China now the world's largest smartphone market

According to new research, 24 million units were shipped to China in the third quarter, just inching out the 23 million shipped in the U.S.

Lindsey Turrentine/CNET

China has become the world's largest smartphone market, new research from Strategy Analytics has found.

During the third quarter, 23.9 million smartphones were shipped in China, just inching out the 23.3 million that hit store shelves in the U.S. during the same period, according to the research firm. China's smartphone shipments were up 58 percent over the second quarter of 2011. In the U.S., on the other hand, smartphone shipments fell 7 percent compared with the second quarter, Strategy Analytics said.

"China's rapid growth has been driven by an increasing availability of smartphones in retail channels, aggressive subsidizing by operators of high-end models like the Apple iPhone, and an emerging wave of low-cost Android models from local Chinese brands such as ZTE," Strategy Analytics director Tom Kang said in a statement.

China has become a highly sought-after market for many smartphone makers as of late, including Apple. Although Apple currently sells its iPhone in the country, the company is trying desperately to bring its device to China Mobile , the country's largest carrier with an estimated 639 million subscribers.

However, China Mobile has been tough on Apple. Earlier this month, Sterne Agee analyst Shaw Wu cited industry sources who said China Mobile will only agree to offer the iPhone to its customers if Apple agrees to give it a slice of its App Store revenue. Apple has never made such a deal with a carrier.

But that doesn't mean Apple won't try something else. During the company's last earnings call, Apple CEO Tim Cook went so far as to say that China has now become his company's second-most-important territory behind the U.S., adding that China is a largely untapped market that could have a profound impact on its bottom line.

Nokia is the top smartphone vendor in China with 28.5 percent market share, according to Strategy Analytics. Samsung is second with 17.6 percent share. All other smartphone vendors make up 54 percent of the market. In other words, China is up for grabs. And Apple seems more than ready to take advantage of that.

However, China is just one piece of the puzzle for Apple. According to Morgan Stanley's Katy Huberty, nearly 80 percent of the "carriers in Asia have no access to iPhones," which means two-thirds of the population across the continent have yet to be offered the iPhone.

 

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