Why Apple dominates the Chinese high-end smartphone market

Puneet Sikka
March 19, 2014

Apple's iPhone keeps raking in the majority of smartphone profits (Part 2 of 5)

(Continued from Part 1)

Apple is dominating the Chinese high-end smartphone market

In the last part of this series, we discussed how Apple (AAPL) has successfully dominated the global smartphone market in terms of profits, even though it’s far behind Google’s (GOOG) Android operating system in terms of global smartphone shipments. We also discussed how Apple has managed to sell the iPhone at a premium not only in the U.S., but also in emerging markets like China. In this part of the series, we’ll discuss how Apple has started to dominate even the Chinese high-end smartphone market. According to a report from Umeng, China’s largest analytics firm, in 2013, 27% of China’s smartphones sold for over $500, and 80% of those are iPhones. This is contrary to the popular belief that Samsung (SSNLF) is eating into Apple’s market share.

Apple continues to sell the iPhone at a higher price

Apple currently promotes three iPhone models on its Chinese website. The iPhone 5S sells for between $860 and $1,120, the iPhone 5C between $730 and $860, and the iPhone 4S at $535. The facts that 27% of the smartphones sold in China sell at above $500 and that the majority of these smartphones are iPhones make this an impressive reading for Apple. About 57% of smartphones in China sell for under $330, and the majority of this segment is dominated by Android, with Nokia (NOK) and BlackBerry (BBRY) taking up minor shares.

Apple’s deal with China Mobile to further boost sales

In January this year, Apple inked a deal with China Mobile (CHL) under which in the companies entered into a multi-year agreement. According to the deal, the iPhone 5S and iPhone 5C will be available from China Mobile’s expansive network of retail stores as well as Apple retail stores across mainland China. The deal also made the iPhone 5S and iPhone 5C two of very few models capable of working on China Mobile’s newly deployed 4G network using a China-specific version of LTE technology. The wireless carrier has 760 million subscribers, which is quite a big market to tap into for Apple. So Apple should benefit even more from this deal.

In the next part of this series, we’ll discuss why Apple is still the most desirable smartphone in emerging markets.

Continue to Part 3

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