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By Oren Laurent
President, Banc De Binary
Global markets have been bombarded by news that China's economy is entering a tepid stage. With several Chinese companies defaulting recently, international stock markets reeled in response. Of particular importance was the impact of Chinese economic performance on the price of copper – a key base metal.
In spite of recent economic upsets, some interesting data has emerged regarding smartphone usage in China. The country’s biggest analytics firm – Umeng – released a comprehensive report detailing the distribution of smartphones according to price. The breakdown revealed the following information:
– 35% of smartphones purchased in China cost less than $149;
– 22% of smartphones purchased in China cost between $150 and $329;
– 16% of smartphones purchased in China cost between $330 and $499;
– 27% of smartphones purchased in China cost over $500.
It is the latter category that is most important to Apple. About 80% of the 27% of high-end smartphones purchased in China are iPhones. Apple is now tailoring its production and marketing campaigns around this information. The widespread popularity of smartphones in China was dramatically boosted during the course of 2013. New Internet technology in the form of 4G will soon be available across China and it will revolutionize the smartphone market
Number of devices in use in China
In fact, sales of smartphones increased quarter on quarter during 2013. For example there were 380 mln devices in use during the first quarter, by the end of the second quarter that number was 500 mln. While growth slowed during the third quarter, sales still reflected a jump to 590 mln devices, followed by a jump to over 700 mln devices by the end of 2013. This trend has continued well into 2014 where almost 1 bln smartphones and devices are expected to be in use in China.
Android phones remain a popular choice in the Chinese market, as evidenced by their huge market share. Almost 60% of Android devices are priced under $330. In China, only 25% of the market uses high-end smartphones priced over $500. Also important to point out is the fact that the growth of new users is shrinking and the majority of new devices that are sold are actually upgrades. Since low-end phones do not qualify for upgrades, it is the high-end phones – the iPhone users – that are benefiting from this trend.
As mentioned, Apple is dominating the high-end market, and with such rapid growth rates, the numbers are certainly staggering. Since becoming the premium market for Apple products, fewer numbers of iPhones have been jail broken by users. This is largely due to the fact that there are now free versions of Apple IOS apps available to Chinese smartphone users.
Apple’s burgeoning popularity in China
Presently, there are 3 iPhone models on sale in China. The price of iPhone 5s ranges between $860 on the low-end and $1120 on high-end. Moving down the ladder, the iPhone 5c is priced at $730 on the low-end and $860 on the high end. The iPhone 4S is currently available at $535. The iPhone 4 was previously available for sale in China at a much lower rate – $435 – but that model has since been discontinued. Apple's growing market presence in China is notable given the fact that there were no prior agreements in place to sell its products in the Chinese market. China's mobile telecommunications market is run by China Mobile – the only provider of telecommunications services in the country.
Meanwhile, industry experts anticipate that Apple has an equal or greater number of iPhone users in China and the USA. The latest estimates put the number of users in both the USA and China at 100 mln users. Within the Chinese market, growth has increased year on year between 2011 and 2013. In fact, within this two year period the number of IOS developers has increased over nine times. Apple added 1.5 mln registered developers during 2013, and now has over 6 mln registered developers around the world.
Yet another interesting statistic that has emerged from the Umeng report is that Chinese smartphone users are less inclined to jailbreak their devices – from data released four 2013. This figure peaked at around 30% in January 2013 and dropped to 13% by December 2013. The phones that uses were likely to jailbreak were the iPhone 3GS at over 50%, the iPod Touch 4 at around 30% and the iPhone 4 at around 25%. The risks inherent in jailbreaking high-end smartphones are now well-known and users are less inclined to go that route.
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