“Apple Inc. haggled for six years to clinch a deal to sell the iPhone through China Mobile Ltd. The quest to win holdout customers in the world’s most populous country is far from over,” Adam Satariano and Edmond Lococo report for Bloomberg. “Forrester Research projects the deal will lift Apple’s smartphone market share in China by just three percentage points to 8 percent. IPhones — including the new lower cost iPhone 5c — remain too expensive for most customers in a country where competitors offer cheaper alternatives with in-demand bigger screens. Other hurdles facing the iPhone include the limited rollout of China Mobile’s high-speed network, a scarcity of apps compared to other handsets and a dearth of Apple-owned retail outlets.”
“With the China Mobile deal, Apple isn’t going after market share, said Benedict Evans, an analyst with Enders Analysis in London. Apple’s strategy is to attract wealthier customers who can afford an iPhone, letting the company maintain its industry-leading profit margins. Getting about 2 percent of China Mobile’s customers equates to about 20 million new iPhone sales, according to Deutsche Bank AG. Adding the iPhone on China Mobile will particularly challenge Samsung’s leadership for high-end smartphone sales,” Satariano and Lococo report. “As it tries to lure customers, Apple doesn’t have as robust an ecosystem of software applications in China as it does in the U.S. and Europe, said Lydia Bi, an analyst with Canalys. Chinese vendors have more localized services available than Apple. ‘The quality of content of the Apple China Store cannot compete with some Chinese local vendor’s as well as Apple’s own stores in more developed countries,’ Bi said.”
Satariano and Lococo report, “Apple’s smaller screen size compared to rivals may limit sales as well, said Bryan Wang, principal analyst and country manager in China for Forrester. About 40 percent of Android devices sold through carriers in China in 2014 will have screen sizes above 5 inches, compared to the 4-inch iPhone screen, he said. ‘Consumers in China particularly like larger screen devices,’ he said.”
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