Why Apple Caved to China: iPhone, Android and Market Share
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Why Apple Caved to China: iPhone, Android and Market Share


With Apple and China seemingly winding down their recent confrontation following Apple’s decision to issue an apology and pledge to reform some of its policies, The Diplomat thought it’d be a good time to review the state of China’s mobile industry. Fortunately, a new report by Umeng, a Beijing-based mobile application analytics platform, provides some interesting information on how it looked in 2012. This report and others go a long way towards explaining why Apple felt the need to quickly end its rift against China, even if it didn’t feel it was in the wrong.

Some of the key findings of the Umeng report include:

 – At the end of 2012, there were 160 million active Android users in China compared to just 85 million iOS users.

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 – Both were growing fast however; the report notes that whereas just 9.2 million Android and iOS activations were occurring in January 2012, by December that figure had risen to a stunning 133 million monthly activations.

– In December 2012 there were 16 times the amount of app sessions in China than there had been at the start of the year. Furthermore, the average app session length had grown by twelve-fold resulting in the average person spending 259 percent more time using apps in December 2012 as they had in January of last year.

Some of these numbers may be underestimating the case. For instance, a different report released last month by the Chinese startup Wandoujia estimated that China had 224 million Android users by the end of 2012. This is three times the number of Android users in the U.S.

Indeed, comparisons between the U.S. and Chinese mobile industries are stark and troubling for Apple. In the U.S. Apple ranked as the largest manufacturer of smart phones with nearly 38 percent of the market in the three month period ending in January 2013, according to a report by comScore, a digital analytics company. And while Android devices accounted for 52 percent of the U.S. smartphone market its numbers had declined relative to the three-month period preceding it while Apple’s had risen 3.5 percent to 37.8 percent.

The Wandoujia report on China’s market further predicts that by the end of this year there will over 300 million Android users in China; close to the entire U.S. population. It also found that currently 17 million apps are downloaded in China, with the growth in games coming faster than other types of apps.

Thus, even if Apple is able to retain its prized position in the U.S. it cannot grow much without capturing a larger share of emerging markets. No emerging markets are as vital as China.

To be clear, the extraordinary growth of the Android OS in China is coming at Apple’s expense. Tech in Asia claims that many research groups believe that 86 percent of new mobile devices being sold in China run on an Android OS compared to just 12 percent that run on Apple’s iOS system.

All of this is very troubling for Apple, which has said that it expects China to become its largest and most important market in the years ahead. It’s hardly surprising then that the company feels the need to make a low-end iPhone to appeal to consumers in emerging markets like China.

The real key to improving Apple’s position in China, however, will be reaching a deal with China’s largest mobile service provider, China Mobile, in which the latter starts offering its customers— who at over 700 million people are roughly twice as large as the entire U.S. population— iPhones and related Apple products.

There has been some movement on this front as of late but all of it would have been at severe risk if the rift between Apple and the Chinese government had been allowed to fester.

Zachary Keck serves as assistant editor for The Diplomat.

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