“In most of the world, the success of Apple’s ‘walled garden’ of proprietary software has two elements,” The Economist reports. “First, its attractive services: users tend to be addicted to its iTunes music shop and iBooks store. Second, the complexities involved in switching from an iPhone to another device without losing music files or having to re-download apps.”
“Neither factor works as well in China. There, many of Apple’s services have not taken off,” The Economist reports. “The American giant missed the boat on music sales in the country, reckons Matthew Brennan of China Channel, a technology consultancy. Its sales of books are blocked by the government. In addition, few would disagree that its messaging service [in China] is a flop and that Apple Pay, its mobile-payment offering, is irrelevant—its market share on the mainland is only 1%. A ‘genius’ employee at an Apple store in Shanghai admits sheepishly that ‘iCloud doesn’t work very well in China.'”
“Nearly everyone uses WeChat, an app made by Tencent, one of China’s three big internet giants, for everything from social media to payments,” The Economist reports. “Through WeChat it is easy to transfer photos, messages, contacts and payments history maintained on that app from one device to another. No wonder that Apple’s retention rate among iPhone users, which tops 80% in America and Britain, is only 50% in China.”
“Hostilities have now broken out with Tencent,” The Economist reports. “The two had co-existed happily: since richer Chinese prefer iPhones to Android phones, these devices are where WeChat made much of its money. But earlier this year, WeChat launched ‘mini-programmes,’ a form of lightweight app that operates independently of Apple’s app store and robs it of revenues. Apple, meanwhile, had disliked but tolerated WeChat’s practice of allowing users to reward generators of content (for example, opinion columns) with small tips. These bypass Apple’s own payments mechanism. On April 19th Apple obliged WeChat to shut down tipping.”
Read more in the full article here.
MacDailyNews Take: iPhone is popular in China, but not as popular as WeChat.
Apple doesn’t have the strongest hand here. Maybe Cupertino can pull out a win in this somehow, but it doesn’t look too promising.
SEE ALSO:
Courting controversy, Apple tells several Chinese social-networking apps to disable their ‘tip’ functions – May 18, 2017
Apple has enough Ca$h to buy them if they were allowed to….
Sorry the cash owned by Apple is not enough to buy Tencent
The market value of Tencent exceeds 300 billion USD now。
The cash pool of Apple is around 250 billion USD
Apple should just back off in this case. Better to have good relations with China and continue selling hardware if they have to take a loss on in-app fees. Fighting Tencent seems like a waste of time and energy. When a company is dealing with a foreign country, it’s probably best to give in. Apple doesn’t need to create any ill feelings in China when they’re having a bad enough time selling iPhones as it is.
Sounds like a couple of billion dollars from Apple’s foreign accounts could clear of some of this.. In the right hands of course… Let’s be simple about this. Apple knows what it takes to make things work in China, but doesn’t want to do it. Of course if they did do it, they would be screwed outside of China.
This is not an envious position. May, Apple could be content with selling just the phones and somehow work out a profit sharing plan with Tencent, or just buy Tencent with a Chinese Affiliate. Maybe they could invest $1B in WeChat or buy 49% of Tencent, just to get a piece of the pie.
Its sales of books are blocked by the government.
And we dummies in the USA support China: Criminal Nation with our $$$$$$$$. Then they invest in their military and further abuse of their citizenry. Aren’t we smart. 😛
The notion that the retention rate of iPhone users is “50%” is dubious. Most research I’ve seen place it at around 80%. Phones are a primary indication of social prestige, and domestic brands, including Huawei say “economic loser” to the world. The idea that Chinese don’t base their phone purchase on perceived stsus is FUD.
Authenticity is not valued in China. A fake Apple sticker on a knockoff phone is enough for most of them to pretend they are upper class.
The same can be said for westerners who flock to Chinese markets and buy counterfeit products. Superficial brand whores with no appreciation for quality underneath the skin.