Apple and China

Brian X. Chen, writing for the NYT:

The company on Tuesday reported $16.1 billion in revenue from “greater China” — which includes mainland China, Hong Kong and Taiwan — in its first fiscal quarter, up 70 percent from the same period a year ago. Canalys, a research firm, estimates that Apple is now the No. 1 smartphone maker in China.

The conventional wisdom just two years ago was that Apple needed to create a low-priced iPhone — not just lower-priced but low-priced — to compete in “emerging markets” like China. That would be true if Apple were interested primarily in market share. But they’re not, never have been, and never will be interested primarily in unit sale market share. Far from hurting them, Apple’s commitment to the premium end of the phone market is helping them separate from the pack in China.

An aside, on Chen’s lead:

Apple is famous for setting trends.

In China, though, Apple has found success by following one.

For years, Apple rivals like Samsung offered large-screen smartphones. Although the bigger phones sold well in China, Apple held off on releasing a similar model, and the country remained a weak spot. But Apple introduced its own versions last September, and now the sales spigot is wide open.

There’s no question that Apple was a latecomer to the bigger-display phone game, and I think few would dispute that the iPhone 6 and especially 6 Plus display sizes played a primary role in this quarter’s breakout success in Asia. The Asian market prefers bigger phones. (From Tim Cook’s remarks on the analyst conference call: “There is clearly a geographic preference difference, where some geos would skew much higher on their preference to iPhone 6 Plus than other geos. So it’s something that’s not consistent around the world.”)

But China was far from a “weak spot” for Apple prior to the iPhones 6. In the year-ago quarter Apple had $8.8 billion in revenue in China, up from $6.8 billion the year before that.

★ Wednesday, 28 January 2015