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

5 Things You Need To Know About Apple Pay
5 Things You Need To Know About Apple Pay
Apple’s payment system will change the retail experience as a whole
 
 
New Reports Say Apple Watch Entering Production In January
New Reports Say Apple Watch Entering Production In January
Rumors are swirling about when the Apple Watch will be released
 
 
The iPhone 6 Is Coming To China
The iPhone 6 Is Coming To China
A license has finally been obtained by Apple
 
 
Will Europe Welcome Apple Pay?
Will Europe Welcome Apple Pay?
The new payment system might not catch on
 
 
 

Latest from the Network

Novel cardiac patches may replace damaged heart tissues
London, Oct 1 (IANS) Israeli researchers have developed novel cardiac patches made from gold particles that could be transplanted into the body to replace damaged heart tissue. They discovered that gold particles are...
Read more on Business Balla
 
Mayor shot dead by his wife in Los Angeles county
Los Angeles, Oct 1 (IANS) Mayor of Bell Gardens, a town in Los Angeles county, Daniel Crespo died after his wife shot him several times during a domestic dispute, media reported Wednesday. Crespo, 45, was shot Tuesday...
Read more on Politics Balla
 
Mary Kom punches her way to Asiad gold
Incheon, Oct 1 (IANS) India's M.C. Mary Kom punched her way to India's first women's boxing gold in Asian Games, defeating Kazakhstan's Zhaina Shekerbekova in the flyweight (48-51kg) final here Wednesday. Mary, a five...
Read more on Sport Balla
 
Search operations resume at Japan volcano site
Tokyo, Oct 1 (IANS) Search operations resumed Wednesday at the Mount Ontake volcano eruption site in Japan. Rescue teams comprising police, firefighters and self-defence forces have been deployed at the site, Kyodo...
Read more on Politics Balla
 
'Hong Kong must capitalise on one country, two systems'
Hong Kong, Oct 1 (IANS) Hong Kong chief executive C.Y. Leung Wednesday said that in order to sustain its development, the region must capitalise on the combined advantages of the "one country and two systems" approach...
Read more on Politics Balla
 
Avoid air pollution to manage asthma
Toronto, Oct 1 (IANS) A simple change in your lifestyle to avoid air pollution can help manage ashtha problems, shows a study. "Air pollution is known to be associated with worsening asthma symptoms, but sometimes...
Read more on Business Balla
 
Mary Kom strikes Asiad boxing gold
Incheon, Oct 1 (IANS) India's M.C. Mary Kom clinched the gold medal in the women's flyweight (48-51kg) boxing competition of the 17th Asian Games here Wednesday. Mary, a five-time World Champion, defeated Kazakhstan's...
Read more on Sport Balla
 
Cancer detection made simpler with 'virtual breast'
New York, Oct 1 (IANS) To help clinicians better interpret the results of a cancer detection test - ultrasound elastography, researchers have developed what they call a "virtual breast". Like a simulator used to train...
Read more on Business Balla
 
Japan volcano eruption toll mounts to 43
Tokyo, Oct 1 (IANS) The recovery of seven more bodies Wednesday has brought the total number of those dead to 43 following Mount Ontake's volcanic eruption, which occurred Sep 27. Search operations resumed Wednesday...
Read more on Politics Balla
 
Why are Americans more depressed today
Washington, Oct 1 (IANS) US citizens are more depressed now than they have been in decades but most of them are not aware of their conditions, says a new study. Analysing data from 6.9 million adolescents and adults...
Read more on Celebrity Balla