Apple CEO Returns to China

tim-cook-1 Apple CEO Tim Cook is in China for the second time in less than a year as Apple seeks to gain market-share in this fast growing smart-phone market.

Cook is meeting with Chinese partners and government officials, according to a government statement.

China is Apple’s second largest market behind the United States and is responsible for around 15 percent of its annual revenues.

According to IDC, Apple had under 10 percent of China’s mobile phone market in the third quarter.

Apple has already built seven stores across China to directly market their popular products.

Apple investors are hoping that Cook’s second visit to China will help Apple to better compete against lower cost Chinese smart-phone hardware companies such as Lenovo and Huawei that are gaining market-share and operate on Android which has gained 90.1 percent of the market, a year-over-year increase from 58.2 percent, according to Analysys International, while Apple’s market share in China declined from 6 percent to 4.2 percent during the same period.

Apple also has to compete in China against Korean giant Samsung and Finnish based Nokia that sell lower cost smart-phones.

Although an iPhone 5 costs well over $700 in China and consists of high-end hardware components, Apple still managed to sell 2 million of them last month in China.

But the iPhone 5’s high price tag in China keeps it out of reach for the majority of Chinese.

You can call it good timing, a well-crafted strategy with a new China visit, or a just a coincidence but yesterday it was reported in the Wall St. Journal that Apple is now working on a lower end iPhone, according to people briefed on the matter.

The cheaper phone could resemble the standard iPhone, with a less-expensive body that may even include a shell made of polycarbonate plastic.

A lower costs iPhone could be just what Apple needs to gain more marketshare in China. The new lower cost iPhone could be launched as early as later this year, according to sources.

For years Apple has been seeking to strike a deal with China Mobile, one of the largest companies in China that carries 65 percent of the wireless market in China, more than double than the second largest wireless carrier, China Unicom.

Apple has still not worked out a business model with China Mobile or designed a smart-phone that can utilize China Mobile’s 3G network, a proprietary network that is incompatible with many of the other popular smart-phones.







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