodity-level quality.

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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