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Apple's China Data Seems Suspicious

Sam Mattera
January 18, 2014

Apple (NASDAQ: AAPL) CEO Tim Cook, in a recent interview with The Wall Street Journal, claimed that Apple's iOS devices account for 57% of all mobile Internet browsing in China.

Cook didn't give a source for his data -- it's likely that he's relying on internal Apple metrics of some sort. At any rate, I find that figure is a bit hard to believe. Google's (NASDAQ: GOOG) Android has taken China by storm in recent quarters, as Samsung, Xiaomi, and other Android handset makers dominate the Chinese market.

China is Android country
According to Chinese research firm Umeng, there were just over 500 million smartphones used in China during the second quarter of 2013. Of those, about two-thirds were running some form of Google's Android operating system, while Apple's iPhones accounted for just 30%.

In terms of new phone sales, Android is even more dominant, powering more than 80% of the smartphones sold in China in the third quarter. In fact, Google's operating system is so dominant in China that the government has become concerned.

In a white paper released last spring, the Chinese government lamented Android's control of the market, noting that while modified versions of Android were the norm, the technology underpinning the mobile operating system remained in Google's control. Last week, the Chinese government unveiled COS -- China Operating System -- as an alternative to Android. Like Google's mobile operating system, it's based on Linux, but the direction and core technology remains in Chinese hands.

Apple dominates Google's operating system in the U.S.
In the U.S., Apple's mobile devices get far more use than their Android competitors. Third-party studies, in addition to Apple's own metrics, have shown a noticeable gap -- U.S. Android users, despite being in the majority, don't spend as much money on physical or digital goods, nor do they account for the majority of mobile Web traffic.

But this isn't hard to believe. Although Apple's iOS has less market share than Android in terms of smartphones, it isn't that far behind -- in recent quarters, Apple's market share has hovered near 40%, while Google's Android remains near 50%. Moreover, since 2010, Apple has sold tens of millions of iPads in the U.S., and though its market share has fallen, Apple remains the single largest tablet vendor.

Differences in the Chinese mobile market
Apple also dominates tablet sales in China, but tablets are far from popular. DigiTimes reports that there were just over 4 million tablets sold in China during the third quarter, and though Apple's iPad accounted for about half the sales, 2 million iPads in a quarter is hardly significant in a country of 500 million smartphones.

Outside of the flagship Samsung and HTC devices, many of the Android smartphones in the U.S. are low-end devices -- it isn't surprising that they don't get as much use. But again, the Chinese market is different: phablets, phones with screen sizes between 5 and 7 inches, are tremendously popular. According to IDC, these larger phones outsold both tablets and laptops combined in the Asia-Pacific region last year. As it's quite difficult to make a call on phone with a 7-inch screen, those buying these devices are probably using them more like tablets than like phones.

Then there's Xiaomi -- a company some have called the "Apple of China." Last quarter, according to Kan