Apple's first quarterly sales drop since 2003 hit them in April with many wondering if Apple's best days are behind them. Sales aren't going to improve this quarter either. Now Bloomberg is reporting that Apple's iPhone has dropped to fifth place in Chinese smartphone shipments, losing ground in its biggest overseas market in a fresh blow for the technology giant.
According to the report, "iPhones made up 10.8 percent of devices sold in May, down from 12 percent a year earlier, according to Counterpoint Research. By comparison, Chinese vendor Huawei Technologies Co. increased its lead with 17.3 percent.
Chief Executive Officer Tim Cook has publicly touted the importance of China, where the company is combating a slowing domestic economy and local vendors with increasingly popular devices. The launch of the cheaper iPhone SE was meant to boost Apple's popularity in developing markets and Cook met with China's vice premier Liu Yandong in May.
Instead, it has suffered commercial, legal and regulatory setbacks in recent months leading to lawsuits and key products getting shut down.
Local brands Huawei, Vivo, Oppo and Xiaomi are now the top four smartphone makers in China with a combined market share of 53 percent, according to Counterpoint research director Neil Shah. Oppo almost doubled its market share to 11 percent." In April IDC showed that Apple was still number two, so in a single quarter Apple has taken a dive.
Apple's competition is getting smarter and faster at delivering new features to their smartphones. Huawei has now launched a dual Lens camera along with Lenovo while Xiaomi and Lenovo are prepping new phablets with giant 6.4" OLED displays to get ahead of Apple on this front and to better compete with the upcoming iPhone 7.
Perhaps one of the trends to watch for going forward is pricing. Xiaomi is selling their upcoming premium phablet with it's giant 6.4" display for only US$235 or a third of what Apple currently sells their iPhone 6s Plus at. While Apple will never push prices to those ridiculous levels, they'll have to consider a price drop if they want to stave off the attack from local OEMs that have pushed Apple to the number five position.
Only time will tell whether Apple will up their technology game and/or lower prices this fall to keep their competitors at bay, but it's clear that local OEMs want to keep Apple from remaining the market leader in China at the high-end of the market. Will Apple have a surprise or two up their sleeve in September? Let's hope that they do.
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