Apple Inc. (AAPL) IPhones Not Too Expensive For China's Smartphone Users, Study

  @SophieXSong on March 14 2014 10:18 AM
  • China iPhone Jan 2014
    A staff of a China Mobile shop (R) explains a function of the iPhone 5s to a customer in Beijing, 2014. Reuters
  • China iPhone Shanghai March 2013
    A woman with an iPhone in Shanghai. Reuters
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Apple Inc.'s (NASDAQ:AAPL)  China strategy may be working out well, despite analysts’ admonitions that iPhones might be too expensive to be successful for the Chinese smartphone market.

A new study entitled China Mobile Internet 2013 Overview, issued by analytics firm Umeng on Wednesday, found that 27 percent of China’s 700 million smartphone users are carrying smartphones that cost $500 or more, and eight out of 10 phones in that high-end segment are iPhones, Fortune reported.

Last year was one of explosive growth for the Chinese smartphone market. At the end of the first quarter, there were 380 million smart device users in China, but that number nearly doubled to more than 700 million active devices by the end of the year. In terms of price, low-end and high-end phones account for the largest segments of the market. Devices below $150 take up 35 percent, those priced between $150 and $329 account for 22 percent, phones between $330 and $499 account for 16 percent, and those priced over $500, where Apple excels, account for 27 percent of the market.

Overall, Android phones still command considerable advantage in the Chinese market, with 57 percent of the devices under $330, but the advantage is fragmented between brands. Samsung Electronics Co., Ltd. (KRX:005930) is the leader of the Chinese Android market with 24 percent, but this is much lower than Samsung’s global share. Domestic brands Lenovo Group Limited (HKG:0992), Huawei, Xiaomi and HTC Corp (TPE:2498) round up the top five most popular Android companies in China.

Over the course of 2013, the percentage of jailbroken iPhones in China fell from 30 percent to 13 percent, as Chinese users are finally “becoming aware of the security risks of using a jailbroken phone,” Umeng said.

Starting in January, China Mobile Ltd. (NYSE:CHL), the biggest mobile carrier in China, began selling iPhones. Even if sales through China Mobile proves more modest than initial estimates, Apple’s fortune in China should be on an upward trend in 2014. As of the end of 2013, Apple had 7 percent of China’s overall smartphone market, behind Samsung, Lenovo, Coolpad and Huawei. Apple is also the most desired smartphone brand in China

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