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Why Apple Is Losing Profits in China

By Kevin Chen - Apr 23, 2013 at 2:45PM

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Hackers KuaiYong launch pirate iOS store.

Say goodbye to Apple's (AAPL 0.11%) software profits in China.

Recently, Chinese hacker group KuaiYong launched a pirated iOS App Store, letting anyone and everyone in China download Apple apps for free. KuaiYong also implemented geolocation techniques to make sure only those in China can access the website -- thus preventing any interference from the Cupertino company.

While you may think the innovative giant may have a few tricks up its sleeves, don't count on it. For a while now, American tech giants have realized the odds are against them. Back in 2011, Microsoft (MSFT 1.12%) CEO Steve Ballmer noted that Chinese revenue would only be 5% of its U.S. sales. He said that with good reason: A study conducted around that time found that the illegal market for software goods was three times that of the legal software market.

In the video below, Fool contributor Kevin Chen further outlines why China spells doom for Apple's software sales. Still, he thinks that there's reason to be bullish about Apple's future, thanks to prospects of a China Mobile (CHL) deal. To learn more about Apple's prospects, watch the video below.

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Apple Inc. Stock Quote
Apple Inc.
$140.52 (0.11%) $0.16
China Mobile Limited Stock Quote
China Mobile Limited
Microsoft Corporation Stock Quote
Microsoft Corporation
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