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From the ‘Let’s Figure Out a Way to Make This Ostensibly About Apple’ Department

Headline for a Bloomberg report by Mark Gurman, Yuan Gao, Scott Moritz, and Selina Wang, “China’s Top Phone Makers Poised to Challenge Apple on Home Turf”:

China’s top smartphone makers are ready to challenge Apple Inc. on its home turf after trouncing the iPhone maker in their own market.

Huawei Technologies Co. and Xiaomi Corp. are in talks with U.S. wireless operators about selling flagship smartphones to American consumers as soon as next year, according to people familiar with the matter. The handset makers are negotiating with carriers including AT&T Inc. and Verizon Communications Inc., said the people, asking not to be identified because the matter is private. Talks are still fluid and it’s possible no agreements will materialize, they said.

Apple only competes in the high end of the market in the U.S. This entire article compares these companies only by “market share”, which is never a good way to evaluate Apple’s success. The idea that phones sold in the U.S. from Huawei and Xiaomi are going to be targeted at Apple is highly questionable.

It seems more likely that if Huawei and/or Xiaomi were to achieve any sort of success here in the U.S., it would come at the expense of Samsung, which has phones that run the gamut from high-end to low-end. And though Apple’s sales in China have indeed waned in the last few years, the iPhone X seems poised to turn that around — not by market share, of course, but by capturing a larger share of the premium market. The company that is truly getting “trounced” — to use Bloomberg’s terms — in China is Samsung, which is a non-player in China.

Apple has a lot at stake in the U.S., where it is the leading smartphone maker. In years past, it’s been insulated from competition by strong support from carriers, which used to subsidize its expensive iPhones and lowered the upfront price for customers. These subsidies or discounts have gone away, as carriers moved to phone financing that spreads costs over two years.

The idea that Apple was “insulated from competition” in the U.S. has got to be a joke. It’s not like carrier subsidies only applied to iPhones. They applied to all phones, from all handset makers. Verizon and AT&T spent untold millions trying to prop up BlackBerry and Motorola as alternatives to the iPhone.

Friday, 15 December 2017