The Middle Kingdom has not been kind to Apple (AAPL -1.00%) in recent months. Kantar reported in January that Apple's market share continued to slip, as local manufacturers continue to eat away at the Mac maker's market share with a powerful combination of improving specs and falling prices. Well, Kantar has now released its latest estimates; unfortunately, it's more of the same.

Android has steadily marched higher over the past year, with the three months ending February 2017 posting the strongest gains yet, jumping over 9 percentage points in urban China. Local brands like Huawei and Oppo, among others, are helping drive those gains. iOS saw its share plunge by nearly 9 percentage points, falling from 22.1% to 13.2% during the three months ending February 2017. Ouch.

iPhones using Chinese language.

Image source: Apple.

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Kantar notes that this is the lowest market share for iOS in urban China in nearly three years, even as the iPhone 7 and 7 Plus are extremely popular devices. Apple's newest models grab 8% of smartphone sales, but the previous-generation iPhone 6s and 6s Plus garnered 14% of smartphone sales in that product's comparable period.

Urban China Market Share

3 Months Ending February 2016

3 Months Ending February 2017

Percentage Point Change

















Data source: Kantar.

Greater China revenue has been somewhat volatile over the past couple of years, although sales bounced back in the fourth quarter. Apple's Greater China segment includes Mainland China, Taiwan, and Hong Kong. Some of the weakness in the fourth quarter came from Hong Kong and Taiwan, while in Mainland China -- the largest area of the three included regions -- revenue was even with the record results from the year prior.

It's not just the iPhone

Investors tend to focus too much on iPhone unit sales. While this is undoubtedly an important metric, it's not the single determinant for Apple's success in a country. The company has been focusing very heavily on growing its services business, targeting $50 billion in annual sales by 2020. CEO Tim Cook noted on the January conference call that Apple also hit record services revenue in China:

Underneath that, what we've seen is that iPhone 7 was the best-selling smartphone in China during the quarter, according to Kantar. Singles Day, which is a huge day in China as you know, we were the most popular U.S. brand on Alibaba. We set a new record for Services in China as the company did. And Mac revenue was up double-digits year-over-year. iPad units were also up double-digits in Mainland China, which was obviously different than the trend that we saw in the balance of the world. We also saw 50% of our iPhone sales in China were to switchers and first-time buyers, which is a very high number that we're pleased with. And then obviously, our total install base continues to grow there in the strong double-digits.

That said, the challenges that are there. One, the currency has devalued 6% year-over-year, and two, Hong Kong remains a very, very difficult market. And so I look at it and I'm encouraged with the significant improvement, but we're not without challenges there and I wouldn't want to imply that, although I do like many, many things that I've seen and how broad-based the pluses were across our product line.

Other parts of the business are faring quite well, even as iOS slips in the smartphone market. To be clear, Apple needs to address its weaknesses in the Chinese market, which will be a challenge, since the company's arguably biggest weakness is pricing itself out of certain market segments and sticking to the premium space. It's a fine line to balance unit sales and profitability.