iPhone trails at No.7 in China's smartphone market, report says

The Chinese hold Apple's products in high regard, but the iPhone is too costly and isn't hooked into China Mobile's network, analysis firm IHS says.

Donna Tam Staff Writer / News
Donna Tam covers Amazon and other fun stuff for CNET News. She is a San Francisco native who enjoys feasting, merrymaking, checking her Gmail and reading her Kindle.
Donna Tam
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Despite Apple's popularity in China, the iPhone is only No. 7 in the Chinese smartphone market, according to a report released today by analysis firm IHS.

Apple's products would seem to be major status symbols in China, what with people rioting over them during launches. But analysts say the iPhone can't compete because it doesn't comply with China's homegrown 3G technology and doesn't have a low-end version for China's less wealthy masses.

The iPhone came in seventh among smartphone brands during the first half of 2012, with Apple shipping 5.2 million units to China, according to the report. That makes up about 7.5 percent of the market, compared with products from Samsung, which are at the top of the heap with a 20.8 percent market share. The other brands that beat out Apple were Lenovo, Coolpad, Huawei, Nokia, and ZTE. The market is a crowded one -- less-prominent companies account for 22.9 percent of it.

Samsung's success in China this year puts the manufacturer back in the top spot globally, which shows China's value in the overall market. Apple had unseated Samsung six months ago.

According to IHS, the growth of the smartphone market in China has been explosive. Last year manufacturers shipped 67 million smartphones to the country. By the end of 2012, an estimated 160 million smartphones will have been shipped there.

To improve its lot, Apple would need to consider a few options, analysts said. The company would need to make a deal with China Mobile, the country's primary carrier of TD-SCDMA , a 3G network technology prevalent in China. Or, Apple could release a phone that cost $99 or less.

The latter isn't realistic, since carriers in China don't subsidize phones and Apple probably won't make a cheaper product. But the company's biggest hurdle would still be the network technology. Of the phones shipped so far this year, about 28 million use TD-SCDMA, with that number estimated to reach 333 million by 2016.

"Among all the international smartphone brands competing in China, Apple is the only one not offering a product that complies with the domestic TD-SCDMA air standard," Kevin Wang, director of China electronics research at IHS, said in a statement. "For Apple, this is a huge disadvantage, as TD-SCDMA represents the fastest-growing major air standard for smartphones in China."

Apple is probably well aware of the issue. The company has been in talks with China Mobile for at least a few months now. At 688 million subscribers, China Mobile is the world's largest carrier, and an agreement with the carrier could mean a boon for Apple's next iPhone.