Apple Faces New Huawei Threat In China: 42% Market Share Is Not Enough

2019-11-25 936 Posted by 3uTools

Apple Faces New Huawei Threat In China: 42% Market Share Is Not Enough

Huawei owns the Chinese smartphone market. As I reported in October, the Chinese tech giant’s annualised growth in the third quarter was an exceptional 66%, taking the company to a staggering 42% market share. Few analysts would dare venture that the company is not on course to capture more than half of the world’s largest smartphone market over the coming months. 

Huawei has left its domestic stablemates Vivo, Oppo and Xiaomi trailing. Once dominant Samsung is nowhere to be seen. But it’s the impact on Apple that has stolen the headlines. Its annualised 28% decline to the third quarter saw Apple sink to its lowest sales level in China for five years.

Apple needs China. It is a vast sales market and its manufacturing hub. It also carries symbolism. And so the latest (unexpected) news from Porsche of all people will have knocked the company and its aspirations. Porsche owners, it seems, opt for iOS over Android almost all of the time. The German automaker’s North American CEO, Klaus Zellmer, told an audience at Automobility LA that 91% of his U.S. customers have iPhones. And the situation is broadly the same in China, with 80% of its cars owned by iPhone users. 

But that could all be about to change at the early iPhone 11 sales success has continued. Bloomberg has reported that the company likely shipped 1o million iPhones during September and October, “up 6% from a year earlier, according to the China Academy of Information and Communications Technology, which is run by the country’s technology ministry.”

But in gadget-crazy China, Apple has two major impediments: no 5G devices expected until fall next year, and no gimmicky foldable device to satisfy the FOMO crowd. According to market researcher Canalys, “Apple faces a looming challenge, as Chinese vendors and operators drive heavy marketing and promotions around 5G in the next two quarters.” Apple’s third quarter sales decline was a year in the making, but its challenge is that with a 5G offering a year away, it risks further China slippage as consumers adopt smartphones capable of a generational uplift in network speeds.

There is of course a non-technical driver behind these market shifts as well—the split between the U.S. and China over Huawei that has seen the Shenzhen company’s domestic market rally around, sending a message of defiance over the supply chain blacklist and the arrest (and potential extradition) of the company’s CFO in Canada. Huawei has acknowledged that it is only extraordinary growth in China that has shored up softening sales in international markets hit by the loss off Google new devices and latent consumer concerns over the long-term. There is brand loyalty between iOS and Android, but within the Android ecosystem, there is brand fluidity.

Source: Forbes

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