360° Coverage : Stumbling Apple Ramps Up China App Store

Stumbling Apple Ramps Up China App Store

Jun 9 2014, 6:50pm CDT | by

A couple of new headlines are highlighting Apple’s (Nasdaq: AAPL) lackluster performance in China in the first part of this year, as the smartphone pioneer falls behind homegrown sensation Xiaomi and takes much needed steps to improve its China App Store. In one of the reports, media are saying that Apple trailed Xiaomi for the first time in the first quarter of this year. Meantime, another report is saying that Apple is embarking on a major drive to recruit more China developers to make local apps for its iPhone, since a strong selection of good apps is key to maintaining its popularity in the market.

Let’s start with the first headline that had Xiaomi overtaking Apple in the first quarter, with sales of 10.4 million smartphones for the former versus 9 million for the latter. (Chinese article) The report points out that the first quarter figure for Apple was still relatively strong, equaling nearly 40 percent of the 23.1 million iPhones that the company sold in China for all of 2013. By comparison, Xiaomi has been growing much faster since its first smartphones went on sale 2 years ago, with its first-quarter sales equal to more than half of the 18.7 million units it sold last year.

While Apple’s first quarter sales figure certainly wasn’t bad, it’s worth pointing out that the company launched its latest models late last year and thus should have posted strong sales for the new 5S and 5C in the first 3 months of the year. What’s more, the company finally reached a deal to sell iPhones through dominant carrier China Mobile (HKEx: 941; NYSE: CHL) last December, and thus should have also seen a spike in new sales from that partnership.

Against that backdrop, the company’s latest performance looks relatively so-so, and the rise of Xiaomi should certainly be attracting attention in Apple’s hometown of Cupertino, California. Here again, it’s worth noting that Xiaomi aims for a more mid-range user than the premium customers Apple targets. But as smartphone quality rapidly rises and Apple’s image dims following several media attacks, many Chinese who might have spent extra for an iPhone in the past might now be willing to consider a Xiaomi or other mid-range models from homegrown rivals like Huawei and ZTE (HKEx: 763; Shenzhen: 000063).

A lack of compelling offerings from its China App Store may also be cause for concern from Apple, whose iOS operating system (OS) is a distant second in the market to Google’s (Nasdaq: GOOG) popular free Android OS. According to a new report, Apple has begun to sharply boost its developer relations staff in China over the last year, in recognition that it needs to do more to support new app development for Chinese iPhone users. (English article)

The China build-up dates back to 2011, when Apple first opened a Beijing office to support its China App Store. As part of its effort, Apple has also developed Chinese language software to assist local developers, and half of the iPhone’s 500,000 China-based app developers joined Apple’s program last year. Still, even after that drive the company only has a relatively modest 150,000 apps in its China store, a tiny fraction of the 1 million apps available to US users.

While Apple is certainly trying to play catch-up, this scramble looks quite typical for a company that consistently tries to use its global strategy without much modification for the Chinese market. That may be a mistake for China, whose sheer size probably justifies a much bigger local investment to develop products and services more suited to local tastes. Obviously it’s far too early to write Apple’s obituary in China, but I would advise the company to sharply step up its locally based initiatives in the next 2 years or risk being overtaken by Xiaomi and other Asia-based players.

Bottom line: Apple’s lackluster performance in China reflects its weak record for customized efforts in the market, which could cause it to lose position to more aggressive homegrown players.

Doug Young is a former China company news chief for Reuters who teaches financial journalism at Fudan University in Shanghai. To read more of his commentaries on China tech news, click on www.youngchinabiz.com.

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Apple Confirms Apple Watch Will Track Users
Apple Confirms Apple Watch Will Track Users
Advertisers are excited about the new capabilities
 
 
Why Is China So Important To Apple?
Why Is China So Important To Apple?
The most populated country is Apple’s latest target
 
 
Apple Sets New Records With iPhone 6 Release
Apple Sets New Records With iPhone 6 Release
The company sold 10 million new iPhones at launch
 
 
iPhone 6 Plus Declared to Include the Best Ever Smartphone LCD
iPhone 6 Plus Declared to Include the Best Ever Smartphone LCD
While the display of the iPhone 6 Plus showed an outstanding performance, the 4.7-inch iPhone 6 screen lagged a bit behind due to the low resolution and pixel density.
 
 
 

Latest from the Network

No deal yet on new n-proposal: Iran
Tehran, Sep 23 (IANS) Ths parties present in the ongoing nuclear talks between Iran and the six world powers have not reached any agreement on the new proposal of the West as a step to resolve the nuclear issue of the...
Read more on Politics Balla
 
Tricks to switch from summer to autumn make-up
London, Sep 23 (IANS) Autumn season calls not only for wardrobe change, but also the makeover of make-up kit. An expert suggests how you can transform make-up from summer to autumn subtly. Natasha Daniel, a head make-...
Read more on Celebrity Balla
 
Syria confirms downing of its aircraft by Israel
Damascus, Sep 23 (IANS/EFE) Syria confirmed Tuesday that the Israeli military shot down one of its aircraft over the tense border between the two countries in the Golan Heights, Syrian state television reported. In a...
Read more on Politics Balla
 
Danny O'Donoghue doesn't own a car
Los Angeles, Sep 23 (IANS) Danny O'Donoghue, the lead singer of The Script band, has revealed that he doesn't own a car. In an interview with The Sun newspaper, the singer, who along with his bandmates has given hits...
Read more on Celebrity Balla
 
NRAI congratulates Bindra
London, Sep 23 (IANS) National Rifle Association of India (NRAI) president Raninder Singh congratulated Olympic champion Abhinav Bindra Tuesday for winning his first Asian Games individual medal, a men's 10 metre air...
Read more on Sport Balla
 
Arctic Sea ice helps balancing CO2 level
London, Sep 23 (IANS) Arctic Sea ice removes carbon dioxide (CO2) from the atmosphere and if Arctic Sea ice is reduced further, we will be face an increase in atmospheric concentration of CO2, says a study. Because of...
Read more on Politics Balla
 
Robert Pattinson, FKA Twigs get cosy
Los Angeles, Sep 23 (IANS) Rumoured couple Robert Pattinson and singer FKA Twigs were spotted getting cosy at Venice Beach in California. Fans captured the stars holding hands as they enjoyed a romantic stroll on the...
Read more on Celebrity Balla
 
Suicides by Indians in Oman on decline
Muscat, Sep 23 (IANS) There has been a fall in the number of suicides by Indians in Oman this year, according to Indian embassy data. On an average, five Indians committed suicide every month in 2013, but this year...
Read more on Politics Balla
 
Harpreet 7th in 25m rapid fire pistol qualifiers
Incheon, Sep 23 (IANS) India's Harpreet Singh finished seventh as Gurpreet Singh and Pemba Tamang failed to impress in the men's 25 metre rapid fire pistol qualification stage 1 of the Asian Games at the Ongnyeon...
Read more on Sport Balla
 
Afghanistan peace depends on US, Pakistan cooperation: Karzai
Kabul, Sep 23 (IANS) Outgoing Afghan President Hamid Karzai Tuesday said that returning durable peace to his conflict-ridden country depends on the cooperation from the US and Pakistan. "Peace in Afghanistan depends...
Read more on Politics Balla