In general, iPhones have sold better in the United States than in other countries. In fact, the iPhone had a 48.1 percent US marketshare at the end of October, versus Android's 46.7 percent, according to the latest data from Kantar Worldpanel.
In China, however, the iPhone's share is just 20 percent, compared with Android's 67.5 percent, according to the Kantar report. In fact, the iPhone has a 20 percent penetration or less in many countries, including Germany, France, and Italy, according to Kantar.
By comparison, IDC reported that three out of four smartphones shipped globally in the third quarter of 2012 were powered by Android. Price is one reason for this, particularly in areas where most consumers use prepaid plans and must pay the entire cost of the device up front. Android devices are available at a much wider variety of price points than the iPhone. They are available from many different manufacturers and are promoted by many more carriers.
In China, the iPhone is available only from China Unicom and China Telecom, both of which just began selling the iPhone 5 today. China Unicom said last week that it had already received 300,000 pre-orders for the phone, which could help boost Apple's marketshare.
Apple also recently opened its sixth retail store in China.
But what would help more is if Apple struck a deal with China Mobile, the largest carrier in that country (and the world). A partnership is being negotiated, but the two sides are having trouble working out the subsidy deal, according to the research firm Trefis.
Despite this, China already represents 15 percent of Apple's total profits. The country accounted for $5.7 billion of the company's revenue in the most recent quarter and $23.8 billion in the previous year, Apple said.
One possible reason for Apple's success there: Even without an official partnership with China Mobile, customers can use unlocked iPhones on the carrier's network. In fact, according to China Mobile, 15 million of its subscribers are using iPhones.
China is still in the early stages of smartphone adoption, but it has already overtaken the US as the world's largest smartphone market, Trefis reports. So even though Apple has only 20 percent of the market, that's one-fifth of a huge opportunity.
There are some lessons here for other global consumer brands.
First, even high-end products with relatively low market penetration rates can do well in China, because of the sheer size of the population.
Second, it pays to treat the customer well. Chinese customers don't get an inferior version of the iPhone; they get the same product everyone else gets. Similarly, the Apple stores in China reflect the corporation's global image, rather than prevailing local standards.
It's not just high-end electronics and luxury goods companies that benefit from this approach, either. A few years ago, when international restaurant chains were beginning to make a significant impact in China, KFC, Pizza Hut, and McDonald's stood out from local competition by having uniform standards of service, products, and cleanliness that were typically significantly higher than those of locally owned establishments.
Regional chains quickly copied this approach, but the foreign players had already gained a substantial lead. Of course, the major beneficiaries were the Chinese consumers themselves, who quickly became accustomed to being able to get friendly service and clean bathrooms.
Twenty years earlier, I saw the same process happening in Russia, where a new McDonald's outlet in Moscow drew record crowds. Sure, part of it was the novelty of eating an American lunch instead of (as many had feared) becoming lunch themselves for the US after the end of the Cold War. But I think most of it had to do with the fact that you were treated politely. The staff even smiled.
— Maria Korolov is president of Trombly International, an editorial services company that provides coverage of emerging technologies and markets. She has been a journalist for more than 20 years.
@ Maria..fakes can't be compared with the originals. I agree with you on that account. But in China...there is a great percentage of people who do not have enough money and resources to go for original Iphones there. Going for non-branded and cheaper smartphones is more plausible choice for common Chinese citizens. We must keep one thing in mind that Chinese are very very adroit at making imitations. They have produced huge clones of Apple iphones. But when we speak of customer's sastisfaction then ...of course there is no comparison.
There are plenty of iPhone look-alikes on the market in China, just as there are here. Plenty of other brands want to get on the bandwagon. You tell them the same way you tell all kinds of fakes:
* They're sold from disreputable shops, street vendors, fly-by-night operations instead of major established stores
* They look shoddy and misspelled
* They're cheap
* They don't work the way an iPhone does -- for example, they're feature phones dressed up to look like iPhones
To get a real iPhone in China, you to go an Apple store, get it from your carrier, order it online -- do the same things you'd do here in the U.S.
Meanwhile, while Android is out-selling the iPhone in China, the iPhone is still doing reasonably well.
For example, while the Android is available at all different price points, the iPhone has just one price -- expensive. Well, two prices, depending on memory -- expensive, and even more expensive.
That means that the iPhone is a status symbol the way it's harder for Android to be. If you have an iPhone, you paid a lot of money for it. If you have an Android, you could have paid a lot or a little. People would have to know the specific make and model to know for sure.
Also, the iPhone is iconic. You put it down, and everyone knows it's an iPhone. You know it's an iPhone. You feel the brand buzz coming off of it. I've had an iPhone for years, and I still feel it. For a lot of people, that's worth something.
Then there's the usability aspects, the ecosystem, etc.. etc..
is it really true that people can tell the fakes from the real ones? and can people even *find* real ones? I had kinda thought that there was a lot of fakes in general in China, but perhaps I'm mistaken?
How's the iPhone doing compared with the Android, and what is it about the iPhone that appeals to the Chinese more?
I haven't seen any data about enterprise adoption in China, however.
The folks I know personally all buy their own phones -- but that's true in the U.S., as well. Well, as far as I know -- I don't normally ask people who bought their phone.
But Maria, why is Apple's stock down? One might think that such a very strong showing of the iPhone 5 in the Chinese Market will instill much needed confidence and boost to Apple NASDAQstock value.
I didn't see your response to my earlier comments which stated among other things that the new Iphone 5 may have been built for the Chinese Market considering its many disticnt features that are popular with Chinese users.
At the enterprise level, do you see many Chinese companies adopting the iPhone 5 for their employees?
What is the ARPU for mobile users in China? Higher ARPU allow mobile carriers to increase subsidies but if the Chinese public isn't ready to increase their monthly payment, companies can't subsidize iPhones (to US prices).
I answered this in another comment, but the first example I can think of -- since I work in the industry -- is that many Chinese versions of international magazines are significantly inferior in quality and standards, which articles that wouldn't pass muster at home.
Maria, how you stated this particular sentence caught my attention:
"Chinese customers don't get an inferior version of the iPhone; they get the same product everyone else gets."
I'm just curious, but have there been instances where a foreign or international firm released an inferior version of their product in China? Somehow this makes it sound like it's not an ordinary thing for China to have products released there that are of the same quality of the products released in the US or Europe or other parts of the world. It just sounds curious.
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I don't wear a watch. I haven't worn one years. If I'm carrying a phone -- any phone -- I always know what time it is and don't have to worry about time zones or daylight savings time. And I don't want to have an iPod or an iPhone that I can wear on my wrist. Again: Why? If I want to sport one while jogging, there are plenty of bands you can already buy that do that.
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